Generation Z Offers Lessons About Saving For Retirement
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Twenty-year-olds are saving for retirement. These are Generation Z’s, whose members were born between 1997 and 2012. Their efforts embrace several key points for a successful retirement plan, including the role of mentors.

Starting Early

By starting young in saving for retirement, Generation Z will greatly benefit from the math of compounding, which will grow their retirement funds in over 40 or more years. Keep in mind that the oldest members of Generation Z will turn 26 in 2023.

Sixty-seven percent of Generation Z workers were saving through employer-sponsored retirement plans or saving outside of the workplace, according to the Transamerica Center for Retirement Studies’ 22nd annual retirement survey involving more than 5,000 workers of all ages, conducted during the final three months of 2021. The median age of Gen Z’s saving for retirement was 19.

Generation Z’s retirement savings are showing strong growth. The average balances in 401(k)s for Generation Z were up 17% in the first quarter of 2023 (mostly due to employer and employee contributions) compared with the fourth quarter of 2022, the highest of any age group, according to the recently released Fidelity retirement analysis of first-quarter 2023 account balances for more than 44.5 million IRA, 401(k) and 403(b) retirement accounts. Fidelity is a multinational financial services company.

In addition, the 401(k) account balances for Generation Z were up 34% from the first quarter of 2022, the most account growth of any generation during the past year, and Generation Z had a 25% increase in IRA accounts in the first quarter of 2023, compared with a year earlier.

The Importance of Mentors

When you start saving for retirement and investing at a young age, it’s highly likely that a family member or friend was influential in directing and encouraging your efforts.

A co-worker’s mother guided Kim Trattner early in her career to start saving for retirement, which eventually led to competing for and being named a 2022 401(k) Champion®. The national award identifies 401(k) participants who, through an essay competition, exhibit leadership potential in teaching the benefits of retirement security to co-workers and others (full disclosure: my company sponsors the award).

“Because I was lucky enough to have my friend’s mom put me on the path to savings early in my career, it’s become a mission of mine to be that person for others,” Trattner wrote in her essay.

Generation Z investors are much more likely to have parents with investments than Generation Z non-investors (68% to 30%), according to a recently released report by the FINRA Investor Education Foundation and the CFA Institute titled “Gen Z and Investing: Social Media, Crypto, FOMO, and Family.”

Generation Z members who do invest are more likely to have parents who talked about investing with them (79%) than Generation Z non-investors (46%). Overall, 56% of Generation Z members 18 to 25 report owning at least some investments.

The report is based on a study of 2,872 people ages 18-57 conducted in November and December of 2022 across the U.S., Canada, the U.K. and China, with U.S. respondents making up slightly more than half of the total sample.

In general, Generation Z investors learn about finances and investing through social media (48%), internet searches (47%), parents and family (45%) and friends (40%). When asked which sources of financial information they trusted the most, the top three were parents/family (27%), financial professionals (24%) and internet searches/websites (18%).

Save Toward Goals

Generation Z investors lean toward financial goals that involve planning, with their top three being having enough money to travel/vacation (62%), saving for unexpected expenses (55%) and being able to retire when they choose and live comfortably (51%), according to the “Gen Z and Investing” report.

They also recognize the challenges to their goals. Both Generation Z investors and non-investors list “cost of living/inflation” as the top challenge to meeting their financial goals, with 44% of Generation Z investors saying that their generation’s economic circumstances are more challenging than those of prior generations.

Taking Risks?

Close to one out of two Gen Z’s (46%) said they were willing to take “substantial” or “above-average” financial risks.

Among the possible reasons offered in the “Gen Z and Investing” report, one is based on the factor of time: Gen Z investors have a longer time horizon due to their age, so they can take more risks and tolerate losses compared to older investors.

Two contrasting reasons involve confidence and following others:

  • Nearly half (48%) of Generation Z investors say they know more about investing than their parents, and 33% say they are extremely or very confident about their ability to make investing decisions.
  • They have a fear of missing out: 50% of Generation Z investors say they have made an investment due to FOMO.

The Securities and Exchange Commission’s site addresses the fear of missing out in an article by Lori Schock, director of the SEC’s Office of Investor Education and Advocacy, titled “Say ‘NO GO to FOMO.’” It includes the following points:

  • “Not every investment opportunity is right for everyone”
  • “It’s time in the market that counts, not timing the market”
  • “Stick with your long-term plan and don’t make investment decisions based on a fear of missing out.”

Keep Saving

No matter what, Generation Z’s who think they have saved enough for retirement should keep saving.

If you fast-forward to retirement, you don’t want to find yourself wishing you had saved enough money to live comfortably after your paycheck stops.

A decline in the confidence of workers and retirees about having enough money to live comfortably through retirement was reported in the 33rd annual Retirement Confidence Survey, released in late April by the Employee Benefit Research Institute and Greenwald Research.

Whereas 73% of workers in 2022 said they were very or somewhat confident, in 2023 the figure dropped to 64%. For retirees, the decline was from 77% to 73%.

Also, among those who did not feel confident, 4 workers out of 10 said it was due to them having little to no savings. The same was cited by 25% of retirees.

The survey, conducted from Jan. 5 through Feb. 2, 2023, included 1,320 workers and 1,217 retirees, all aged 25 or older – 25 being on the outer edge of the age range for Generation Z.

The Right Tools

A key factor for any investor is having solid financial knowledge. As it relates to Generation Z, “It is vital to understand their investing decisions and to provide them with the educational tools to prepare for those decisions,” FINRA Foundation President Gerri Walsh said in a statement related to the “Gen Z and Investing” report.

FINRA, which oversees the brokerage industry, provides free resources for investors, including topics related to investing basics and personal finance. has the Roadmap to Saving and Investing as part of its Introduction to Investing section.

Role Models Themselves

As long as Gen Z’s continue to save and invest, while embracing risk without overdoing it, they may themselves be role models – for both younger and older generations.


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