Millennials know their retirement won't look like mom and dad's, and they're already planning ahead

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Just 5% of retirees say personal savings is their primary income source.

• A new Wells Fargo survey of American retirees found that 86% live primarily on income from Social Security or a pension.
• By contrast, only 25% of millennial workers expect their primary source of retirement income to come from Social Security or a pension. Instead, 45% of millennials say their future retirement will be funded by personal savings.
• The average millennial started saving for retirement at 25, while today's average retiree started saving around age 40.
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Millennials have their work cut out for them when it comes to prepping for retirement.

A new Wells Fargo survey of 2,700 US workers and 1,000 retirees uncovered a huge distinction between how baby boomers pay for retirement and how their kids plan to pay for their own in a few decades.

The survey ultimately found that younger generations are beginning to save for retirement much earlier than those before them. Today's retirees started saving around age 40, on average, while baby boomers still working started around age 36, Gen Xers at age 31, and millennials at age 25.

The average age of retirees surveyed was 70. In 2019, baby boomers are ages 55 to 73, according to Pew Research Center. The Wells Fargo survey found that the vast majority of retirees live primarily off of Social Security income (66%) or a pension plan (22%).

Just 5% of the retirees say their main source of income is a 401(k), IRA, or other personal savings vehicle. But things are changing fast. Among baby boomers still working, a total of 60% say they'll primarily use Social Security or pension income to pay for expenses when they retire, while 22% say they'll use personal savings.

Further, about 37% of Gen Xers and only 25% of millennials plan to fund their retirement mostly with Social Security or a pension. Forty-five percent of millennials and 41% of Gen Xers say their personal retirement savings accounts will be their largest source of income in retirement.

Millennials and Gen Xers are smart to plan for retirement assuming they won't get much help from the government or their employer. Reports show the Social Security trust will be underfunded as soon as next year and pension plans have been on the decline for years.

But despite being closer to retirement age than millennials, Gen Xers are at about the same level when it comes to financial preparedness. In a separate survey from Insider and Morning Consult, only 36% of Gen Xers are actively contributing to a retirement account, compared to 33% of millennials.

Despite a three-decade span between the oldest Gen Xers and youngest millennials, the Wells Fargo survey found that the same share of millennials and Gen Xers - 14% - have between $25,000 and $100,000 saved in personal retirement accounts.

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