6 Signs Millennials Are Falling Behind on Retirement Savings — and How To Catch Up
Are you as prepared for retirement as you think you are?
As of 2026, only 55% of millennials think they will be financially prepared for retirement when the time comes, according to Northwestern Mutual. And 55% of millennials, more than any other generation, also believe that the likelihood they could outlive their savings is either somewhat likely (34%) or very likely (21%).
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For many millennials, the bigger issue is not one single mistake, but several financial decisions that have made it more difficult to build retirement savings.
1. Not Funding Retirement Accounts
If you’re not setting money aside in a retirement savings plan, then you’re falling behind. Melanie Musson, finance expert with Clearsurance.com, recommends having a goal of how much you want to contribute.
“You might have a goal of contributing $500 a month, but if you can start at $50, start there and work your way up,” she said.
2. Only Saving What Is Leftover
“One of the clearest signs millennials are falling behind on retirement savings is that they are saving only what feels leftover, instead of treating retirement like a fixed monthly bill,” said Lily Vittayarukskul, CEO and co-founder of Waterlily, a financial care planning tool.
According to Vittayarukskul, it can be a warning sign when retirement contributions are the first thing paused as rent, childcare, student loans, travel or lifestyle costs increase. It may suggest the plan is not durable enough yet.
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3. Not Knowing Your Number
Another sign that millennials are falling behind is not knowing how much their retirement numbers are.
“Many millennials know their salary, rent, credit card balance and monthly subscriptions, but they do not know how much they are contributing to retirement, whether they are getting the full employer match or what their current savings would realistically support later in life,” Vittayarukskul wrote.
Another number millennials don’t understand is their “magic number,” or how much they need to retire comfortably.
“In my practice, when I ask clients about their retirement target number and how they intend to get there, the answer is typically something along the lines of 'I'm not quite sure,’” said Cody Schuiteboer, president and CEO of Best Interest Financial.
4. Prioritizing Debt Payments Over Retirement Savings
It may seem counterintuitive, but prioritizing paying off your mortgage over funding your retirement account could be a sign that you’re falling behind.
According to Schuiteboer, many of the millennials who took advantage of 2.5%-4% mortgages between 2020 and 2022 are now applying extra payments towards their mortgages instead of maxing out their retirement accounts.
“While on paper, it may seem like a good idea, the reality is that they are paying off 2.5%-4% of debt with after-tax income and skipping out on 7%-10% average return in tax-advantaged accounts,” he said.
5. Not Increasing Contributions
According to Schuiteboer, your contribution rate should be above 10% to your annual salary to your 401(k).
“By choosing to contribute 6% of the salary and max out the employer's match, millennials are missing out on the opportunity of raising the contribution rate above 6%,” he said.
The best-case scenario is maxing it out every year.
“A matching program is an amazing opportunity for you to catch up to where you should be, so start increasing your contributions every month,” Musson advised.
6. Lifestyle Outpaces Income Growth
With every raise, millennials who prioritize a nicer car, travel and convenience spending rather than retirement savings can stay flat even as income increases.
“Millennials often have more financial pressure than older generations did at the same age, but the math still matters: The earlier you build the savings habit, the less painful it usually is,” Vittayarukskul said.
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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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