Gen Z zooming past older generations in saving for retirement

Gen Z zooming past older generations in saving for retirement
Data on DC plans and IRAs show young families are accumulating retirement assets faster than ever.
FEB 07, 2024

A new survey from the Investment Company Institute reveals a striking trend in retirement savings, with Gen Z leading the charge in early financial planning.

The study indicates that Generation Z’s participation in defined-contribution retirement plans is three times' the participation of Gen Xers at the same age.

The ICI report found more than three-quarters of Americans under 35 are incentivized to save for retirement as a result of the favorable tax treatment of their DC plans. This generational shift is reflected in the rising number of younger households that not only own retirement accounts but also accumulate substantial assets within them.

According to ICI, 10% of households aged 18 to 25 held retirement assets in DC plans or individual retirement accounts in 1989, compared to 30% of households in that age bracket in 2022.

Similarly, 7% of young households had investments in DC plans in 1989, significantly less than the 24% of households in that age group with assets in DC plans almost a quarter-century later.

“The landscape of retirement planning is transforming," Sarah Holden, ICI’s senior director of retirement and investor research, said in a statement. "Younger generations are actively prioritizing retirement savings, with many attributing their participation to the tax benefits associated with their plans.”

The prevalence of 401(k)s and other defined-contribution retirement plans – which have overshadowed traditional defined-benefit pensions to become the norm in the private sector – has played a pivotal role in this uptick. Automatic enrollment has also been a significant factor, with more than half of the households under 35 saying they were enrolled by default into their retirement plans in 2023.

The study also emphasizes that Gen Zers are not just saving – they are investing. A significant 70% of mutual fund-owning households under 35 reported their first mutual fund purchase was through an employer-sponsored retirement plan.

Comparing asset accumulation across generations, the report highlights that Gen Z households in 2022 had 2½ times the inflation-adjusted assets in their DC plans that Gen X households did in 1989. Millennials show similar progress when compared with the same-age cohort in 1989.

“Our research underscores the importance of workplace retirement plans," Holden said. "They are a gateway to not just saving, but also investing for a significant portion of the workforce."

New ETF combines the S&P 500 and bitcoin futures

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.