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Gen Z retirement savings: Tips for boosting your 401k, Roth IRA, and other savings



The oldest members of Generation Z (those born between 1997 and 2012) are entering the workforce and beginning to grow their incomes and plan for the future. One way they’re doing that is through their retirement savings. 

While this group is still new to the retirement savings game, the thought of retirement is at the forefront for many, with over 30% of Gen Zers citing saving for retirement as a financial priority. 

How much does Gen Z have saved for retirement? 

Generation Z is the youngest working generation, and many Gen Zers have still not reached working age. According to a recent report by the TransAmerica Center for Retirement studies, members of this generation have a median of $33,000 across all of their retirement savings accounts. That’s compared to $162,000 for Baby Boomers, $87,000 for Gen Xers, and $50,000 for Millennials. The estimated median savings among all workers is $67,000. 

While Gen Zers do have a lower balance in their retirement accounts, they’re actually saving a larger percentage of their annual salary compared to older generations. 

On average, Gen Z workers are putting away 20% of their annual salary into their 401(k) or a similar plan. That’s significantly more than the 10% to 15% experts typically recommend. 

Why are Gen Zers behind on saving? 

There are a few underlying factors that have contributed to the smaller savings balances of this generation. 

Gen Zers are still new to the workforce

Less time in the labor force means that Gen Zers haven’t yet reached their high-earning years. To add an additional layer of challenges—many of the older members of this generation were entering the workforce just before or during the start of the pandemic, when unemployment rates were reaching new highs. In fact, the same study showed that 52% of Gen Zers experienced one or more negative impacts on their employment, ranging from layoffs and furloughs to reductions in hours and pay. 

Many Gen Zers have other financial priorities

Compared to older generations, Gen Zers are the least likely to prioritize saving for retirement over competing financial obligations. Gen Zers have, on average, $20,900 in student debt—that’s 13% more than millennials, according to the Fed. And 7.7% of Gen Zers have student loan balances over $50,000.

“Gen Z is especially struggling in terms of their overall financial health over the past couple years, likely impacting their ability to save for retirement,” says Mike Foy, senior director and head of wealth intelligence, at J.D. Power. “Among all U.S. self-directed investors (2021 and 2022 data) only 52% of Gen Zers say they are always able to pay all their bills on time, versus 71% of older investors, and just 43% say their debt is completely manageable versus 60% of older investors. These short-term financial challenges limit Gen Z investors ability to address longer term needs like retirement savings.” 

4 Ways Gen Zers can increase their retirement savings  

For Gen Zers hoping to switch gears and ramp up their retirement savings strategy, there are plenty of ways to set themselves up to thrive in their later years with a little pre-planning now. 

  1. Avoid taking early withdrawals from your retirement account. More than one-third of workers have ever taken a loan, early withdrawal, and/or hardship withdrawal from their 401(k) or similar plan or IRA, including 41% of Gen Zers. Depending on the kind of loan or withdrawal, you could face steep penalties and taxes later on. It could also mean extending your retirement timeline or altering your retirement lifestyle so that you have enough funds to live off of. If you find yourself in a bind, consider alternatives to borrowing from your future self like tapping into your emergency savings
  2. Regularly increase your contribution amount. You should aim to save a set percentage of your income for retirement, no matter how much you’re earning. When it comes to growing your retirement savings, time is the name of the game, and the earlier you start, the better off you’ll be in the future. “Waiting to invest for retirement can present a risk of having less compounding time for the money to grow. This applies to any form of investment. The longer you wait to invest in your career, the less time you have for higher earnings,” says Brian Kuhn, certified financial planner, CLU®, CLTC®, and a financial advisor at Wealth Enhancement Group. As your income increases over time, you’ll want the amount that you’re saving for retirement to align with your higher income. Make it a priority to increase your monthly retirement savings contribution after every pay raise. You should also try to direct any windfalls or bonuses to your retirement account as well. 
  3. Open a second retirement account. If you’re already saving for retirement through an employer-sponsored account, consider opening a separate IRA. The annual IRA contribution limit is $6,000 in 2022 ($7,000 if age 50 or older) and $6,500 in 2023 ($7,500 if age 50 and older). What’s more—you could still benefit from a contribution match without an employer. 
  4. Take advantage of your employer’s match. If your employer does offer a match, don’t leave any free money on the table. “Generation Z members, regardless of their financial priorities and resources, can boost their retirement savings by striving to save at least what their employer is willing to match,” says Kuhn. “That’s a good starting point.”

The takeaway 

Gen Zers are still at the start of their retirement saving journey, but the key to building a comfortable savings to live off of in your later years is to start early. Maximize your savings by taking advantage of employer contributions, choosing a lucrative savings vehicle, and building an emergency fund so that your retirement savings aren’t impacted by any unforeseen emergencies. 



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