Key insights
- Gen Z's early retirement savings, driven by increased financial awareness and access to 401(k)s with auto-enrollment, is a positive trend. While not a direct market mover, it suggests a potentially more financially secure future generation, which could have long-term implications for consumer spending and investment patterns. The shift from pensions to defined contribution plans is also highlighted.
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Gen Z started saving for retirement at 22, a decade before Gen X did at the same stage, according to a new Northwestern Mutual survey.
Keller Lindler, a financial advisor at Northwestern Mutual, thinks Gen Z (who are ages 14 to 29) might have a head start on saving because of increased awareness about personal finance and investing. This generation also grew up with smartphones and social media, making financial and investing information easier to access.
Nearly half of Americans (46%) say they don't expect to be financially prepared for retirement, and 48% think they could outlive their savings. Gen Z's early start is a bright spot in an otherwise sobering picture.
"When working with Gen Z clients, conversations about saving for retirement are more prevalent. We’re seeing a lot of avenues of how people save—with 401(k)s being more common," Lindler said.
But Gen Z's early start may also reflect broader changes in how Americans save for retirement.
While savers in the past could rely on employer-sponsored pensions, these plans have fallen out of vogue since the early 1990s, as defined contribution plans, such as 401(k)s, have gained popularity.
"Younger generations of workers are expected to be better prepared for retirement than baby boomers, benefiting from greater access to defined contribution plans and stronger plan design," states a 2025 Vanguard report.
One in three Gen Z workers had a defined contribution plan in 2025, compared with one in four baby boomers at the same age, according to the Vanguard report.
Certain 401(k) plan features have also encouraged more workers to invest for retirement.
"Automatic features, such as auto-enrollment and higher default saving rates, have simplified decisions about whether to save and how much to save," Vanguard's report said.
Auto-enrollment allows an employer to automatically enroll employees in workplace retirement plans, so they don't have to opt in. According to the Vanguard report, 60% of defined contribution plans today offer auto-enrollment, up from just 10% in 2006.
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