Gen X and baby boomers contributing more to IRAs

Older Americans are ramping up their IRA contributions, according to Fidelity’s latest retirement analysis study. Advisors say growing anxiety about the possibility of running out of money in retirement is likely driving the surge in contributions.

The study, which looked at 17.8 million IRA accounts in the second quarter of 2025, found that IRA contributions have remained flat year over year. But, among Generation X and baby boomer account holders specifically, the contribution rate has increased 25% and 37%, respectively, from a year ago. 

Gen Xers and boomers contributed an average of $1,158 and $1,839 to IRA accounts, respectively. While still lagging behind the $2,200 average IRA contribution Fidelity reported for all account holders, those figures represent a significant increase within those groups.

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Financial planner Chad Karl, founder of Chad J. Karl & Associates in Janesville, Wisconsin, said the possibility of reduced Social Security benefits is looming over retirement plans.

“Reviewing my own Social Security statement this year, it indicates: ‘Social Security will be there when you retire. The Social Security Board of Trustees estimates that, based on current law, the Trust Funds will be able to pay benefits in full and on time until 2035. In 2035, Social Security would still be able to pay about $830 for every $1,000 in benefits scheduled,'” Karl said. “I believe that people are finally starting to recognize that they may incur a potential 17% reduction in Social Security benefits at some point in the future, based upon that statement.”

According to the nonprofit, nonpartisan Committee for a Responsible Federal Budget, the reduction in benefits will be sooner and more severe due to provisions in the One Big Beautiful Bill Act. The law, signed by President Trump on July 4, creates a new tax deduction for seniors age 65 and up, offering $6,000 in deductions for single filers and $12,000 for married couples.

Together with the expansion of the 2017 tax cuts, the new deduction is expected to move the Social Security Old-Age and Survivors (OASI) trust fund’s insolvency up to late 2032, at which time the committee estimates a roughly 24% reduction in benefits.

Other factors, like greater life expectancy and higher-than-expected inflation, could also be driving the increase in IRA contributions with Gen Xers and baby boomers, Karl said.

Older Americans are feeling the squeeze

While many younger investors have already started planning for a retirement with reduced Social Security benefits, older Americans are making that savings shift later in life.

Nicole Sullivan, director of financial planning at Prism Planning Partners in Libertyville, Illinois, said that Gen Xers and baby boomers may be increasing their contributions in an effort to compensate for years of undersaving.

A recent BlackRock survey found that Gen Xers are especially feeling the pressure when it comes to retirement savings. Just 54% said they are on track with their savings, the least of any generation in the survey.

The survey, which spans 10 years of responses, found that Gen Xers at age 45 have the same level of retirement confidence as boomers did at that same age. That plateau contrasts with millennials and Gen Zers, who have shown increased retirement confidence compared to previous generations at the same age.

Monica Dwyer, senior vice president at Harvest Financial Advisors, said that Gen Xers and boomers are playing “catch-up” with their retirement savings, as they experience insecurities about whether or not they will be ready.

Real estate isn’t the de facto investment it once was

The rise in IRA contributions isn’t just about savings insecurity. As wage growth lags behind housing price appreciation, more Americans are abandoning hopes of home ownership, instead investing surplus income into the stock market, according to Josh Brooks, founder of Exponential Advisors in Weatherford, Texas.

Among U.S. adults who do not own a home, 30% think they will buy one within the next five years, according to a Gallup survey conducted in April. That figure is significantly lower than what Gallup measured in prior surveys. In 2015, 43% of non-homeowners said they planned to buy a home in the next five years.

“The housing affordability crisis has created ‘forced investors,'”  Brooks said. “With home prices up 51% while wages rose only 20%, homeownership is increasingly out of reach. The money that would have gone toward down payments is now flowing into investment accounts. When the traditional path to building equity is broken, people adapt.”

Nationwide, home prices have increased 60% since 2019, according to the Harvard Joint Center for Housing Studies — far exceeding the traditional affordability benchmark of a 3-to-1 price-to-income ratio.

And as home buying has become more difficult, technology has made it easier than ever to invest in the stock market, Brooks said.

“Investing barriers have been eliminated — anyone can now open an IRA and build a diversified portfolio from their phone with minimal costs,” he said. “This democratization of financial markets is allowing more Americans to participate in wealth creation through the stock market rather than real estate. We’re witnessing a secular shift where the stock market is becoming the primary wealth-building engine for the middle class, not just a retirement supplement. As advisors, we must recognize this new reality and guide clients accordingly.”