Saving for the Future: Why Most Young Adults Put Nothing Toward Retirement
Written by
Vance Cariaga
Edited by
Susan Kim
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When you’re young, retirement seems so far in the future that it might as well be another millennium. It takes a certain degree of discipline and foresight to put your money toward retirement savings when there are so many other ways to spend it. This partly explains why most young adults today are behind on retirement savings, but there are other reasons as well.
A 2023 survey from GOBankingRates found that 30% of adults ages 25 to 34 had no money at all saved for retirement, while another 37% had less than $50,000 saved up. Those figures are well below what most financial experts recommend.
Retirement Savings Must Be Substantial, and Sacrifices Often Need To Be Made
Fidelity recommends saving two times your salary by age 35. The median weekly earnings for full-time workers ages 25 to 34 were $1,056 a week during the 2024 first quarter, according to the U.S. Bureau of Labor Statistics. That translates into $54,912 a year. If you earn the median, then you should have nearly $110,000 saved up by age 35.
One reason younger adults are not saving enough for retirement is because many are focused on “soft saving,” CNBC reported late last year, citing a study from Intuit. “Soft saving” refers to the “soft life” favored by many younger folks. This largely revolves around experiences that promote personal growth, emotional well-being and living in the moment rather than thinking about finances decades down the road.
Separate research from Edward Jones found that when younger adults do save money, it’s usually for something besides retirement, Investment News reported. According to that research, saving to start a family is the “GenNext” client priority reported by 30% of advisors who took part in the survey. That was followed by being responsible with everyday expenses (28%) and investing (23%).
Meanwhile, many young adults are strapped with student loan and credit card debt, which prevents them from putting money toward retirement. Here are some other reasons Gen Z and other younger adults have put little or nothing toward retirement:
- Too many monthly expenses (78% of survey respondents): Research from Assurance IQ found that 44% of Gen Zers said they had skipped a meal just to pay their monthly bills.
- Financial hardship (77%): A 2023 study from EY found that more than half of Gen Zers said they are “extremely worried about not having enough money” to pay bills or save for retirement. Many face financial hardship due to a combination of economic uncertainty, corporate downsizing, inflation and other factors.
- Caring for/financially supporting family (75%): A survey last year by EduBirdie found that more than one-fifth (22%) of Gen Z college students work to support their parents.
- Time out of the workplace (73%): A Visier survey of 1,000 U.S. employees found that work aspirations ranked fourth in priority for Gen Z respondents. Two-thirds prioritized spending time with family and friends over work. A similar percentage (64%) prioritized health over work, while 58% prioritized traveling over work. Taking a break from work might be good for the mind and soul, but it can also put you behind on retirement savings.
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