Generation Z wants to retire early but isn’t saving enough to do it

More than half of America’s youngest adults, Generation Z, consider themselves aligned with the FIRE early-retirement movement. Yet, many in that generation have no money saved for retirement.

Fifty-three percent of zoomers say they are part of the Financial Investment, Retire Early (FIRE) movement, which advocates intense savings and investment toward a goal of retiring decades early. The statistic comes from a new survey by Credit Karma, the personal finance company.

But Gen Zers are struggling to put their money where their mouth is.

The FIRE philosophy urges workers to sock away up to 70 percent of their income for early retirement. But most zoomers contribute less than 10 percent of their paychecks to a retirement account, the survey found. And, 32 percent of Generation Z has no retirement savings at all.

The Credit Karma survey, which reached 1,006 adults in March and April, paints a poignant picture of the youngest generation of American adults, born after 1996, and their financial aspirations.

Thirty-six percent of Generation Z expects to retire by 50, the survey found. Sixty-six percent expects to retire by 60.

Yet, three-quarters of zoomers have no 401(k) retirement account. Half lack a savings account.

“It’s interesting how bullish Gen Z is about their retirement plans, especially since so many have entered the workforce for the first time during an unfavorable economic environment, making it difficult for them to save money,” said Courtney Alev, consumer financial advocate at Credit Karma.

Other surveys have also found Generation Z voicing optimism, perhaps unfounded, about scripting an early exit from the job market.

One Harris Poll found that 43 percent of zoomers plan to retire before 65, compared to 37 percent of millennials and 24 percent of Generation X, born between 1965 and 1981.

Surveys and studies are split on whether Generation Z is faring better or worse than other Americans in preparing for eventual retirement.

A recent survey by Bankrate, another personal finance company, found that a “stunning” 31 percent of Generation Z workers had saved nothing for retirement over the past few years, compared to 23 percent of millennials, the next-older cohort, born between 1981 and 1996.

Zoomers who aren’t saving for retirement are passing up more than $500,000 in potential savings, the Bankrate analysis found: not an auspicious start for a generation hoping to retire early.

“There’s definitely an issue associated with financial literacy, and not just with our youngest cohorts,” said Mark Hamrick, Washington bureau chief for Bankrate.

On the brighter side, those proactive zoomers who are saving for retirement seem to be doing a good job. A study from BlackRock found that Generation Z is saving 14 percent of its income, on average, compared to 12 percent for millennials.

A TransAmerica report found that the average zoomer has $33,000 saved for retirement, compared to $50,000 in retirement savings for millennials and $87,000 for Gen Xers. That report, too, found zoomers saving at a higher rate than older workers.

Why, then, is Generation Z lagging in retirement savings? Because zoomers are mostly new to the job market, working at entry-level wages, and saddled with debt, including student loans.

If zoomers aren’t quite prepared for their far-distant retirement, they are not alone. A sobering 2022 report from the U.S. Census found that more than two-fifths of Americans ages 55 to 64, those closest to actual retirement, have no retirement savings.

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