The average Gen Zer started saving for retirement 15 years earlier than baby boomers. It still may not be enough

In fact, the average Gen Zer started putting money away for retirement at age 22, according to Northwestern Mutual’s 2024 Planning and Progress Study. That’s 15 years earlier than the average baby boomer, who said they started saving at 37. For the average Gen Xer and millennial, those ages were 31 and 27, respectively, per the study, which surveyed over 4,500 U.S. adults in January on a variety of money and financial decision-making behaviors.

The survey, published since 2012, also found that thanks to inflation, Americans believe they’ll need increasingly more money to live comfortably in retirement. This year, respondents said they’d need $1.46 million, on average, to retire comfortably, compared with $1.27 million last year. In 2020, that figure was $950,000.

Other recent data has pointed to younger generations getting an earlier jump on saving for retirement. Last year, a report by Vanguard found workers age 18 to 24 in 2021 were 32% more likely to invest in their workplace retirement plan than their older colleagues were at their age, thanks to the increased prevalence of automatic enrollment and easier access to information on plans and the benefits of contributing to them earlier. A recent Fidelity report found some Gen Zers starting to plan at age 20.

Kyle Wick, private wealth advisor at 22 One Advisors, a Northwestern Mutual Private Client Group, says another component of Gen Zers saving earlier is that retirement itself has profoundly changed over the past couple of generations. Retirement didn’t really exist as Americans think about it today for boomers’ parents or grandparents; those earlier generations benefitted from pensions in addition to Social Security and private savings.

‘They know they have to get started’

Gen X is the first generation that’s primarily had to rely on private savings when it comes to retirement, with each subsequent generation getting a bit more of a head start.

“I don’t think older generations were as worried about tomorrow as people are today,” Wick tells Fortune, noting that people simply weren’t living as long, and if they were, the expectation was to keep working. “Young people now are envisioning, ‘I want to retire at 60 and live until 100.’ They’re smart—they know they have to get started if they really want that.”

Still, financial experts say it may not be enough—especially if the sum required to retire comfortably keeps creeping up. While the average member of Gen Z said they’ll need $1.63 million to retire comfortably, according to Northwestern Mutual, some advisors say the real number eventually could exceed $2 million. Even more striking: Northwestern Mutual’s survey finds 32% of respondents of all ages haven’t started saving at all.

But Gen Z seems to have learned some lessons from ongoing coverage of America’s retirement crisis. Baby boomers and Gen X are wildly underprepared for retirement on the whole, according to many surveys and studies. The typical Gen X household has $40,000 in private retirement savings, while the median retirement account balance for those 65 to 74 is around $200,000.

Baby boomers and Gen Xers, on average, said they’re expecting to work longer than younger generations, with boomers saying they’ll likely retire around age 72 and Gen Xers saying 67. Meanwhile, millennials expect to retire around 64 while the average Gen Zer says, perhaps a tad too optimistically, 60.

The good news is, as the Vanguard report shows, employees of every generation are saving a lot more than they used to. Savers were deferring an average of 7.7% of their paychecks into their 401(k)s in 2021, compared with 7.2% in 2006.

Gen Z faces ‘unprecedented’ headwinds

The survey results are even more impressive when taking into consideration the economic headwinds facing Gen Zers. From out-of-control housing prices to the ongoing issue of student loan debt to ever-growing childcare costs, young workers are facing financial hurdles older generations either didn’t have to overcome or did but to a lesser degree.

“Generation Z are starting their careers in a very difficult financial time,” Clark D. Randall, a Texas-based certified financial planner and director of financial planning at Creekmur Wealth Advisors, previously told Fortune. “They’re facing unprecedented inflation and a housing market with tight supply and high interest rates. They hear about the problems with the Social Security trust fund.”

Despite those challenges, younger Americans are still making significant progress. Members of the millennial and Gen Z generations may hold less wealth than older generations did at their age, particularly boomers, but over the last few years, their wealth has grown the fastest of any age group—largely due to their stock and mutual fund holdings—according to the New York Federal Reserve.

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