In a landscape where retirement security seems increasingly out of reach for many Americans, one demographic group is bucking the trend.
Full-time workers who belong to Generation Z have made meaningful progress in retirement savings in recent years, outpacing all other generations in some key metrics, according to a recent report from Dayforce.
The report looks at trends in participation in employer and individual retirement plans among the full-time U.S. workforce from 2021 through 2024.
In its analysis, Dayforce looked at savings in 401(k), 403(b), 457(b), employee stock ownership and pension plans. It also included savings in traditional and Roth IRAs.
Gen Z participation in employer or individual retirement plans climbed from 64% to 68.7% from 2022 to 2024. Their savings rates (the percentage of their income that they saved) improved from 6.6% to 7.2%, while total contributions rose by 24%.
The gains in those three areas outpace those of older workers during the same period, according to Dayforce.
What makes Gen Z’s achievement particularly noteworthy is the context in which it’s occurring. This generation entered the workforce during unprecedented economic uncertainty, facing student loan debt, rising living costs and a housing market that feels increasingly unattainable. Yet, they’re still finding ways to prioritize their financial futures.
Although Generation Z is leading the way in terms of increasing the pace of its savings, older workers — who generally have higher incomes — continue to save more overall than younger workers. Overall savings were highest among baby boomers and members of Generation X.
Here is the breakdown of how much each generation stashed in their retirement accounts in 2024. Note that the average represents the sum of all savings divided by the number of participants, while the median represents the middle number in a set of data.
Generation Z:
- Average: $2,961
- Median: $1,694
Millennials:
- Average: $5,544
- Median: $3,421
Generation X:
- Average: $7,369
- Median: $4,312
Baby boomers:
- Average: $7,783
- Median: $4,143
The broader picture painted by Dayforce’s research reveals savings disparities across the American workforce. For example, the overall retirement landscape shows a nation increasingly divided along income lines.
Workers earning between $150,000 and $250,000 contribute nearly 13 times more toward retirement annually than those making under $50,000, according to Dayforce.
Since 2022, high earners have seen their participation rates, total contributions and overall savings rates increase, while those making less than $150,000 experienced declines across all three metrics.
Gender and racial disparities also persist, with 79.9% of men contributing to retirement accounts in 2024 compared with 76% of women.
White workers participated in retirement plans at a rate of 84.6%, significantly higher than the 68.2% rate for Black workers and 61.1% rate for Latino workers.
As Jason Rahlan, Global Head of Sustainability & Impact at Dayforce, notes in a summary of the study findings:
“We believe this research should serve as both a wake-up call and a call to action. For far too many people, the promise of a secure retirement is drifting further out of reach.”
Add a Comment