The Retirement Funds Boomers Rely on Most — and Why Rising Generations Will Need a New Strategy

Whether retirement is like a sunrise on a distant horizon or you can already feel its golden rays warming your golden years, one thing is clear: Your money needs to be ready. While there are universal pillars of smart saving, such as keeping savings in a high-yield savings account, investing consistently and maintaining an emergency fund, each generation approaches retirement saving a little differently.

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When GOBankingRates teamed up with New York Life to understand how people are feeling about their finances today, one insight stood out. In a survey of more than 1,000 Americans ages 18 and older, only 20.81% of respondents age 65 and older said they rely on a 401(k) for income. In contrast, 43.93% said they receive income from an employer pension.

If you’re thinking that Gen Z or Millennials might not have the same access to pensions, you’re right. The way people save for retirement is changing — and future retirees will need a more self-directed strategy.

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Boomers Rely on Traditional Retirement Accounts

In the survey, respondents of all age groups were asked about their sources of household income. Unsurprisingly, older respondents — those in the 65-and-older group — reported high reliance on Social Security (90.17%) and pensions (43.93%).

More surprising? A relatively small portion of Baby Boomers — just 20.81% — reported income from a 401(k). That figure is nearly on par with the catch-all category of “other savings.” But that may not be shocking to those familiar with how retirement planning has evolved.

As retirement writer Donna Fuscaldo noted in a piece for Kiplinger, “For many of the baby boomers’ working years, they had access to pensions and a strong job market. They didn’t have to worry about where their income in retirement would come from.”

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Fuscaldo pointed out that by the time Gen X entered the workforce in the ’80s and ’90s, many companies were shifting away from pensions and toward 401(k) plans. Essentially, the onus for saving for retirement began falling to the employee instead of the employer.

Boomers also came into, and out of, the workforce during a time when Social Security largely seemed secure, or at least, not something they had to worry about long-term, giving them one more reason to feel financially secure in retirement.

Younger Generations Are More Self-Directed

It’s only natural that younger generations — Millennials, Zoomers, and even Gen X — rely mostly on income from their current jobs. While they’re not withdrawing from their retirement accounts just yet, it’s worth noting that 12.78% of respondents aged 55-64 reported 401(k) income, just eight percentage points below the 65-and-older group.

As pensions become less prevalent, especially in the private sector, younger generations are expected to lean more on the 401(k) in the future. The survey found that 16.77% of respondents ages 45-54 and 15.43% of those 35-44 reported a 401(k) as an income source. That may sound surprisingly high, especially for those under 45, but it’s likely reflective of multigenerational households, where income from a parent’s or older relative’s 401(k) factors into the household total. Either way, the data underscores the growing importance of self-funded retirement strategies for future generations.

Younger generations are also more likely to piece together income from multiple streams. Notably, 36.21% of respondents ages 18-24 said they earn money from side hustles. This age group also reported 0% participation in annuities — a traditional retirement product — compared to 11.56% of Boomers and 6.11% of respondents aged 55-64. This suggests younger Americans could stand to boost their awareness of long-term savings tools.

Financial Literacy Will Make All the Difference

Boomers largely benefitted from a retirement system that included pensions, stable Social Security, and less personal responsibility to actively manage long-term investments. But the same cannot be said for today’s rising generations.

As Fuscaldo writes, “In the early days of 401(k)s, people weren’t saving, and there wasn’t a ton of information available about saving, investing and planning for retirement.” That’s no longer the case.

Today’s workers have access to an abundance of financial education about 401(k)s and virtually every other type of financial product, but they also face more responsibility. And many are skeptical about the long-term viability of Social Security. According to the Nationwide Retirement Institute, 45% of Gen Z and 39% of Millennials believe they’ll never see the Social Security benefits they’ve earned.

Perhaps that’s why Gen Xers now on the cusp of retirement, as well as Millennials and Zoomers, are embracing new and diverse ways of saving for retirement, from 401(k)s to side hustle savings to life insurance with cash value components.

The retirement playbook has changed. And while Boomers may have been able to count on a few key institutions, rising generations will have to get more creative, more informed, and more proactive about their financial futures.

Looking to build a legacy? Check out our Life to Legacy guide for expert advice and smart moves you can make today.

GOBankingRates and New York Life Insurance surveyed 1,009 Americans aged 18 and older from across the country between March 19 and March 125, 2025, asking twenty-one different questions: (1) What is your current employment status?; (2) Which of the following category or categories best describes your race or ethnicity? (If more than one category applies, please select all that apply); (3) What are the source(s) of income for your household? (Please select all that apply); (4) Please choose the approximate level of investible assets for your household; (5) Using the scale below, how do you feel about the following statement: “I often take the opportunity to discuss my knowledge of financial products or services with others”; (6) Using the scale below, how do you feel about the following statement: “I regularly read financial news or financial publications”; (7) Using the scale below, how do you feel about the following statement: “Thinking about my future sometimes keeps me up at night”; (8) Using the scale below, how do you feel about the following statement: “I have enough money to live the way I would like to”; (9) Using the scale below, how do you feel about the following statement: “I believe that The American dream is within reach for people like me”; (10) Using the scale below, how do you feel about the following statement: “Stories in the media sometimes make me nervous about my financial future”; (11) Using the scale below, how do you feel about the following statement: “I can’t really take risks in my life because I don’t have a safety net if things go wrong”; (12) Thinking about the nation’s economy, how would you rate economic conditions today?; (13) A year from now, do you think that during the next twelve months we’ll have good times financially, or bad times, or what?; (14) Compared to 6 months ago, how has your level of uncertainty changed regarding the following societal and economic issues?; (15) Do you own any of the following products? (Please select all that apply); (16) Do you currently have a financial plan?; (17) On a 1 to 10 scale, where 1 means not at all confident and 10 means completely confident, how confident are you that you will meet your financial goals?; (18) What kind of financial professional have you worked with? (Please select all that apply); (19) Using the slider below, please indicate which statement best describes you.; (20) Using the slider below, please indicate which statement best describes you.; and (21) Using the slider below, please indicate which statement best describes you. In order to take the survey the respondents had to pass two screener questions (S1)
Who is the primary financial decision-maker in your household? with the answer being they were at least involved in the households financial decision making and (S2) Which range best describes your total annual household income before taxes? with an answer above $50K. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.

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This article originally appeared on GOBankingRates.com: The Retirement Funds Boomers Rely on Most — and Why Rising Generations Will Need a New Strategy