Retirement Savings: Gen Z Is Getting Started as Young as 19 — How It Compares to Millennials, Gen X and Boomers

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Of the four generational cohorts currently in the working world, Gen Z is probably the least likely to depend on Social Security to fund their retirement. Social Security’s cash reserves are expected to be fully depleted around 2034, when even the oldest Gen Z workers still won’t have turned 40 years old.

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This goes a long way toward explaining why many Gen Zers are starting to save for retirement as teenagers — much sooner than earlier generations, according to a new report from the Transamerica Center for Retirement Studies titled titled “Emerging From the COVID-19 Pandemic: Four Generations Prepare for Retirement.”

The report, released earlier this week, found that 67% of Gen Z workers are saving for retirement through employer-sponsored 401(k)s or similar retirement plans and/or outside the workplace. The median age at which Gen Zers are starting to save — 19 years old — is much younger than the median starting age for millennials (25), Gen Xers (30) and boomers (35).

“Generation Z workers are young and have decades to grow their retirement savings,” Catherine Collinson, CEO and president of Transamerica Institute and TCRS, said in a press release. “In addition, they will change employers many times throughout their careers, and likely spend time in self-employment, so they must be diligent in managing their retirement savings, especially during transitions.”

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The TCRS study was based on a survey of nearly 5,500 workers conducted by The Harris Poll. The survey included 398 Gen Z workers, 2,326 millennials, 1,631 Gen X workers, 1,100 boomers and 38 workers born before 1946. 

More than half of Gen Z respondents (52%) expect their primary source of retirement income to come from either self-funded savings accounts such as 401(k)s, 403(b)s, and IRAs (40% of respondents) or other savings and investments (12%). Nearly three quarters are concerned that Social Security will not be there for them when they are ready to retire.  

A separate survey conducted earlier this year by BlackRock found that on average, Gen Zers have an expected retirement age of 63.6 years — nearly two years younger than the boomer average of 65.9 years. More than one-third of Gen Z respondents in that survey 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 TCRS survey found similar differences between generations. For example, while the vast majority of Gen Z respondents doubt that they will be able to depend on Social Security in retirement, 40% of boomers expect Social Security to be their primary source of retirement income.

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Gen X workers have the least faith in Social Security, with 78% saying they are concerned that Social Security will not be there for them when they are ready to retire. Among millennials, 73% said they are concerned that Social Security will not be there when they are ready to retire — the same percentage as Gen Z respondents.

One way to address the problem is for policymakers to develop strategies to strengthen the retirement system, Collinson said. But the private sector will likely play the biggest role.

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“The private sector must continue innovating products, services, and solutions that can help people live, work, save, and retire better. We’re all in this together,” Collinson said.

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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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