Key facts
- Millennials have an average of $94,300 in retirement accounts.
- Gen Z has an average retirement account balance of $20,800.
- Employer contribution rates are 4.1% for Gen Z, 4.8% for millennials, and 5.1% for Gen X and Baby Boomers.
- 80% of Gen Z's retirement savings are in target-date funds.
- Gen Z is increasing its savings rate more aggressively than other generations.
Fidelity's second-quarter "Building Financial Futures" report highlights key trends in retirement investing among younger generations. Millennial savers are approaching an average of $94,300 in their retirement accounts, nearing the $100,000 mark, a significant milestone often cited as the hardest part of wealth accumulation. Gen Z savers, on average, have $20,800 in their retirement accounts.
The report also indicates that younger generations are receiving lower employer contributions compared to older cohorts. Baby Boomers and Gen X receive an average of 5.1% in employer contributions, while millennials receive 4.8% and Gen Z receives 4.1%. This suggests potential missed opportunities for maximizing employer matches.
Target-date funds are particularly popular among younger investors, with 80% of Gen Z savers holding all their assets in these funds, compared to 46% of Baby Boomers. These funds automatically adjust asset allocation as retirement approaches and are often the default option in many employer-sponsored plans.
Encouragingly, Gen Z is demonstrating the most aggressive increase in savings rates. This trend may be partly attributed to the SECURE 2.0 Act, which mandates auto-increases in retirement savings for many new 401(k) accounts, potentially pushing savings rates towards 10-15%.