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Retirement Planning > Saving for Retirement

Gen Y Better Savers Than Boomers

By Danielle Andrus

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Younger investors have done a better job of “embracing” self-directed investing than older investors, a report released Tuesday by TD Ameritrade found.

Overall, investors are making “steady progress” toward their long-term goals for 2011, but TD Ameritrade found that “that many older Americans are missing out on opportunities that could position them for further success.”

While 85% of investors have an IRA or 401(k), one-quarter of Gen Y investors and 23% of Gen X investors are funding them. Just 16% of boomers are doing the same, in spite of 74% of boomers saying they are not confident they’ll reach their savings goal before they retire.

“The good news is that many working Americans, especially those who are young, are taking advantage of saving for retirement in a tax-free environment through options like an IRA, despite a tough economy,” Carrie Braxdale, managing director of investor services for TD Ameritrade Inc., said in a statement. “But funding these accounts on a regular basis is the key–even if it’s a small amount. Every year that you don’t fund your IRA is lost opportunity for tax deferral to help with growth.”

Further hindering boomers’ saving goals is that just 68% of investors over 50 are taking advantage of the “catch up contribution,” which allows them to contribute an additional $5,500 to their employer-sponsored plan. Half of eligible investors said they aren’t making the additional contribution because they can’t afford it, but 21% said they had never heard of it.

TD Ameritrade surveyed over 1,500 adults between ages 22 and 81 for the report. The survey was conducted for TD Ameritrade by Maritz Inc.

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