Gen Zers are socking away 14% of their income for retirement, a higher share than older adults

The nation’s youngest workers appear to be taking the save-for-retirement message to heart, research suggests.

Defined as workers ages 18 to 25, Generation Z is saving an average of 14% of their income for their golden years, according to new study from BlackRock. Among millennials (ages 26-42), Gen Xers (ages 43-55) and baby boomers (ages 56-75), the average is 12%.

However, the overall share of workers across all ages who think they’re on track with their retirement savings has fallen to 63% from 68% in 2021, the research shows. Retirement plan sponsors’ confidence also is down: 58% say their employees are on the right path, compared with 63% last year.

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“Retirement confidence is down for the first time in a few years,” said Anne Ackerley, head of BlackRock’s retirement group.

“Even in the pandemic, it stayed [the same], but we’ve seen it come down across all generations due to inflation and market volatility,” Ackerley said.

Broken down by generation, though, Gen Zers have the most confidence in their savings (69%), followed by boomers at 65%, and both millennials and Gen Xers at 60%.

The research for BlackRock’s “Read on Retirement” report includes input from 305 plan sponsors, 1,308 workplace savers, 1,300 independent savers and 300 retirees.

Experts generally recommend that workers save at least between 10% and 15% of income in a tax-advantaged retirement account. That would include a 401(k) or similar workplace plan, or an individual retirement account.

There are two things that might factor into Gen Z’s higher rate of savings, Ackerley said. For starters, they were more likely to be raised in households where no one was counting on a traditional pension.

“I think it’s a reflection that we’ve switched to defined contribution plans from defined benefit plans,” Ackerley said.

“Gen Z was raised in households where there was a need to save for retirement … and the message is out there that you’re on your own, that you need to start saving early,” she said.

Another possible reason, Ackerley said, is that they may have watched family members struggle due to the 2007-2009 Great Recession — when job losses, home foreclosures and investment losses were widespread — and want to avoid similar financial challenges down the road.

Gen Zers also envision retiring at an average age of 63.6, the report shows.

That compares to working boomers, who peg that age at 65.9. Separately, a Gallup survey done last year showed that among retirees, the average age they left the workforce was 62, while nonretirees said they plan to retire at age 64.

It’s worth noting that if you tap Social Security before your full retirement age (which is up to age 67, depending on when you were born), you’ll end up with permanently reduced benefits. If you wait beyond that full retirement mark, your benefits will keep growing up until you reach age 70.