Are Gen Zers prudent savers? According to Empower Personal Dashboard^TM data in September 2024, Gen Zers (ages 18 to 26) already have an average of $78,300 in retirement savings (in employer-sponsored plans and individually controlled IRA savings and investment accounts). 

That’s not a typo. Perhaps it shouldn’t be surprising that Gen Z is motivated to save: Empower research shows they plan to retire soonest of all generations, at 54. Over the past three years, Gen Z participation in workplace retirement plans like 401(k)s has more than doubled. However, Empower data reveals that many may be leaving money on the table: only 62 percent are contributing enough to maximize their employer’s matching contributions — the lowest of all age cohorts.¹ 

With an average retirement savings that’s 3.7 times the median ($21,037), some Gen Zers may feel that they’re falling behind, but the gap between average and median savings narrows as Americans get older: there is still time to start saving up. 

Compound Returns

In general, the older a person gets and the longer they save, the smaller the divergence between average and median savings. In reviewing Empower Personal Dashboard™ data, Millennials’ average retirement savings of $254,616 is less than 2.7 times the median of $94,540. 

The Gen X average of $784,988 is 2.2 times the median of $350,530. 

And the Boomer average of $1,171,728 is less than twice the median of $589,160. 

Although the average remains higher than the median, the differences between the savings amounts tend to become less stark over time. The secret behind this statistical trend? The potential power of compound returns. 

No matter how young you are – in fact, especially when you’re just starting out on your financial journey – you can harness this power and potential returns for decades. 

No time to lose

The trick is to start saving early and often, in a regular, disciplined way – usually an automatic method that sets aside part of your income every month, such as a paycheck contribution to an employer-provided 401(k). Many employers also offer some sort of matching contribution, so consider contributing enough to max out any employer match. 

For example, let’s assume you’re a 25-year-old focusing on investing in a Roth IRA and your total balance currently sits around $10,000. Using the rule of 72, and assuming a 10% rate of return, you could expect your investment balance to double in 7.2 years.² The initial $10,000 could turn into $20,000 (without any further contributions). 

If you first invested $10,000 at age 25, by the time you near traditional retirement age you could have $320,000 in your account, without any additional contributions.

• 2020 (age 25): $10,000
• 2027 (age 32): $20,000
• 2034 (age 39): $40,000
• 2041 (age 46): $80,000
• 2048 (age 53): $160,000
• 2055 (age 61): $320,000 

*Assuming 10% investment returns every year. Rates of return may vary. FOR ILLUSTRATIVE PURPOSES ONLY. This hypothetical illustration does not reflect a particular investment and is not a guarantee of future results. The rule of 72 is a mathematical rule used to approximate the number of years it takes a given investment to double in value. It assumes a 6% rate of return. Rates of return may vary. This illustration does not reflect any associated charges, expenses, or fees, which could change the outcomes provided. 

Simply waiting and letting the market do the heavy lifting for your retirement portfolio can be one path towards a comfortable future. Of course, you should still consider keeping an eye on your investments and making changes when needed – when there are life changes, like having a child or when you need to rebalance your investments. 

The key is to get started – as soon as you can – and let compounding work for you.