How Boomer and Gen Z Couples Define Retirement 'Wealth'
How much savings do couples need to retire rich? The answer depends on who is doing the math. While Gen Z and baby boomers have very different ideas about what a wealthy retirement looks like, financial experts say hitting a specific dollar amount is only part of the equation.
From savings benchmarks to income goals and smart planning strategies, here's how couples can build a retirement plan designed to last.
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Gen Z vs. Boomers
Gen Z and boomers may have different views on many things, yet both generations believe retiring comfortably requires a significant amount of money.
According to a Northwestern Mutual Planning & Progress study, Gen Z believes $1.63 million is needed to retire comfortably, while boomers put the number at $990,000. Experts say those differences reflect the contrasting economic realities each generation has faced.
“Younger and older generations have different ideas about how much money is needed for a wealthy retirement because they're working from completely different reference points,” said Ralph Estep Jr., an accountant and financial podcast host.
He explained that older generations often retired with pensions, lower healthcare costs and a lower cost of living, while younger couples face longer life expectancies, self-funded retirement savings and rising healthcare expenses.
“A number that felt like ‘rich’ to a retiree in 1995 may not even be adequate in 2045,” Estep said.
The Important of a Income Target
Instead of chasing a generic retirement number, couples should start by figuring out how much income they'll need to maintain their lifestyle. Many financial professionals use a benchmark of replacing 70% to 80% of pre-retirement income, then factor in both partners' Social Security benefits to arrive at a more realistic savings target.
In addition, Estep said a couple's retirement target should reflect factors such as retirement age, lifestyle, healthcare costs, debt and inheritance goals. Couples in lower-cost areas may need less savings, while those with chronic health conditions should discuss building a larger savings cushion.
“These aren’t one-size-fits-all conversations; they're deeply personal, and that's exactly why a plan matters more than a number,” he said.
Boomers: Focus on Income
As retirement approaches, income planning can become more important than growing an account balance. D'Andre Clayton, co-founder of Clayton Financial Solutions, said a retirement replacement income target is often more useful than focusing on a specific portfolio value.
“Retirement is actually about reliable income, tax efficiency, healthcare planning, freedom of choice and low financial stress,” he said.
Rather than asking how large a portfolio should be, retirees should focus on how they will meet income needs, manage healthcare costs and account for any legacy goals. Clayton said retirement planning should focus on the practical use of assets, not simply accumulating the largest possible portfolio.
Gen Z: Maximize Employer Matches
Financial experts say one of the best retirement tools Gen Z couples have is time.
“Time is the one resource you cannot buy back,” Estep said. “The math on early investing is almost unfair in the best possible way.”
Estep said couples in their 20s and 30s should contribute enough to get the full-employer match and then gradually increase contributions by 1% each year.
“You’re effectively getting a guaranteed return of 50% to 100% on that portion of your savings on day one,” Estep said. “That’s unbeatable.”
Get on the Same Page
No matter their age, couples are more likely to reach retirement goals when they're working toward the same vision.
“Financial compatibility doesn't mean you have to be identical,” Estep said. “It means you've agreed on goals, you communicate about money without it becoming a fight and you're both rowing the same direction. Couples who get that right have a massive advantage.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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