Gen Z saving 14% of income for retirement, more than other generations

Young adults may be hearing the retirement savings drum loud and clear, a new study suggests.

Generation Z workers, defined in the study as those ages 18 to 25, are saving, on average, 14% of their golden years’ income, according to new research from BlackRock. That compares to 12% of their older counterparts: millennials (ages 26-42), Gen Xers (ages 43-55), and baby boomers (ages 56-75).

At the same time, the overall share of Americans who believe they are on track with their retirement savings has dropped from 68% to 63% in 2021, research shows. Confidence among plan sponsors is also down, with 58% saying their employees are on the right track, compared to 63% last year.

More on Personal Finance:
Social Media ‘FOMO’ Drives Bad Spending Habits
This retirement strategy can help retirees stretch savings
Before you ‘chase dividends’, here’s what you need to know

Also Read :  Monster tax cuts to stay despite budget pain, Treasurer says

“Confidence in retirement is down for the first time in a few years,” said Anne Ackerley, head of BlackRock’s retirement group.

“Even in the pandemic it remained [the same]but we’ve seen it decline in every generation due to inflation and market volatility,” Ackerley said.

Broken down by generation, Gen Z members are most confident in their savings (69%), followed by boomers at 65%, and both millennials and Gen Xers at 60%.

Sticking to a Plan Can Help You Reach Retirement Goals

Research for BlackRock’s “Read on Retirement” report includes input from 305 plan sponsors, 1,308 workplace savers, 1,300 independent savers and 300 retirees.

Experts generally recommend that workers save at least 10% to 15% of income in a tax-advantaged retirement account. That would include a 401(k) or similar work plan, or individual retirement account.

Also Read :  California’s tech Mecca saw largest drop in median income during pandemic as the wealthy fled cities

There are two things that could play into Gen Z’s higher savings rate, Ackerley said. For starters, they were more likely to be raised in households where no one had a traditional pension.

[T]The message is out there that you’re on your own, that you need to start saving early.

Anne Ackerley

Head of BlackRock Retirement Group

“I think it’s a reflection that we’ve switched to defined contribution plans from defined benefit plans,” Ackerley said.

“Generation Z was raised in households where there was a need to save for retirement … and the message is out there that you’re on your own, that you need to start saving early,” he said.

Another possible reason, Ackerley said, is that they may have seen family members struggle due to the Great Recession of 2007-2009, when job losses, foreclosures and investment losses were widespread, and want to avoid challenges. similar financial statements in the future.

Also Read :  Insights on the Personal Finance Software Global Market to

Gen Zers also expect to retire at an average age of 63.6, the report shows.

That compares with working boomers, who peg that age at 65.9. Separately, a Gallup poll conducted last year showed that among retirees, the average age they left the workforce was 62, while non-retirees said they plan to retire at 64.

It’s worth noting that if you use Social Security before your full retirement age (which is up to age 67, depending on when you were born), you’ll end up with permanently reduced benefits. If you wait past that full retirement mark, your benefits will continue to increase until you reach age 70.


Leave a Reply

Your email address will not be published.