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The average Gen Zer saving for retirement has $35,000: Here’s how that stacks up against other generations

“It takes decades of regular contributions" to build a retirement fund.

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It makes sense that Gen Z, the youngest working generation, has saved the least amount of money for their financial futures so far. They simply haven't had as much time as their older peers.

Data from wealth management platform Personal Capital shows that the average Gen Zer has $35,197 in their retirement accounts, like 401(k)s and IRAs. Researchers analyzed the retirement savings of over 2 million of the website's users to find the average balance for each generation.

By comparison, millennials (born 1981-1996) have $166,430 saved, Gen Xers (1965-1980) have $568,750, and Baby Boomers (1946-1964) have $1,029,840.

Personal Capital's findings correlate with data from Fidelity based on its account-holders, which showed that as of the fourth quarter of 2020, 20- to 29-year-olds had an average of $15,000 saved in a 401(k). Those ages 30 to 39 had $50,800, 40- to 49-year-olds had $120,800, and 50- to 59-year-olds had about $203,600.

Gen Z employment has been hit hard by Covid

People born in 1997 or after count as members of Generation Z, according to the Pew Research Center. Though they're often conflated with millennials, born between 1981 and 1996, they're a distinct group.

The oldest zoomers, who are currently around 25, have emerged into an economy where student debt is on the rise, housing costs are sky-high, and the Covid pandemic is taking a toll on Americans' finances across the board.

"Every generation has obstacles to saving for retirement," says Greg McBride, chief financial analyst at Bankrate. But saving over the last year has been even harder for some Gen Zers.

People ages 16 to 24 are the most likely to be unemployed or underemployed because of Covid, according to the Economic Policy Institute. That's likely because they're concentrated in industries like hospitality and retail, which were hit hard by the pandemic.

The hospitality sector, which employed about a quarter of zoomers before the pandemic, saw a 41% employment decline from February-May 2020, the EPI reports. Retail, which employed 18.9% of Gen Z workers in 2019, saw employment decline 13% in the first half of 2020.

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Young people overall have had to delay financial goals during the pandemic. In a recent Bankrate survey, 59% of respondents age 18 to 34 said they put off a major financial milestone, like a wedding, home purchase, or having a child, due to Covid-related concerns.

By comparison, only 40% of respondents ages 35 to 54 and 23% of respondents ages 55 and older put off a financial milestone.

Gen Z has time on its side — and may out-earn millennials in under a decade

The outlook isn't all bad for young savers. Federal student loans have been in forbearance since March 2020, saving many young borrowers thousands of dollars in interest. Expensive commutes for white-collar workers have largely vanished, and some Gen Zers have moved back home to work remotely, cutting their housing costs significantly.

Zoomers are also headed into their prime earning years. Bank of America says that their income is expected to rise fivefold by 2030, hitting $33 trillion and accounting for more than a quarter of global income. Gen Z should surpass what millennials earn by 2031. 

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If Gen Zers can save money, start investing early, and stay the course, their wealth will grow, experts say.

"Like the old expression 'Rome wasn't built in a day,' the same is true for retirement savings," McBride says. "It takes decades of regular contributions and compounded investment returns, so naturally those that have been saving longer will have accumulated more than younger generations that are just starting out."

How, and how much, to save for retirement

Retirement can feel a long way away for zoomers, and it can be tempting to put off saving for your old age until after you've reached other financial goals. But that's a mistake, McBride says. "Don't wait to start saving until you've paid off debt, or bought a house, or the kids start school. Prioritizing retirement savings early on is important to maintaining that habit in the years ahead."

Regardless of how much they can save, Gen Zers should take advantage of any retirement savings plans offered by their workplaces. Aim to contribute about 10% to 15% of your pay each month, and take advantage of whatever contributions your employer offers. Even if you can't afford to save that much, the earlier you start, the more the money you can contribute will grow, thanks to compound interest.

"Make sure you get the full employer match," says Haley Tolitsky, CFP, of Cooke Capital. That's true "even if you are working to pay down outstanding debt, such as student loans," or eyeing a goal like homeownership.

Plan to save more over time, too. As you grow your career and earn more, "increase your savings by at least 1% each year, and when you receive a raise," Tolitsky says.

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