Key Takeaways
- Less than half of people saving for retirement are on track to maintain their current lifestyle in retirement, according to Vanguard.
- Older Gen Z workers (ages 24-28) are the best prepared, with 47% on a trajectory to keep up their lifestyles in retirement. Millennials (42%), Gen Xers (41%), and younger Baby Boomers (40%) are less prepared.
- Working just two years longer would significantly increase the number of workers who could maintain their current lifestyles in retirement, Vanguard found.
Regardless of where you are in your career and how long you have until retirement, proper planning for a post-work life means ensuring you’ll have enough money available to continue to support yourself adequately.
With many workers experiencing lifestyle creep as they build their income throughout their careers, it’s important to consider whether you’re saving enough to maintain your lifestyle after retiring.
According to Vanguard’s 2025 Retirement Outlook report, less than half of retirement savers are on track to be able to maintain their current lifestyles after they leave the workforce.
Retirement Preparation by Generation
Vanguard found that older Gen Z workers (ages 24-28) are the best prepared to maintain their lifestyle in retirement, with 47% beginning their retirement savings journey on the right track.
That percentage falls slightly with older generations, as 42% of millennials, 41% of Gen Xers, and just 40% of preretirement Baby Boomers are adequately preparing to maintain their current lifestyle later in life.
It’s worth remembering, however, that though their savings may lag, almost 90% of Baby Boomers own a home, so tapping into home equity or selling a home and renting may be another option to provide support in retirement as well.
How To Make Sure You’re on Track
Evaluating whether you’re adequately preparing for retirement requires consideration of your current retirement savings, your capacity to save going forward, your current and anticipated expenses, and the time you expect to continue working. Retirement planning experts often suggest aiming to save between 10 and 12 times your final (or highest) salary, to replace about 70%-80% of your cost of living preretirement.
For younger retirement planners, making consistent contributions to retirement accounts is essential in order to capitalize on the power of compounding.
Those approaching retirement in the coming years but lacking sufficient savings should evaluate whether catch-up contributions may be feasible.
If you have access to a defined contribution plan, it’s important that you take advantage of your employer’s matching contributions program, if there is one. Not taking advantage of an employer match is like leaving free money on the table.
Important
The median employer match is 4.0% of an employee’s salary, which can quickly add up over years of compounding.
Vanguard found that workers with access to defined contribution plans such as 401(k)s and 403(b)s were twice as likely to achieve their retirement savings goals as those without.
Managing Expenses in Retirement
For many retirees, successfully stretching the limited income provided by retirement savings requires a lifestyle modification. This may mean downsizing to a smaller home or relocating from an area with a high cost of living to one that is better suited to retirement living. Trimming unnecessary expenses is another way to reduce a budget in retirement.
To prepare for retirement, you’ll have to estimate your future lifestyle costs. You can start by knowing what you spend now. To do that, track your spending. Try to keep a detailed, updated budget. No matter how far away from retirement you are, consider how your life circumstances will change in retirement, and what effect that will have on your budget.
With a majority of savers not sufficiently prepared to keep up their current lifestyles in retirement—many older adults have nothing saved toward retirement at all—it may be helpful to look for benefits programs to manage your expenses. For example, Medicare Savings Programs may help to cover certain medical expenses including premiums, deductibles, and more. The Low Income Home Energy Assistance Program provides grants to help older adults cover the costs of heating and cooling their homes. Additional programs help cover the costs of housing, food, and more.
Finally, you might consider taking on part-time work in retirement to boost your savings. In 2024, almost 1 in 5 individuals age 65 or older was working or actively looking for work.