A recent review suggests that Generation Z has seen an increase in their 401(k) savings to an average of $11,300, outpacing millennial’s growth in the previous quarter. Signifying Gen Z’s strong focus on long-term financial health, they have also shown a boost in overall retirement contributions despite economic challenges from the pandemic.
Millennials, on the other hand, witnessed an only 11% growth in their 401(k) savings, leading to an average of $59,800. Though an increase from the previous year, many experts express concern that this growth might not secure a satisfactory retirement life. To enhance their retirement savings, millennials are advised to consistently contribute a percentage of their income into their 401(k) plan.
Retirement savings differ among generations. Generation X and Baby Boomers lean towards more aggressive and conservative investments respectively, showing variations in the average savings that can be attributed to life stages. For instance, baby boomers who have been in the accumulation phase for longer have an average saving of $241,200 compared to Gen X’s $178,500.
Different generations also have contrasting financial goals. While Gen Z aims for a retirement saving goal between $500,000 – $1 million, millennials are looking to gather $1-2 million.
Gen Z’s growing emphasis on 401(k) savings
Regardless of the amounts, all generations understand the significance of retirement planning and early savings. This shows a potential shift in the mindset around retirement for younger individuals.
In a statement, Sharon Brovelli, President of Workplace Investing, applauded savers for their dedication and resilience, reiterating that a successful financial future was grounded in continuous long-term investing. Brovelli highlighted that patience, consistency, and persistence are key factors to one’s financial success.
Interestingly, the study revealed a generational shift in wealth accumulation with Gen X surpassing Baby Boomers who maintained their 401(k) for at least 15 years. The average savings for Gen X was $543,400 compared to the baby boomers’ $522,100. One possible factor behind this is value differences in financial attitudes and strategies between generations.
The first quarter of the year witnessed a 15% rise in 401(k) millionaires despite the economic disturbances. Showing resilience amidst market volatility, this increase highlights the importance of steady contributions to retirement funds. Further rise in the number of 401(k) millionaires and their average balances is expected with such practises.
