Survey reveals generation gaps in retirement, with a reality check for pre-retirees

As a record number of Americans approached retirement age, a new study from Fidelity Investments offers a fresh look at differences in how generations prepared for life after work.

Fidelity’s 2025 State of Retirement Planning study, which polled more than 2,000 adults, showed that Gen X was the most uncertain about their retirement future, younger generations were more optimistic, and many retirees faced financial surprises – particularly when it came to inflation and healthcare costs.

Generational gaps in retirement confidence

The study released Monday revealed a striking generation gap in retirement confidence. While 75 percent of Gen Z respondents felt optimistic about their ability to retire how and when they wanted, that number dropped to just 53 percent for Gen Xers. Millennials were caught somewhere in the middle, with 71 percent expressing confidence in their retirement prospects.

Gen X respondents were generally more anxious as they navigated a delicate financial highwire act. Unlike their younger counterparts, Gen Xers were often caught between supporting both children and aging parents, making it harder to prioritize retirement savings. Thirty percent of Gen Xers said balancing current expenses with saving for retirement was a significant challenge, compared to 24 percent of Gen Z and Millennials.

The shift away from pensions was also a factor. Nearly half (48 percent) of retirees surveyed said they receive pension income, while 61 percent of pre-retirees expected to rely on 401(k)s, IRAs, or workplace plans as their primary income source. This transition puts more onus on individuals to manage their savings wisely, adding to Gen X’s retirement planning concerns.

Inflation was another top challenge. Forty-seven percent of Baby Boomers – which includes many retirees – cited rising living costs as their biggest financial hurdle, compared to 37 percent of Gen Xers and 30 percent of Millennials. The study suggested that younger generations may not have fully grasped the long-term impact of inflation, which could erode their purchasing power in retirement.

Expectations vs. reality – the pre-retiree wake-up call

The study also highlighted significant gaps between pre-retirees' expectations and retirees' actual experiences. While two-thirds of pre-retirees felt confident in their retirement plans, retirees offered a more sobering perspective.

For one, many retirees spent less than they had anticipated – but not necessarily by choice. Nearly 60 percent of retirees said they had to cut back on expenses, with women (63 percent) reducing spending more than men (54 percent). This suggested that many retirees may have underestimated their long-term financial needs or faced unexpected expenses.

Healthcare costs were also a major spending surprise for more than half of retired respondents. Fifty-seven percent of retirees said medical expenses were higher than expected, and 43 percent felt Medicare covered less than they had anticipated. This served as a critical lesson for pre-retirees, who may not have been budgeting enough for out-of-pocket healthcare costs.

Another stark reality check: 70 percent of retirees said inflation had significantly eaten into their savings. While many pre-retirees planned for general expenses, fewer seemed to have fully prepared for how inflation could erode their purchasing power over decades.

Despite these challenges, there was good news: 69 percent of retirees reported that retirement was more enjoyable than they had expected. This suggested that while financial planning was crucial, retirement could still be a fulfilling and rewarding phase of life for those who adequately prepared.

Learnings from retirees – how to prepare better

For workers still navigating their path to retirement, Fidelity’s survey offered some key takeaways from retirees with hard-earned experience. A two-thirds majority of retirees (66 percent) said that even saving small amounts early in a career could make a big difference over time, thanks to compound growth. Nearly as many (58 percent) encouraged pre-retirees to maximize employer-sponsored retirement plans by taking full advantage of 401(k) contributions, especially employer matches, to build a strong financial foundation.

Debt management was also a major concern. Forty-two percent of retirees said they wished they had focused on paying down high-interest debt sooner, while 63 percent of those five to ten years from retirement emphasized the importance of entering retirement debt-free. That echoes concerns highlighted in Nationwide's Advisor Authority study last year, which found one-fourth of retired investors are still saddled with a mortgage and 25 percent are dealing with credit card debt.

Another 39 percent stressed healthcare planning as an area to watch, particularly Medicare, long-term care, and other medical expenses, to avoid unexpected financial strain.

Finally, one simple but practical tip from 35 percent of retirees: Practice living on a retirement budget before actually retiring. Going on a retirement test drive helped pre-retirees adjust to a lower income and identify potential financial gaps before making the leap.