Born into crisis, gen Z is saving for retirement like no other generation

The Guardian

06-07-2025

Research published at the end of last year by the Investment Company Institute with help from the University of Chicago found that gen Z – those born between 1997 and 2012 – are 'outpacing' earlier generations in contributing to retirement, having more than three times more assets in their 401(k) retirement savings accounts than gen X households had at the same time in 1989, adjusted for inflation.
This mirrors a 2023 study from the TransAmerica Center for Retirement Studies, which found that gen Z is doing a 'remarkable job' saving for retirement with many putting away as much as 20% of their income towards the future.
It's no wonder why.
The oldest of this generation probably have early memories of the 2009-2010 financial crisis. They have lived through a global pandemic. Their social media accounts are frightening them with stories of political upheavals, global warming, indiscriminate violence, riots, chaos and anarchy. Older generations got this kind of news maybe once or twice a day. This generation gets it fed to them every minute. They yearn for security. And one way is to save their money.
The question is, are they doing enough? What more could be done? Here are three things we should be considering.
Thanks to the Secure2022 legislation, employers can now not only offer Roth 401(k) plans for their employees but can also contribute to those plans. We should all have one. That's because – within income limitations – contributions to a Roth 401(k) are made after taxes have been paid but then grow tax-free and can be withdrawn without any tax liability after the age of 59 1/2. gen Zers – who are likely to be paying less in taxes now due to their relatively lower salaries – can put this money away at lower rates, rather than just defer taxation to a future year when, under regular 401(k) rules, distributions become required. And they can let these sums grow without worrying about paying any more taxes in the future. As an employer, you can provide investment options that can help maximize their returns too.
Another great after-tax vehicle is the 529 plan. By offering this plan, an employer can help their employees – both younger and older – put after-tax money away that will grow tax-free and can then be withdrawn if used to pay for higher education, private school or religious school. It's a great way for gen Zers to save for their future kids' education instead of paying for it out of funds that would be used for their own retirement years down the line.
Health Saving Accounts have exploded in popularity over the past decade, and it's no surprise why. With these accounts – which need to be paired with a high deductible group insurance plan – employees can sock away pre-tax dollars to be used for medical expenses that are not reimbursed by their health plans. Gains and withdrawals are not taxed. The beauty of these plans is you don't have to use them or lose them – any unused balances just roll over to the next year. Some call it a 401(k) for healthcare, and they're not wrong. It's a great way for younger employees to put away money that could help pay for their future healthcare costs without interfering with their retirement savings.
Agree or not, the Trump administration has reversed course with its predecessor and is now demanding student loan repayments. The result is that many younger people are going to need to face the reality of making good on their debt. One fallout will surely be less cash available to put away for retirement. But as employers, we can help. The Secure 2022 legislation now makes it legal for us to match their student loan payments with contributions to their 401(k) plans. This way even if they don't have enough funds to put away for the future, employers can help make up the difference. This is something we should all consider.
As a certified public accountant, I have spent my life dealing with money – both my own and my clients'. And yet every day I learn something new and still have to rely on the internet to clarify and research financial questions that I have. Now, imagine being a 25-year-old trying to figure out all the options. It's impossible. A good employer should have an outside financial counselor on retainer who can provide one-to-one advice for their employees once or twice a year. My best clients do this. And it's not just about retirement. It's buying a house, getting insurance, owning a car … all the financial decisions that in the end affect what's left over for retirement.
According to a recent Goldman Sachs survey 60% of gen Z respondents report 'having a personalized financial plan, not just for retirement but also for goals like buying a home or a car' and 68% 'believe their savings are on-track or ahead of schedule'.
Sounds great. But I'm betting that 'plan' could be improved. Employers should be providing more help to help save for retirement. And the good news is that they have got a generation eager to take it.