In fact, the average Gen Zer started putting money away for retirement at age 22, according to Northwestern Mutual’s 2024 Planning and Progress Study. That’s 15 years earlier than the average baby boomer, who said they started saving at 37. For the average Gen Xer and millennial, those ages were 31 and 27, respectively, per the study, which surveyed over 4,500 U.S. adults in January on a variety of money and financial decision-making behaviors.
The survey, published since 2012, also found that thanks to inflation, Americans believe they’ll need increasingly more money to live comfortably in retirement. This year, respondents said they’d need $1.46 million, on average, to retire comfortably, compared with $1.27 million last year. In 2020, that figure was $950,000.
Other recent data has pointed to younger generations getting an earlier jump on saving for retirement. Last year, a reportbyVanguardfound workers age 18 to 24 in 2021 were 32% more likely to invest in their workplace retirement plan than their older colleagues were at their age, thanks to the increased prevalence of automatic enrollment and easier access to information on plans and the benefits of contributing to them earlier. A recent Fidelity report found some Gen Zers starting to plan at age 20.
Kyle Wick, private wealth advisor at 22 One Advisors,a Northwestern Mutual Private Client Group, says another component of Gen Zers saving earlier is that retirement itself has profoundly changed over the past couple of generations. Retirement didn’t really exist as Americans think about it today for boomers’ parents or grandparents; those earlier generations benefitted from pensions in addition to Social Security and private savings.
‘They know they have to get started’
Gen X is the first generation that’s primarily had to rely on private savings when it comes to retirement, with each subsequent generation getting a bit more of a head start.
“I don’t think older generations were as worried about tomorrow as people are today,” Wick tells Fortune, noting that people simply weren’t living as long, and if they were, the expectation was to keep working. “Young people now are envisioning, ‘I want to retire at 60 and live until 100.’ They’re smart—they know they have to get started if they really want that.”
Still, financial experts say it may not be enough—especially if the sum required to retire comfortably keeps creeping up. While the average member of Gen Z said they’ll need $1.63 million to retire comfortably, according to Northwestern Mutual, some advisors say the real number eventually could exceed $2 million. Even more striking: Northwestern Mutual’s survey finds 32% of respondents of all ages haven’t started saving at all.
But Gen Z seems to have learned some lessons from ongoing coverage of America’s retirement crisis. Baby boomers and Gen X are wildly underprepared for retirement on the whole, according to many surveys and studies. The typical Gen X household has $40,000 in private retirement savings, while the median retirement account balance for those 65 to 74 is around $200,000.
Baby boomers and Gen Xers, on average, said they’re expecting to work longer than younger generations, with boomers saying they’ll likely retire around age 72 and Gen Xers saying 67. Meanwhile, millennials expect to retire around 64 while the average Gen Zer says, perhaps a tad too optimistically, 60.
The good news is, as the Vanguard report shows, employees of every generation are saving a lot more than they used to. Savers were deferring an average of 7.7% of their paychecks into their 401(k)s in 2021, compared with 7.2% in 2006.
Gen Z faces ‘unprecedented’ headwinds
The survey results are even more impressive when taking into consideration the economic headwinds facing Gen Zers. From out-of-control housing prices to the ongoing issue of student loan debt to ever-growing childcare costs, young workers are facing financial hurdles older generations either didn’t have to overcome or did but to a lesser degree.
“Generation Z are starting their careers in a very difficult financial time,” Clark D. Randall, a Texas-based certified financial planner and director of financial planning atCreekmur Wealth Advisors, previously told Fortune. “They’re facing unprecedented inflation and a housing market with tight supply and high interest rates. They hear about the problems with the Social Security trust fund.”
Despite those challenges, younger Americans are still making significant progress. Members of the millennial and Gen Z generations may hold less wealth than older generations did at their age, particularly boomers, but over the last few years, their wealth has grown the fastest of any age group—largely due to their stock and mutual fund holdings—according to the New York Federal Reserve.
Learn how to take control of your personal finances with Get Your Due, our six-week email bootcamp. Sign up for free.
FAQs
In fact, the average Gen Zer started putting money away for retirement at age 22, according to Northwestern Mutual's 2024 Planning and Progress Study. That's 15 years earlier than the average baby boomer, who said they started saving at 37.
When did the average Gen Z start saving for retirement? ›
The average Gen Zer started putting money away for retirement at age 22—compared with 37 for baby boomers. Retirement looms large in the American psyche, with many millennials and Gen Zers worried that come age 65, they won't be able to afford to enjoy their golden years outside the confines of a nine-to-five.
Are baby boomers not saving enough for retirement? ›
Most peak boomers aren't financially ready for retirement
About 53% of "peak boomers," or the tail end of the generation who will turn 65 between 2024 and 2030, have less than $250,000 in assets, the new study found.
What is the average retirement savings for baby boomers? ›
The lack of savings is greater for certain social groups. The average retirement savings for all male boomers just hitting retirement age is $269,000, but it's $185,000 for women. The divide widens even more for non-white retirees.
What is the expected retirement age for Gen Z? ›
A somewhat more optimistic 14% of Gen Z and 8% of Millennials are aiming to retire between 40 and 50 years old. The most common answer was different for each group. For Gen Z, the largest group (33%) think they will retire between 61 and 70 years old.
How much does the average Gen Z have saved? ›
Generation Z's Savings Account Balances
Although Gen Z is the least likely of any generation to have $100 or less in a savings account, Gen Zers are still likely to have relatively low savings overall — 56% of Gen Z has $1,000 or less in savings.
What is Gen Z minimum year? ›
Gen Z is the generation born in the 15-year span from 1997 to 2012. In 2024, they will turn between 12 and 27 years old. This is the newest generation to gain influence in the world, from joining the workforce to being old enough to vote.
Why aren't baby boomers retiring? ›
“For my own personal mental health and well-being, I like being active and working.” Cavedon is part of a growing number of baby boomers, many of whom are college-educated, who continue to work well past 65 not because they can't afford to retire, but simply because they love their work—and don't want to give it up.
Why don t millennials save for retirement? ›
By some measures, millennials lag on retirement preparedness and net worth relative to older generations such as Gen X and baby boomers. There are many reasons for this, such as a shift away from pensions toward 401(k) plans and high student debt burdens.
How will baby boomers retiring affect the economy? ›
Production and transportation jobs will also be impacted by departing baby boomers, but to a lesser extent, according to the report. The report finds that the most severe labor shortages will be in health-related jobs as more aging baby boomers will require personal care.
If your pay at retirement will be $100,000, your benefits will start at $2,026 each month, which equals $24,315 per year. And if your pay at retirement will be $125,000, your monthly benefits at the outset will be $2,407 for $28,889 yearly.
Can I retire on $8000 a month? ›
Based on the 80% principle, you can expect to need about $96,000 in annual income after you retire, which is $8,000 per month.
How many people have $1,000,000 in savings? ›
There are 21,951,000 people/households with a net worth of or above $1 million in the USA. There are 1,456,000 people/households with a net worth of or above $10 million in the USA. There are 9,630 people/households with a net worth of or above $100 million in the USA.
Why does Gen Z want to retire early? ›
Americans' ideas of what constitutes retirement is also shifting, and Irwin suspects many Gen Zers just want more freedom—to travel, to be present for their children, to pursue passion projects before their sixties or seventies.
What are the retirement goals for Gen Z? ›
Gen Z is aiming to retire much sooner than previous generations, based on the survey. Among respondents, 44% of them plan to retire before they turn 60, with only 14% planning to retire between 65 and 69.
What is Gen Z life expectancy? ›
They're now expected, on average, to live to 79. This average life expectancy is expected to further lengthen as time passes. The members of Generation Z, the oldest of which are now in their 20s, on average are expected to live to 100 and beyond.
Which generation has 10,000 members retiring per day? ›
Currently, baby boomers–those aged 65 and older–make up approximately 17% of America's population. As they age, more of the boomer generation is retiring. Baby Boomers are retiring in droves, and 2024 has so far seen a record number of retirees.
How much does the average millennial have saved for retirement? ›
Average millennial retirement savings: $62,600 saved, 32 years left.
What is the average lifespan of Gen Z? ›
The members of Generation Z, the oldest of which are now in their 20s, on average are expected to live to 100 and beyond. Health technology may or may not eventually lift Gen Zers well past that. They could be the generation that collectively hits the biological ceiling.
How much do Gen Xers save for retirement? ›
Balances for Gen X workers who've been saving for 15 years averaged $543,400, $200 more than Boomers', according to the financial service firm's analysis of its more than 22 million accounts in the first three months of the year.
