The age-old belief that younger generations are careless with money and less willing to work needs to be re-examined, particularly in terms of Generation Z (13 to 28 years old in 2025). Despite being often depicted as lethargic and financially irresponsible, Gen Z is proving this stereotype wrong by taking retirement planning seriously and seeking financial advice at a significantly young age.
According to Northwestern Mutual, Gen Z individuals who have financial advisors start consulting them as early as 23 years old, essentially two decades earlier than the baby boomer generation. Despite having the smallest average 401(k) balance of any generation, this can be attributed more to their youth than laziness.
The average Gen Zer's $13,500 401(k) balance range from college students to corporate workers. Vanguard demonstrates that workers under 25 have an average 401(k) balance of just $6,899, with a median of $1,948. Meanwhile, Gen Z individuals with a middle-class income boast a median retirement savings of $43,000, based on Transamerica Center for Retirement Studies data.
The power of starting early should not be underestimated. A 20-year-old investing $300 monthly at a 7% return would amass $1.03 million by age 65. If the same investment started at 30, the required monthly contribution would almost double to $620. Starting at 40 would require a significantly steeper monthly contribution of roughly $1,360.
Despite the unpredictable economy, a considerable number of Gen Z individuals are following this savings strategy. Northwestern Mutual's data indicates the average Gen Z individual starts consulting a financial planner at 23. This shows the importance placed on early retirement planning. It is encouraged that even without a 401(k), Gen Z individuals should open an Individual Retirement Account (IRA) and automate monthly contributions, even if the amount is marginal.
Employer matches are recommended before any other savings due to the possibility of "free money". Coupled with the strategy of paying down high-interest debts, while contributing enough to secure employer contribution, the key isn't perfection but initiating the path to lifelong retirement saving as soon as possible.