Saving for Retirement is Broken

Millennials aren’t the only ones who are screwed.

Michael K. Spencer
Apr 9 · 5 min read

When we talk about Capitalism being broken and economic uncertainty making people feel powerless, part of that conversation is really about the last quarter of our lives.

Most North Americans have lofty dreams for the future, but too many aren’t prepared to bring them to life. Millennials are known for consuming “experiences”, and this often means a poor saving strategy when it comes to planning for retirement. But if you want to measure the actual financial health of the middle class, look at how much they are saving for retirement.

According to a Morning Consult & Business Insider survey:

  • One-quarter of millennials who expect to retire between ages 66 and 75 have no retirement savings account.
  • Nearly half of Gen Xers have no retirement account, despite most expecting to retire between 56 and 75.
  • Thirty-one percent of millennials, 25% of Gen Xers, and 12% of baby boomers want to own a home but are not saving for one.

Not only is social mobility down, we aren’t saving properly. People should aim to save for retirement while applying the 4% rule that’s backed up by academic research.

Half of Americans Fail to Save for Retirement

48 percent of American households over the age of 55 still have no retirement savings. This is an improvement from previous years, according to the U.S. Government Accountability Office.

With aging populations, many Millennials and GenZ don’t believe things like pensions will exist by the time they are ready to retire, like they do today. With the increase in part-time employment, work-life balance is being prioritized over saving in the new capitalism.

Most pre-retirees — 66 percent — have not calculated how much money they will need to cover their expenses in retirement, according to the Alliance for Lifetime Income.

Baby boomers, the oldest of whom are in their 70s, have an estimated median of $152,000 saved in all household retirement accounts, according to the Transamerica Center for Retirement Studies. The problem is younger cohorts are likely to have a lot less by they time they reach the same age.

According to CNBC, the situation is even more distressing for Gen Xers — the cohort that was born between 1965 and 1980. Those workers have a median of $66,000 socked away in all household retirement accounts.

Millennials had the smallest median balances saved: $23,000. GenZ will grow up with even higher student loan debts and far more career instability with AI and machine learning disrupting the demand for many of their skill-sets multiple times in their working life.

With job automation on the horizon, working a side hustle is going to become increasingly important for folk. For others, the entire construct of retirement will no longer exist as they age into their 60s and 70s.

Ariel Skelley | Getty Images

Millennials have a Complicated Relationship with the Economy

Nearly 80 percent of millennials are not invested in the stock market, according to a new Harris poll commissioned by investing app Stash.

Fewer than 4 out of 10 participants know about the Saver’s Credit, a tax credit available to people who put money in a retirement plan at work or in an IRA. Our financial literacy has never been worse I’d argue.

The great decline of the participation in Wall Street by the average American Millennial is a disturbing trend. Investing is the easiest way for the Middle class to elevate their savings. It’s not just that they have less faith in the markets, it’s actually that they have less savings to even invest with!

Older millennials never really recovered from the financial crisis of 2009, I belong to this group so I can relate. We who bore the brunt of the financial crisis, dealt with a tough job market and wage stagnation, didn’t meet career expectations which basically makes it more difficult for us to save.

Capitalism lures us to “live in the moment” with unreasonable income to debt ratios. The ultra-rich love to say how “capitalism is broken” for most people. Warren Buffett, Jamie Dimon, Ray Dalio, Howard Schultz and other business leaders are calling for fixes to widening income inequality and under-investment in public education. This is even before aging populations completely breaks our healthcare system.

We have no idea the kind of economic pressure we might be under in the years to come. We like to talk about the “economy” for instance in the 2020 elections debates, but the forecast for young people today saving for their retirement is rather grim.

Democratic presidential hopefuls Elizabeth Warren and Bernie Sanders are campaigning on higher taxes on the wealthy, yet we aren’t even saving properly for our retirement. Clearly the system is not serving the people and capitalism is getting more corrupt with rising wealth gaps, racial divides, women earning less to the dollar and rising wealth inequality where the top 1% has increasing power over all the rest of us.

Dalio is estimated to have a net worth of $18.4 billion, so when he says the American Dream is lost, you sort of have to laugh. Wealth inequality is more than a potential national emergency, it could mean young people today won’t even have any retirement. Capitalism is at a crossroads and the prognosis does not look good, but we still have to live responsibly for our financial health and future well-being.

It’s the age of cannabis, part-time work and no saving for retirement. What could possibly go wrong? We live in a winner-takes-all capitalism that’s not incentivizing people to save or consider the future with much fiscal control and foresight.

The ultimate Millennial platform, Instagram, parades the experience economy as if we should be loving life to the full, all the time. But how much does such technology damage how Millennials and GenZ actually relate to the fine line between money and experiences? It seems the image does not actually sync with the reality. Meanwhile Facebook profits from this deception, while people suffer long-term consequences.

10% of Gen Xers said they don’t expect to retire at all — the highest share of any generation. This means likely 15% of Millennials and 20% of GenZ should expect the same thing. If Capitalism is broken for young people, saving for retirement is broken for all of us.


Discovering the optimal lifestyle of the future.

Michael K. Spencer

Written by

Blockchain Mark Consultant, tech Futurist, prolific writer. LinkedIn: michaelkspencer


Discovering the optimal lifestyle of the future.