Gen Z may be known for blowing money on the latest Taylor Swift concerts or luxury trips, but behind the youth’s passion for fancy expenditures is a responsible financial habit: investing for retirement.
In fact, the younger generation may be more prepared to retire than their older cohorts. Nearly half of Gen Z workers (aged 24-28) are projected to maintain their current standard of living in retirement, slightly ahead of the 40% projected for baby boomers (aged 61-65) approaching retirement, according to a new study from investment management firm Vanguard. Millennials were also slightly ahead of the older generation (aged 29-44), with 42% on track for retirement. Gen X fell slightly behind at 41% (aged 45-60).
Vanguard based its findings on data from the 2022 Survey of Consumer Finances, using roughly 2,700 working U.S. households to estimate how each generation was on track for retirement and whether their retirement incomes would be enough to maintain their lifestyle without exceeding their spending needs.
The financial readiness of Gen Z could come as a shock to older generations who may believe they are “doom spending” or making discretionary purchases, rather than necessary ones they’ll need to reach adult milestones. While soaring inflation, high living costs and stagnant salaries are dragging baby boomers out of retirement, young savers may be taking those headwinds as a financial lesson.
