A recent survey by TransAmerica Center for Retirement Studies revealed that 67% of workers aged 18-25 already have retirement accounts totaling $33,000.
Gen Z, the youngest generation of workers, are setting a strong foundation for their retirement with an average of $33,000 saved in their retirement accounts. This is a commendable feat considering the financial challenges faced by this generation, especially during the pandemic.
The economic uncertainty brought on by the pandemic has also left many Americans feeling unsure about their retirement readiness. The survey found that more than 25% of Americans lost their job at some point during the pandemic, with over 20% reporting a worsened financial situation.
Talking about the retirement savings, comparatively, baby boomers had $162,000, Gen X had $87,000, and millennials had $50,000. The survey shows that younger generations are starting their retirement savings earlier than older generations, which TransAmerica President Catherine Collinson views as a positive step.
However, Gen Z does need to improve on its emergency savings. They only have $2,000 saved for unexpected events, according to Collinson.
It is not uncommon for young people to have a “future bias” where they focus on their future goals and ignore potential risks in the present. The unpredictability of life events and the uncertain economic climate may rather cause them to prioritize other financial goals over building up their emergency fund. This is compounded by the lack of financial literacy and knowledge about emergency savings and its importance.
It’s crucial for Gen Z to understand the importance of having a strong emergency fund as it provides a safety net in case of unexpected expenses or loss of income.
The survey revealed that workers of all ages struggle with planning for a comfortable retirement, though saving for retirement was listed as a top financial priority for 56% of respondents.
