Why Gen Z May Retire More Easily Than Boomers — and How You Can, Too
Written by
Kristopher Kane
Edited by
Molly Sullivan
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Gen Z is widely seen as a generation experiencing what’s been called “delayed adulthood.” They’re more likely to still live at home with their parents or, in many cases, have moved back after an initial failed foray into independent life. They’re delaying marriage, putting off having kids and making many other sacrifices just to cope with high costs of living and a housing market with abysmally low supply and pricing that, for most of them, has soared far out of reach.
But there’s one important financial milestone that this youngest generation of adult Americans is quietly working toward, making more progress than the generations before them. And it might be the most significant financial landmark in adult life: retirement.
Keep reading for a look at how Gen Z is already preparing for their golden years, and how you may benefit from adopting some of the same strategies, no matter your age.
A Look at the Numbers
Gen Z is, without making a big deal out of it, inching ahead in retirement saving, according to Vanguard, which analyzed data made available from a Federal Reserve Survey of Consumer Finances. As it stands today, those born between the mid 1990s and the early 2010s are the most prepared for retirement of all current adult demographic groups. Forty-seven percent of all workers between the ages of 24 and 28 have somehow managed to save enough money to keep them on track for a comfortable retirement, no matter how eventual it may seem.
Contrast that number with the lower 42% of all adults who are likely to have sufficient savings by retirement age to maintain their standard of living. And as you look at progressively older age groups, that number drops even more. A full 59% of Gen Xers are staring down the barrel of retirement age without adequate preparation, and a shocking 60% of all boomers not yet retired may still be working because they don’t have enough savings on which to comfortably retire.
So, how is Gen Z pulling this off?
The Secret? Don’t Think About It
Time is still on the side of this youngest group of working Americans, but that’s not the only hack this group has at its disposal — after all, their older peers were young once, too. For zoomers, the “one simple trick” is the way retirement savings systems have evolved on a corporate level. Gen Z isn’t better with money, per se, but they do have the benefit of automatic retirement plans that many enroll in without even being aware of it.
The boomer generation largely relied on pensions, many of which dwindled and eventually disappeared, and Gen Xers inherited a lot of this faulty system only to have to make mid-career changes into better options like 401(k) plans that had to be carefully managed and set up manually. Gen Z workers are typically automatically enrolled in 401(k) and 403(b) retirement accounts, to which their employers make matching contributions. And the best part of the arrangement is that they don’t have to even think about it.
These automatic retirement savings options generally kick in on their first day of work with a preset savings rate and auto-escalation that keeps pace with wage increases, upping the amount that’s contributed each year, again without any need for manual intervention. The result is a hell of a tailwind that older generations simply didn’t have.
It’s Not Too Late
If you’re on the dark side of 25, all hope isn’t lost. Many Gen Z workers still have student loan debt hanging over them, which isn’t as significant a concern for older workers. Despite this, they’re still managing to squirrel away enough savings to give them a milder winter forecast. The takeaway is to be flexible in your thinking when it comes to debt and savings. Don’t ignore low-interest debt, but don’t stop saving for retirement in favor of knocking that debt down faster.
You may not have 40 years to prepare, but you can still take advantage of some of the same tools. Start where you are with the automated tools your employer may provide and start looking at your retirement contribution as something like a non-negotiable tax you’re paying to future you.
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