Every Generation Wants To Retire Comfortably - MagnifyMoney
News

Every Generation’s Top Investing Goal Is Retirement, But Younger Americans Have an Eye on Getting Rich

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
How MagnifyMoney Gets Paid ?
Advertiser Disclosure

Most Americans tend to invest with the primary goal of a comfortable retirement, but some younger investors want to get rich — and invest accordingly.

MagnifyMoney surveyed nearly 1,300 Americans to get the pulse of investors, from strategies to behaviors, across different generations. We found that younger investors tend to actively trade, pursue riskier strategies and consume newer forms of media more than older investors. We also found that older investors tend to rely on financial advisors and avoid more volatile asset classes, such as options and cryptocurrency.

Most baby boomers fit the model of retirement-focused investors. But while many younger investors share those same priorities, there’s a cohort of young traders looking to the market for big windfalls.

Find a Financial Advisor

How much would you like to invest?

Find a Financial Advisor

Key findings

  • Every generation’s top investing goal is retiring comfortably, but younger generations also want to get rich. 29% of Gen Z and 22% of millennial investors’ primary investing goal is to get rich, compared with 8% of Gen Xers and 2% of baby boomers.
  • Younger investors who want to become rich may have different investment styles. Gen Zers have more aggressive investing philosophies (40%) and tend to have more investing regrets (57%) than older generations. Regardless of age, investors’ top regrets are not investing more money (19%) and selling a certain investment (10%).
  • Older investors prefer to trust financial advisors for portfolio management. Baby boomers are most likely to trust financial advisors (70%), while younger generations are more reliant on other sources of information. Half of baby boomers want a professional to manage their portfolio, while younger investors prefer a DIY investing approach.
  • Despite this trust in financial advisors, baby boomers checked their investment balances most frequently in the last month. Meanwhile, Gen Zers and millennials (32%) bought stocks most often within that time period.
  • Men across each age bracket are more likely than women to invest. The gap is largest among millennials — 61% of millennial men invest, compared with 45% of millennial women. The trend is similar regardless of age bracket, too, as men are more likely to have retirement savings plans (43%, versus 35% of women) and brokerage accounts for self-directed trading (32%, versus 18% of women).

All generations focus on a comfortable retirement

Among respondents with investment accounts, a plurality of each generation lists being able to retire comfortably as their primary investing goal.

Investors tend to focus on that goal as they get older. Just 35% of Gen Zers (ages 18 to 25) and 49% of millennials (ages 26 to 41) care most about retiring comfortably, compared with 69% of Gen Xers (ages 42 to 56) and 81% of baby boomers (ages 57 to 76). Relatedly, tax-advantaged retirement accounts are the most common investment accounts overall and among each generation (even 31% of Gen Zers have retirement accounts).

There are plenty of investors who have other goals, though — in fact, 29% of Gen Z and 22% of millennial investors say their primary investing goal is to “get rich,” while just 8% of Gen Xers and 2% invest with that mindset.

Likewise, learning the ins and outs of investing and saving for life events are slightly more common goals among younger generations.

While retirement is the main goal for most people regardless of age, younger investors are more likely to have different priorities. After all, retirement is further away for them.

“Young people have the most valuable asset when it comes to investing: time,” says Ismat Mangla, MagnifyMoney executive editor. “They have the power of compounding on their side. Young investors can invest heavily in stocks and afford to take more risk, as long as they hold onto those investments. Stocks have a ton of growth potential over time, and even if the market takes a dip, young people can let their portfolios recover.”

Younger investors take an aggressive approach, feel differently

There are some significant demographic differences in how younger generations approach investments and how they feel about them. For example, 57% of Gen Zers and 50% of millennials have investing regrets from the last year, compared with 39% of Gen Xers and 26% of baby boomers.

The most common regret among investors was not investing more of their money (19% felt this way). Other regrets focused on choices regarding specific investments — selling or not selling one, for example.

Younger people are also more likely to feel addicted to investing, as 40% of millennial and 35% of Gen Z investors note feeling that way.

Almost half of respondents across each generation consider themselves to have a moderate investing philosophy. Younger generations, however, are more likely to be aggressive investors: 40% of Gen Zers say they prefer riskier strategies for higher potential returns, while just 14% prefer safer strategies for loss avoidance. By contrast, 22% of baby boomers lean aggressive and 33% lean conservative.

Perhaps the biggest generational divide is whether people use mobile apps to invest: 80% of Gen Zers, 71% of millennials, 55% of Gen Xers and 24% of baby boomers invest through apps.

Older investors trust advisors to manage their portfolios

More than half of investors in all generations trust financial advisors regarding information or advice about investing, but baby boomers (70%) trust them more than respondents overall (58%). Half of baby boomers prefer to have someone else choose and manage their investments, compared with just 29% of Gen Xers, 28% of Gen Zers and 20% of millennials.

“A financial planner can do some of the homework for you when it comes to figuring out asset allocation and what mix is best for reaching your goals,” Mangla says. “You certainly don’t need an advisor in every situation, but because they have a lot of knowledge and expertise in the space, they can save you time and possibly help you make more money than you would if you were trying to figure everything out on your own.”

Meanwhile, 44% of investors overall trust their friends and family for how to manage their portfolios. But, notably, among the generations, baby boomers tend to trust family or friends less than other generations, at 35% compared with 41% of Gen Xers, 50% of millennials and 52% of Gen Zers.

Other sources of trusted investing information overall include:

  • Newspaper, magazine or other news source: 22%
  • Financial blog: 21%
  • Significant other: 17%
  • Podcast: 12%
  • Reddit users: 8%
  • Specific social media influencer: 6%

Unsurprisingly, younger generations tend to view newer, alternative sources of information more favorably than older generations do.

There’s also a notable difference in which investments are held by which generations. Individual stocks are the most popular asset, but the second-most popular is mutual funds. However, older investors prefer mutual funds more than younger investors: 57% of baby boomer investors have mutual funds in their portfolio, compared with 38% of Gen Xers, 31% of millennials and 26% of Gen Zers.

Mangla says there’s no one-size-fits-all approach, but she values low-fee index funds — and research shows that index funds perform better over the long run than actively managed funds.

Annuities are also more popular with older investors, while cryptocurrency is more popular among younger investors.

Baby boomers tend to check their investments more often

Even though younger generations tend to pursue riskier investments and consider themselves to be more addicted to investing than older generations, those older investors tend to check their investment account balances more often than younger ones.

In fact, 74% of baby boomer respondents say they checked an investment account balance within the last month, compared with 66% of Gen Xers, 61% of millennials and 49% of Gen Zers. A vast majority of all investors have checked their accounts within the last six months (86%).

But even though baby boomers check their accounts most regularly, they don’t actively manage their investments as much as younger people do. In fact, 68% of Gen Z investors and 60% of millennial investors have bought a stock within the last six months, compared with 37% of baby boomer investors.

Nearly as many younger investors bought cryptocurrency within that time frame (59% of Gen Zers and 55% of millennials), but hardly any older people did (10% of baby boomers).

Below are some of the actions taken by investors in the past month. Unsurprisingly, most (65%) have at least checked their balance within the last month.

All this said, Mangla cautions against checking your balance too often.

“Checking your portfolio too regularly is a sure way to cause yourself unnecessary stress,” she says. “The market is going to have a lot of highs and lows, and the best way to deal with them is to set it and forget it, especially if you have a long-time horizon.

“Remember, you’re not investing for the short term — so why ride every emotional high and low as the market takes a ride?”

Men are more likely than women to invest their money

Across gender lines, more men (59%) have investment accounts than women (46%). That gender gap is highest among millennials (61% of men and 45% of women) and lowest among baby boomers (55% of men and 46% of women).

Millennials are a generation with some pronounced investing differences between men and women. Among millennials with investment accounts, 61% of men and 43% of women hold cryptocurrency — and the gap is even bigger for those who hold individual stocks (61% of men versus 33% of women). On the other hand, millennial women are more likely to invest in mutual funds (32%) than millennial men (29%).

Another significant gender difference in a particular generational demographic: Gen X female investors are more likely to have investing regrets (49%) than Gen X male investors (31%), and they specifically regret not investing more money (28% of women, compared with 14% of men). Relatedly, Gen X men are more likely to have bought a stock in the last year (70%) than Gen X women (53%).

MagnifyMoney also asked all survey respondents how they would use an extra $1,000 if they could only spend it one way. Saving money (58%) was by far the top choice, ahead of investing it (22%) or spending it (20%). More women would prefer to save or spend that extra cash compared to men, but more men (29%) would choose to invest it (compared to 16% of women).

Methodology

MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,295 U.S. consumers (including 670 investors) from Feb. 15-21, 2022. The survey was administered using a nonprobability-based sample, and quotas were used to ensure the sample base represented the overall population. All responses were reviewed by researchers for quality control.

We defined generations as the following ages in 2022:

  • Generation Z: 18 to 25
  • Millennial: 26 to 41
  • Generation X: 42 to 56
  • Baby boomer: 57 to 76

While the survey also included consumers from the silent generation (those 77 and older), the sample size was too small to include findings related to that group in the generational breakdowns.