WARNING: It is time to start investing in the stock market

According to the non-partisan US Government Accountability Office, as many as half of American households headed by someone 55 or older don’t have any retirement savings. And it looks like their adult children are headed in the same direction.

And early numbers suggest that Gen Xers may actually be worse off. A Transamerica Center study found that Gen Xers are less confident that they’ll be able to retire comfortably, feel less secure financially and contribute less to retirement plans than either boomers or millennials do. Gen Xers are also least likely to have developed a financial plan or retirement strategy.

Will Millennials do any better? 

The Transamerica study suggests that millennials are fearful, 22% of them still say that their main goal is to cover their basic living expenses – rather than trying to save for retirement.

That is a potentially catastrophic mistake. As we’ve talked about here before, the money that people set aside in a retirement plan in their 20s is worth exponentially more than that same dollar set aside a decade or two later – thanks to the power of compounding.

The Transamerica study also noted that 14% of millennials expect work to be their primary source of income in retirement. But if you think finding a job was difficult in your early 20’s just wait until you are in your 60’s or 70’s.

However, according to the Transamerica study millennials are not doing as poorly as we would think. We start saving in 401ks in our mid to late 20’s. About 80% of us take advantage of it, and save a median of 7% to 8% of our annual salaries. And while that may not be enough, it certainly is better than our Gen X and Baby Boomer friends.