Gen Z’s Shocking Retirement Savings Habits

Saving for retirement when you’re young is like cleaning up while you cook. It may seem like more work because, along with the chopping and measuring and following the recipe (if you’re a recipe follower), you have to wipe up spills, put away ingredients after using them, and wash spatulas and bowls. But when the cooking is done, you reap the rewards of all that hard work: Cleanup is a breeze. There’s almost nothing left to do.

Saving for retirement is similar. It takes concentration and more than a little discipline when you’re young. Your salary is generally lower, and you have lots of expenses like hefty student loans.

But that effort results in a big payoff. Those early amounts are especially powerful after years of compounding interest, and the earlier you start, the less you’ll have to save each month when you’re nearing retirement. Take a look at the impact of compounding one dollar over various time frames, and how much more you have when you start saving earlier:

It looks like young adult workers got the memo. While other demographics struggle with skimpy account balances as they get closer to retirement, Gen Zers — people born between 1997 and 2012 — are actually on track to go into their non-working years with confidence.

About two-thirds of Gen Z workers who have a job that offers a 401(k) plan are actively saving for retirement, according to a study from Transamerica Center for Retirement Studies. More encouraging stats on Gen Z’s financial habits:

• The average amount workers from this generation have already saved for retirement: $33,000
• The percentage of their salary being saved for retirement: 20%
• Median age that Gen Z members started saving for retirement: 19

For more on Gen Z and their enthusiasm for 401(k)s read our reporter Sarah Hansen’s story.

— Jill Cornfield, deputy editor

P.S. If you got this newsletter from a friend, sign up here for email delivery to make sure you don't miss the next issue.

Maximize your downsizing

Don’t let a mortgage rate turn a small house into a giant weight on your wallet. 

For over 20 years, AmeriSave Mortgage has helped homebuyers quickly and easily get to closing. With a competitively low mortgage rate and credit approval in just 3 minutes, our lending professionals make home happen.

• Laid off in your 50s? Here’s some advice on what to do. (podcast)
• Some see it as the last chapter, but others think of retirement as a fresh start.
• Good news about starting late: The closer you get to retirement, the better data you’ll have to create a realistic plan.

This newsletter is free because Money earns a commission when you click or make purchases from the links in this email and on our site. We also receive compensation for some of the products and services featured in this message. Offers may be subject to change without notice. Learn more about how we make money.

AmeriSave Mortgage Corporation (www.amerisave.com/licensing), NMLS ID #1168. Licensed in 49 states and DC. Not licensed in NY. Some people portrayed are professional models. Equal Housing Lender. For licensing information, go to www.nmlsconsumeraccess.org.

Privacy Policy • Advertise With Us • We're Hiring!

To stop receiving these emails, unsubscribe or manage your email preferences.

Copyright ©2023 Money Group, LLC. All rights reserved.

Metro Office Park Calle 1, Building 7 Suite 204, Guaynabo, Puerto Rico 00968, USA