The youngest generation is getting out in front of retirement planning.
Workers between18 and 25 already had $33,000 socked away in their retirement accounts, according to a recent survey from TransAmerica Center for Retirement Studies about intergenerational retirement preparation.
“Gen Z is extraordinary. It’s extraordinary that 67% are saving — of those who are offered a plan,” TransAmerica President Catherine Collinson told Yahoo Finance Live (video above). “And that’s something that they’re doing extraordinarily well. As you can see in the retirement accounts, they’ve built up those savings.”
Baby boomers had $162,000 in retirement savings, the survey found, while Gen X had $87,000 and millennials had $50,000.
“And as we look across generations and as a researcher, it’s so exciting for me to see that younger generations, millennials and Gen Z, are starting at a much earlier age than their older counterparts,” she added. “That is something they are doing absolutely right.”
Where Gen Z specifically is lagging is saving up for unexpected events, according to Collinson.
“Their emergency savings have only saved $2,000, which is telling us they may be doing a better job at retirement than building up the rainy-day funds or emergency savings that they may need to tap into if a financial emergency pops up,” she said.
Overall, the survey found that workers of all ages aren’t sure if they saved enough for a comfortable retirement.
“An area where all generations can improve is in terms of planning, setting retirement savings goals, and setting forth a written plan that can help them achieve those goals. So they’re doing great on saving, but not so great on the planning side. The big concern is if they’re saving enough,” added Collinson.
Collinson said that the survey reflected the high unemployment rate during the pandemic.
The survey found more than 1 in 4 Americans were out of work at some point, while 1 in 3 cited they experienced negative employment circumstances, such as reduced work hours (21%), reduced salaries (13%), layoffs (12%), and furloughs (12%). Additionally, more than 1 in 5 workers said their financial situation worsened due to the pandemic.
Because of that economic uncertainty, American workers in the survey were unsure of whether they were ready for retirement.
“So many Americans are not confident, or at least not yet confident, that they are preparing for a financially secure retirement. And we’ve been through a lot during the pandemic. The workforce has experienced so many disruptions,” said Collinson.
Still, Collinson noted that workers were still focused on preparing for their futures. The survey found the top three financial priorities included paying of debt (59%), saving for retirement (56%), and building emergency savings (40%).
“What’s extraordinary is they haven’t lost sight of their future retirement, which is really extraordinary given the more time-sensitive issues that they were dealing with.” said Collinson.
Ella Vincent is the personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago
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Source: https://finance.yahoo.com/news/gen-z-is-doing-extraordinarily-well-saving-for-retirement-study-finds-131437228.html