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Key Takeaways
- Gen Z workers have an average 401(k) balance of $13,500, with total contributions reaching 10.9% when employer matches are included.
- Gen Z began working with financial advisors at age 23 on average—earlier than any generation before them.
- Even with the smallest balances, 63% of Gen Z workers feel ready for retirement—the highest confidence rate of any generation.
How Gen Z’s 401(k) Savings Compare With Other Generations
It’s perhaps a timeless pattern that older generations depict the young as reckless with money, less eager to work, and maybe even a worrisome sign of the future. Any such stereotypes need a major update with Gen Z (ages 13 to 28 in 2025), who are saving for retirement earlier than previous generations and seeking advice from financial planners far sooner.
According to Northwestern Mutual, Gen Zers who have financial advisors start working with them at an average age of 23, more than two decades earlier than baby boomers.
So though Gen Z’s average 401(k) balance is the lowest of any generation, that’s more a function of age than generational differences. Many Gen Zers who are saving for retirement are just a few years into full-time work.
Starting Earlier Gives Gen Z a Powerful Retirement Advantage
Gen Z’s $13,500 401(k) average covers a wide spectrum, from college students to those already ascending the corporate ladder. Vanguard’s data shows workers under 25 averaging just $6,899 in their 401(k) accounts, with a median of $1,948. Data from the Transamerica Center for Retirement Studies shows that those in Gen Z who already have a middle-class income have median retirement savings of $43,000.
If your balance is close to these figures, don’t be alarmed: that’s expected since you’re likely still in school, working part-time, or in the first years of your first full-time job. You can still start building a foundation of retirement savings earlier than previous generations.
How Gen Z Can Make the Most of Its Head Start
Time rewards those who start early. A 20-year-old investing $300 per month at a 7% return would accumulate $1.03 million by age 65. Wait until 30, and the required monthly contribution jumps to about $620. Start at 40, and it’s about $1,360. The longer you wait, the steeper the climb.
Many in Gen Z, despite the turbulent economy of recent years, are saving accordingly.
If you’re in Gen Z and you don’t even have a 401(k) yet, that’s okay. If your employer doesn’t offer one, you can open an IRA and automate a monthly contribution, even if you can only afford a modest amount each month. The habit matters more than the monthly figure right now.
If you have access to a workplace plan, try to get the maximum from your employer match before anything else—that’s free money you’d be leaving on the table. If you’re carrying high-interest debt, it’s reasonable to work on paying that down while contributing at least enough to capture free money from your employer. The goal isn’t perfection—it’s building early momentum as you start a lifetime of retirement savings.
Important
The typical Gen Zer who works with a financial planner started doing so at an average age of 23, according to Northwestern Mutual.
Read the original article on Investopedia
