Gen Z's Smart Money Moves: Outsaving Older Generations

Gen Z, often labeled as financially struggling, is actually leading the pack in retirement savings. A recent study reveals that nearly half of Gen Z workers are on track for retirement, outpacing baby boomers, Gen X, and millennials. This is quite a surprise, given the common belief that younger generations are financially unprepared. The secret to Gen Z's success? It's not about side gigs or viral social media deals. Instead, it's the power of defined contribution (DC) retirement plans. These plans, which include contributions from both workers and employers, offer significant long-term benefits. The study shows that workers with access to DC plans are twice as likely to meet their retirement goals. The data highlights a stark contrast in wealth accumulation. In 2022, the median worker with a DC plan had $83, 000 in non-housing net wealth, which is 1. 3 times their income. In contrast, those without a DC plan had only $13, 000, just 0. 4 times their income. This difference underscores the importance of early and consistent savings. Despite carrying more debt than previous generations, Gen Z is proving to be financially savvy. Their ability to leverage retirement plans effectively is setting them up for a more secure future. This trend is a positive sign, especially considering the financial challenges faced by older generations. The study also notes that universal access to DC plans could significantly boost retirement readiness. For Gen Z, this could double the current share of workers on track for retirement. This finding emphasizes the need for broader access to such financial tools.