How Does Gen Z’s Wealth Now Compare To Baby Boomers in Their 20s?
Written by
Laura Beck
Edited by
Susan Kim
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The economic landscape looks very different for today’s young adults of Generation Z compared to the baby boomer generation when they were in their 20s. With stagnant wages, soaring costs of living and record levels of student loan debt, Gen Z faces more financial challenges to build wealth at a young age.
While the baby boomers benefited from a thriving post-war economy with ample opportunities for stable careers and affordable housing, Gen Z faces a more difficult path today. Key factors like massive student loan debt, inflated housing prices and stagnant wage growth have put this generation behind in terms of building wealth compared to where baby boomers were at the same age.
Also find out why Gen Zers are most confident about their retirement.
Wealth and Income
Today’s young adults face high costs for housing, healthcare and education while often struggling in a job market still shaking off the effects of the Great Recession and COVID-19 pandemic. Many Gen Zers stepped into careers around 2020 when unemployment levels were at record highs. Those managing to find work are earning wages that have largely stagnated for decades when accounting for inflation.
A third of Gen Z and 37% of millennials want to retire before they’re 60 — but they aren’t saving enough to do it, according to a study from 401(k) provider Human Interest. And half of both Gen Z and millennials admit they haven’t yet saved $50,000 for retirement.
Today’s young people are already financially behind based on retirement savings goals. While Gen Zers certainly have lower incomes currently in their 20s, the inability of many to save anything substantial indicates they are struggling to keep up with basic expenses today. This prevents them from accumulating wealth for the future at the rate many boomers did.
Homeownership Rates
One of the biggest wealth indicators is homeownership, and here we see a major divergence between Gen Z and baby boomers in their 20s.
“There’s a large difference between how Gen Z’s wealth now compares to baby boomers,” says Sebastian Jania, director of Ontario Property Buyers. “One of the biggest reasons for this is today’s cost of living and today’s cost of assets. When it comes to rent, rent makes up a significantly larger portion of one’s income for Gen Z compared to how much rent made up the baby boomers income. Further, even looking at it from the perspective of buying a house, baby boomers and many markets were able to buy homes for tens of thousands of dollars, sometimes even less, compared to Gen Z today having to spend multiple six figures on a home.”
These inflated housing costs make it extremely difficult for Gen Z to break into home ownership at a young age like baby boomers did.
Retirement Planning
With lower incomes and less wealth, Gen Z has a bleaker outlook on retirement than boomers did at the same age.
A third of the Gen Z participants admit they’re ‘winging it’ on their retirement plan, according to the same Human Interest study.
This paints a concerning picture that a large share of an entire generation is entering the workforce without a solid strategy to build wealth for retirement. In contrast, baby boomers report feeling more optimistic about retirement.
The same study reported 48% of boomers said they are somewhat or very confident that they will have a comfortable retirement.
While boomers certainly benefited from a strong job market and economy early in their careers, this confidence gap also likely reflects Gen Z’s awareness that they are already behind in retirement savings compared to previous generations.
Here is a new section comparing the retirement savings and outlook of Gen Z and baby boomers:
A More Nuanced View
While Gen Z is frequently portrayed as lagging behind baby boomers, a closer look reveals the two generations may not be as different as they seem.
A third of Gen Z and 37% of Millennials want to retire before they’re 60 — but they aren’t saving enough to do it, as reported by the study.
However, baby boomers face a similar gap between aspirations and preparation. Human Interest’s study showed that 48% of boomers said they are somewhat or very confident that they will have a comfortable retirement. But at the same time only 21% of Boomers have $250,000 or more saved for retirement.
So while Gen Z certainly faces very real hurdles like stagnant wages and student loan debt, boomers also appear to have retirement goals exceeding their actual retirement savings. The two groups may be more alike than different in this regard.
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