Retirement Savings: Here’s How Much Gen Z Should Be Saving Each Year

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Whether you want to get a head start on your retirement savings, or you’re hoping to accomplish some other life goals, it’s a good idea to start saving early. After all, the sooner you get started, the better prepared you’ll be for when the time comes. Plus, by setting aside a portion of your income each month or year, you’ll be able to weather any surprises or financial pitfalls along the way.

With that in mind, here’s how much Gen Zers should be saving for retirement — and other major financial goals — each year.

How Much Gen Z Should Save Each Year

“Ideally, you can save 20% of your income,” said Todd Stearn, founder and CEO of “But your savings rate really depends on your goals.”

As you start setting aside some money each month or year, think about your motivations. For example, do you want to retire by a certain age? Do you have other major financial goals you want to accomplish along the way — like buying a house or having your dream wedding?

Are You Retirement Ready?

“An individual must first determine what they want out of life,” said Patrick Yono, founder of Sure Life Financial in Novi, Michigan. “Once one determines their life goals, they can start working towards those goals through saving and investing strategies.”

Consider your ideal lifestyle. If you want to live a life of luxury well into your retirement years, you’ll need more money to cover your expenses. On the other hand, if you’re interested in a simpler lifestyle, chances are you won’t need as much money to maintain it.

“A good rule of thumb is to save a minimum of 10-15% of your annual income, while avoiding carrying high credit card balances (not higher than you could easily pay off in a few months),” Yono added.

Say, for example, you earn $40,000 a year. Here’s how much you should be saving each year:

  • 10% = $4,000 (or $333 a month)
  • 15% = $6,000 (or $500 a month)
  • 20% = $8,000 (or $666 a month)

Ultimately, there’s no one-size-fits-all answer to how much you should save each year. “The more important thing for our Gen Zers to do is to focus on their goals and define what level of income and savings is needed to achieve those goals, then come up with solutions to make those goals a reality,” said Yono.

Are You Retirement Ready?

Effective Money-Saving Strategies For Gen Z

When it comes to saving money, it’s not always about setting aside a specific dollar — or percentage — amount of your income. Here are some key strategies to help you save up for retirement and other long-term financial goals.

Save Up Everything You Don’t Need

Christopher Manske, founder and president of Manske Wealth Management, said, “It’s much more valuable to save everything above a certain lifestyle amount. Keep that lifestyle fixed so that your savings may increase. And what lifestyle is appropriate? You could begin with 70% of your gross salary and strive to keep it at that dollar amount for at least five years.”

As you get used to living within your means and saving what you don’t need, it’ll become easier to keep doing it. You can always make adjustments based on your income and needs.

Focus On Building Your Savings Over Time

It’s okay if you can’t save as much as you want in the early stages of your career. What matters is creating an upward trajectory in your savings.

“As a young adult, the absolute dollar amount you have saved is less impactful than the financial habits you are forming,” said Curtis Congdon, president at XML Financial Group. “The best habit is to systematically increase the percentage of your income that you save. Whatever your current savings rate, increase that by 1% per quarter and you may be surprised how many times you can do that before hitting your real pain point. This commitment to saving a greater percentage of your income will produce a lifetime of wealth accumulation which creates far more opportunities for your future.”

Are You Retirement Ready?

Cut Down On Spending Elsewhere in Life

The cost of living can cut into your income and savings goals, which is why it might be prudent to move somewhere less expensive or get a roommate.

“The quickest path to saving more money is to lower your housing costs,” said Stearn. “For some people, this can mean living with roommates or living with your parents for a year or two while you save up money. Another option is to live in a town with a low cost of living if you’re able to get a remote job or you can commute further to work.”

Think Beyond Salary

Your salary is important, but it’s not the only thing to consider when choosing your future job or saving money. “When considering your next career move, think beyond just salary to factor in other short and long-term benefits,” Tory Reiss, CEO and co-founder of Equi. “For example, taking a salary cut to join a high-growth startup might pay financial dividends in the long term. On the flip side, a high starting salary without room for growth might leave you feeling stuck down the road.”

Are You Retirement Ready?

Pay Down Debt

A lot of young people start their adult lives with student debt. Not only can this delay savings, but it can also keep you from trying new things that could pay off in the long run.

“Like many people, I graduated college with a considerable amount of debt,” said Reiss. “Debt can prevent you from taking on risk, since it requires you to spend time and resources repaying it. By getting out of debt quickly, you’ll free up more time to take on risks, try new things, or even explore different career paths.”

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