Gen Z Is Saving More for Retirement, But Are Their Financial Goals Realistic?

If you want to take a glass-half-full view of the savings habits of younger Americans, a new report from BlackRock offers this: Gen Z workers on average have a higher savings rate than all other generational cohorts.

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The glass-half-empty version is this: Gen Z’s savings rate isn’t that much higher than others’ — even though Gen Zers have some pretty lofty financial goals.

The “2022 BlackRock Read on Retirement” report found that Gen Z workers — those between the ages of 18 and 25 — are saving an average of 14% of each paycheck for retirement. That’s slightly higher than the 12% of income being put toward savings by millennials, Gen Xers and baby boomers.

The report is based on a March/April 2022 survey of 305 plan sponsors, 1,308 workplace savers, 1,300 independent savers and 300 retirees. Roughly seven in 10 (69%) of Gen Z workers said they are on track for retirement. Nearly three-quarters (72%) said they would save less for retirement if faced with other big-ticket goals.

Retire Comfortably

One of the highlights of the survey is that on average, Gen Z respondents have an expected retirement age of 63.6 years — nearly two years younger than the boomer average of 65.9 years.

Gen Z respondents also figure they can get by on a lot less money in retirement than other generations. More than one-third said they would need less than $250,000 to retire comfortably. In contrast, nearly half of boomers said they would need $1 million to $3 million.

The question is whether Gen Z savers have a realistic outlook on what they will need to live on in retirement. As previously reported by GOBankingRates, Synchrony Bank recommends that Americans in their 30s should have one to two times their annual salary saved for retirement. Those in their 40s should have three to four times their annual salary; those in their 50s should have six to seven times their annual salary; and those in their 60s should have eight to 10 times their annual salary.

Median earnings in the United States are $1,041 a week, according to the latest data from the U.S. Bureau of Labor Statistics, released on July 19. That translates into about $54,000 a year.

Based on Synchrony’s formula, people in their 60s who earn the median salary should have anywhere from $432,000 to $540,000 saved up for retirement — roughly twice as much as many Gen Zers think they’ll need. And Synchrony’s savings formula is much more conservative than other formulas.

Retire Comfortably

One thing most everyone can agree on is that saving for retirement has become much more challenging because of the impact of COVID-19 and skyrocketing inflation. In the BlackRock survey, the vast majority of respondents said the pandemic and current inflation have affected their attitude towards retirement saving, including 90% of Gen Z, 82% of millennials, 79% of Gen X and 75% of boomers.

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“As we experience new market headwinds that could impact the retirement security of millions of Americans, it’s a critical time for our industry to ensure people are planning for retirement with confidence and clarity,” Anne Ackerly, BlackRock’s head of retirement, said in a statement. 

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

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