A recent survey finds that Gen Z (those aged 18-25) are saving an average of 14% of pay for retirement—more than the other workplace demographics (Boomers, Gen X & Millennials). But surveys are one thing—how does that match up with the real-world experience of NAPA-Net readers?
Now, granted, according to that survey the other demographics are also pretty aggressive savers (averaging out at about 12%), but still—14%? Perhaps if it’s both employer AND employee contributions?
Regardless, we asked NAPA-Net readers to weigh in—and started by asking if they had noticed higher rates of deferral among younger workers in the organizations they support:
30% - Yes—with some, anyway.
26% - Yes, with most.
26% - Not really.
14% - No.
4% - Yes.
Reader comments provide some perspective around those results—here’s a sampling:
It depends on the industry. If in professional groups or traditional "white collar" organizations, the answer is many save a higher percentage but not 14% deferrals. Potentially a combined employee and employer contribution. In manufacturing or other "blue collar" organizations and not for profits, the answer is no even if looking only at those who are participating.
Talk dollar savings and not percentages. It resonates better.
Most Gen Z live at home with their parents. They are happy to save because they have money left over from their paychecks. Those who live on their own are more financially savvy having learned to create budgets and with their use of apps like Mint they learn about the importance of saving.
Yes, and the recordkeeping data bears this out.
We still struggle to get young people to save at the 6% rate
My experience is many "just out of college" workers are not rushing to rent/but housing and staying home. With that, they are using the opportunity to bank some savings...in some cases a lot of savings, and also defer higher rates into their 401Ks. In many cases, they are looking to max out even at 22-24 years old. Not always the case, but I've seen more and more of it.
I see them joining the plan at double digit rates and wanting to know how they can save above and beyond the limits.
How High is Higher?
So, with that as a baseline, we asked how that higher rate of deferral matched up against the 14% in the survey:
39% - That's a LOT higher than we're typically seeing.
26% - About right (certainly if you include employer contributions)
26% - That's higher than we’re typically seeing
9% - About right (even without employer contributions).
And so, it seems that while there ARE higher rates of deferral, 14% is higher than most of this week’s reader respondents are seeing in reality. And the comments bear that out:
We are still seeing a lot of young non-savers. But the new/young savers who are saving, are definitely doing so at much higher deferral rates than in decades past. It's so refreshing.
That 14% figure seems really high, maybe the 6.2% for Social Security was included. (sarcasm)
We do work with employers whose employer contributions are more generous than most, though.
That most definitely includes employer contributions, we see roughly 10-12% on average when combined with match, SHNEC, and/or profit sharing.
Seems exceedingly wrong. Even if you add in the match, rarely do I see a great number of young people saving even 8%.
Other Comments
I believe that having the world shut down with COVID provided the Gen Z population a BIG learning opportunity. I provided time for families to talk with them about money or have their own experience of saving and making ends meet in a unique way.
Educate at earlier age and show them how to get started has been huge. Also help more tenured employees increase savings in a more digestible way has helped too.
30 somethings’ participation rates are lower than other age groups.
The degree to which younger employees are in track for retirement is so much better that, if the trend holds, tremendous retirement wealth creation will result!
Most are clueless...need to go ask daddy what to do.
If we can get Gen Zs to save 8% then the retirement crisis will be solved by the time they retire.
Scary Stories?
Oh—and as Halloween is Monday, we also asked readers to weigh in on our annual Scariest Movie poll. There was a group of movies that drew a solid level of support, including: Dawn of the Dead (1978), Omen, The (1978), Seven, Nightmare on Elm Street (1984), Jaws, Nope (a new one!), Sixth Sense, The, Saw, Carrie (the 1976 version), A Quiet Place, Scream, Shaun of the Dead (really? Scary?), Night of the Living Dead (1968).
Vying for the top spot was a tie for #2: Silence of the Lambs & Friday the 13th.
But the winner for this year—and we have a new one—is The Shining…
Thanks to everyone who participated in this week’s NAPA-Net Reader Radar poll!
