Gen Z Isn’t the Only Generation Not Saving For Retirement, According To Study

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As Gen Zers enter the workforce, it might not come as a surprise that most aren’t saving for retirement — or have very little saved. However, it’s more concerning that older generations aren’t faring much better.

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According to a recent survey conducted by GOBankingRates, 47% of 18- to 24-year-olds haven’t started saving for retirement and have very limited savings to fall back on. The generations closer to retirement age aren’t displaying an enthusiasm to save either. An astounding 45% of Gen Xers aged 45-54 don’t have any retirement savings.

Here’s a breakdown of who is saving for retirement and who isn’t, as well as experts’ top tips for all ages on how to get started.

Nearly Half of Gen Z and Gen X Have $0 Saved for Retirement

According to GOBankingRates’ survey, 37% of overall Americans have not started saving for retirement and 27% have saved $10,000 or less.

Motivation to save for retirement varies vastly among generations. Forty-seven percent Gen Z respondents have no retirement savings in the bank and make up the group least motivated to start saving. Surprisingly, those on the Gen Z-millennial cusp are displaying more enthusiasm than both older millennials and Gen Xers, with a much lower 34% who have not yet started saving.

As age rises, retirement savings do not. According to the survey, 40% of millennials aged 35-44 have yet to start saving. The numbers are even bleaker for Gen Xers aged 45-54, with 45% of this age group not yet saving for retirement.

It’s worth noting that 92% of those who have not started saving fall between the ages of 18-24 or 45-54.

Those in the 55-64 age group fare better, with only 26% saying they have yet to start saving. Twenty-four percent of baby boomers over 65 said the same.

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Older Generations Experienced Less Pressure To Save for Retirement

It’s curious that such a large number of Gen Xers, and even some baby boomers who are at retirement age, don’t have any retirement money saved. One reason for this could be that many were raised by parents who did not encourage them to save for retirement.

“Over the past few decades there has been a shift from defined benefit to defined contribution pension plans,” said Robert R. Johnson, Ph.D., CFA and CEO at Economic Index Associates. “In the defined benefit world, one didn’t need to be concerned with saving for retirement. The baby boomers retiring today began their careers in the defined benefit world. They didn’t witness their parents saving for retirement and weren’t conditioned to do so themselves.”

In other words, older generations could expect to work for the same company over the course of their careers and receive pension payments when they retired. The same cannot be said for younger generations, as pensions for the most part have gone extinct.

Although most Gen Zers and millennials don’t expect a pension, the fact that retirement is decades away is probably why many haven’t given thought to saving for it. But the sooner they start saving, the more time their money has to grow and compound and sustain them through their retirement years.

How To Start Saving for Retirement

The best time to start saving for retirement is when you get your first full-time job. That being said, if you haven’t started saving for retirement yet at age 40 or 50, it’s not too late to start.

Saving for retirement can be daunting. With all your other financial responsibilities, you might not want to set aside money for something that seems so far away. That being said, you might be surprised by how manageable saving for retirement can be if you break it down into bite-sized goals and automate it.

The 12% Rule

For Gen Zers looking to start saving for retirement, financial experts recommend staying disciplined about setting aside a percentage of your paycheck every month.

“Ideally, when someone starts their first full-time employment, they will start saving 12% toward retirement,” said Tommy Thompson Jr., CFP® with Innovative Financial Group. “The more time your savings have to compound, the greater your chances of a financially sound retirement.”

Take Advantage of Employer-Sponsored Plans

An easy way to set aside a percentage of your check for retirement is through an employer’s retirement program, such as a 401(k) account.

“Perhaps the worst financial mistake anyone can make is turning down free money,” Johnson said. “If one does not contribute enough in a 401(k) plan that has a company match to earn that match, one is basically turning down free money.”

Increase Your Contributions

Increasing your retirement contributions becomes particularly important in your 40s and 50s — especially if you haven’t started saving yet.

Since your 40s and 50s are likely your peak earning years, you are in a great spot to put a sizable chunk of your income toward retirement. Consider setting aside 15% of your pay instead of 12% to take advantage of maximum retirement plan contributions and receive a higher employer match.

More From GOBankingRates

Methodology: GOBankingRates surveyed 1,005 Americans aged 18 and older from across the country on between January 16 and 18, 2023, asking twenty different questions: (1) Do you currently have any form of an emergency fund?; (2) How much do you currently have put away for an emergency fund?; (3) If you faced an emergency (medical, housing, etc.) how would you have to pay for it?; (4) How much do you currently have saved for retirement?; (5) Do you have any of the following debt? (Select all that apply); (6) How much debt (student loans, medical, auto/personal loan, credit card, etc.) do you currently have? (NOT including mortgage); (7) If you have a significant other, how much do you argue about money concerns?; (8) Which money topics do you discuss with your children? (Select all that apply); (9) How often do you discuss personal finance issues with your family and/or friends?; (10)What are the chances, in an average month, of you and your family running out of money before you are paid next?; (11) What worries you most when it comes to your personal finances?; (12) Compared to pre-COVID (before March 2020) are you more or less confident in your personal finances?; (13) If you received an unexpected bonus of $5,000, what’s the first thing you would do with it?; (14) If you won the lottery ($100 million), which of the following would you do with the winnings? (Select all that apply); (15) Would you rather…ask a family or friend to borrow money or max out a credit card?; (16) What would you like to learn more about in order to improve your personal finances?; (17) Do you consider yourself a spender or a saver?; (18) Which categories do you believe you overspend on? (Select all that apply); (19) How much do you spend on self care monthly?; and (20) What is your top financial priority?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.

This article originally appeared on Gen Z Isn’t the Only Generation Not Saving For Retirement, According To Study