Curious to know if your neighbors with the fancy cars are saving for their retirement? Well, we can't say for sure. But we can fill you in on average savings rates by generation, thanks to a new report from Fidelity.

Fidelity's 2020 Retirement Savings Assessment surveyed 3,234 working Americans across different age groups on their retirement savings habits. The report shows that all age groups are saving less than they should be, with an average savings rate of 10%. That's 33% below the minimum recommended savings rate of 15% -- which equates to $15,000 in savings deposits for every $100,000 you make. 

Older man waving from a nice car.

Image source: Getty Images.

Savings rates by generation

The table below shows the savings rates by generation, according to the Fidelity report.


Savings Rate




Generation X


Baby boomers


Data source: Fidelity.

You can see that baby boomers are winning the generational savings race. On average, they're saving 11.7% of their income. And a higher savings rate for this generation makes sense. Boomers today are 55 to 73 years old, and all respondents were still working when they took the survey. That means many of these individuals are in their peak earnings years and some are within striking distance of retirement. They're motivated to protect their lifestyle, and they have the financial capacity to save at that higher rate.

Generation X and millennials are both saving 9.7% of their income on average. That's a decent start at retirement savings for the younger millennial group, but the older Gen Xers are falling short. Aged 39 to 54, Gen Xers only have 10 to 25 years before they reach their mid-60s. Now's the time for this generation to pick up the savings pace, so they don't face big lifestyle changes later.

What happens if you don't save

The recommended 15% savings rate is a good guideline, but it's only reliable if you start saving in your 20s. If you delay saving or save less than 15% in your early years of working, plan on ramping up that percentage in your later years. For example, a savings rate of 35% or more in your 50s would be wise if you're just starting to build your nest egg.

If you choose to save less than that,  you risk a pretty major lifestyle downgrade in your senior years. And while you might joke with your friends about working until you die because you didn't save, that's usually not an option. Eventually, you'll get laid off or health concerns will keep you out of the office.

At that point, you're reliant on Social Security and whatever savings you do have. Social Security in its current form only replaces about 40% of your working income, on average. As a point of reference, the average monthly Social Security benefit in 2020 is $1,503. But even that may be optimistic, given that the Social Security trust fund is expected to deplete its cash reserves by 2034. As a result, the benefits could be cut by 21% if changes aren't made to the system.

How to start saving -- or save more

A common barrier to saving is thinking you can't afford it. But here's some tough love: If you get a regular paycheck, you can afford to save. You may have to make different choices about where you live, what type of car you drive, or what you do for fun, but that goes with the territory. You can either make those choices now, while you're working, or risk being forced to make them once you retire.

You can get a quick win in savings by identifying something expensive in your life and getting rid of it. Then, redirect that money into your retirement account by way of higher 401(k) contributions. You could try something drastic like moving to a cheaper neighborhood or trading in your car for a bicycle. Or you could shop around for cheaper rates on insurance, fire your landscaper and do the work yourself, cancel your gym membership, or switch your smartphone plan to a cheaper, second-tier provider. Pore over your bank statements for long enough and you're sure to identify places where you can trim spending.

If you won't or can't change your spending, try earning extra money and using that to fund your retirement account. Earning more could mean renting out a room on Airbnb, but it doesn't have to. If you're paid hourly, you could ask your boss for more hours. Even better, you could ask your boss to mentor you and prep you for a promotion. You could also start a side business gardening, running errands, freelance writing, selling clothes on Poshmark, or selling arts and crafts on Etsy.

Don't worry about keeping up with your neighbors and their fancy cars. If they're not saving, that lavish lifestyle is only temporary. Focus on your own retirement prospects and make the tough choices today to enable a comfortable lifestyle tomorrow.