Gen Z and 401(k)s: Is This a Problem, a Shining Example or Both?

When it comes to their retirement attitudes and preparations, Generation Z workers (those born between 1997 and 2012) present a tangled blend of incomprehension, intuition, proactiveness and procrastination.

Many of these individuals haven’t yet started to save for retirement — but when they do, they tend to jump in with both feet.

“What we’re seeing with Gen Z really is a tale of two realities,” said Cathy Marasco, the head of protected retirement at financial services company Nationwide. “On one hand, a meaningful portion of Gen Z is struggling to get started. At the same time, the flip side of the story is encouraging. When Gen Z does start saving, they’re starting much earlier compared to older generations, and they’re more engaged once they’re in.”

Access bonus Workspan Daily Plus+ articles on this subject:

Gen Z Is Facing ‘A Perfect Storm’

According to a survey by financial company NerdWallet, just 18% of Gen Z workers said they had contributed to a retirement account in 2025. Similarly, data from the TIAA Institute, a financial research center, found only 20% of Gen Z is saving for retirement.

“Gen Z is facing some serious headwinds,” said Kourtney Gibson, the CEO of retirement solutions at the TIAA Institute. “Here’s the irony: They have more access to financial knowledge than any generation before them, yet 35% of those not saving say they simply don’t know where to start.”

More than half of the average Gen Z budget is going to housing expenses, she said, noting that inflation is impacting their finances and confidence, and the traditional retirement vehicles their parents and grandparents relied on, such as pensions and Social Security, are no longer a given for them.

In addition, the Gen Z workforce is graduating from college with significant student loan debt but finding that many of the entry-level jobs that were available to their parents no longer exist due to artificial intelligence-driven workplace changes, said Rob Austin, the head of thought leadership at benefit services provider Alight.

“Gen Z is in a bit of a perfect storm when it comes to sky-high living costs and student loan debt,” he said. “They’re focused on month-to-month, and they’re not thinking far down the road. There’s a lot going on that maybe other generations haven’t had to encounter because of job markets and debt accumulation along the way.”

But there are some encouraging signs, according to Gibson. She shared TIAA Institute research found a 10% increase in retirement savings between the ages of 22 and 23, indicating some Gen Z workers are starting to save for retirement as soon as they start working.

An Evolving View of Retirement

Gen Z workers tend to have a fragmented and shifting view of what exactly retirement means, and how it will look for them. For example, research from fintech platform Empower showed Gen Z workers cited 54 as the average age at which they want to retire, much earlier than any other generation.

But others in the Gen Z demographic see retirement differently, and it’s impacting how they live today. More than half of undergraduates surveyed by career networking platform Handshake are financially supporting older family members or expect to do so in the future. Many also are concerned they simply won’t be able to afford to retire. Three-quarters of Gen Z workers surveyed by NerdWallet expect to stay in the workforce as long as they’re physically able, and the TIAA Institute found a good portion of the generation don’t see themselves retiring in the traditional sense.

“They don’t see their professional lives stopping at 62, and they certainly don’t think they’ll work for the same company their entire career,” Gibson said. “That’s a big shift from all the financial ‘norms’ their parents and grandparents followed.”

Rather than taking “one prescriptive path from education to retirement,” she said Gen Z workers are more focused on financial freedom today to allow them to travel (their top savings priority as told to the TIAA Institute), take breaks between jobs and simply pay their bills.

How Employers Can Help Navigate

Considering the perfect storm facing Gen Z workers and their shifting views about their futures, employers have an important role to play when it comes to educating their youngest employees about saving and investing — whether for goals a few years down the road or retirement later on.

Richard Reed, the vice president and defined contribution practice director at HR and benefits consulting firm Segal, suggested employers take the following steps:

Offer ongoing, accessible education on financial wellness and retirement savings.
Regularly assess the organization’s plan design and the effectiveness of touchpoints such as landing pages, apps or communications.
Incorporate plan features that foster participation and continued engagement.
Find new and innovative ways to engage and communicate with every generation participating in the plan.

“I recommend that employers reassess their record-keeping relationships from the employees’ point of view to ensure that both the services provided and the way they are delivered align with the organization’s goals and expectations,” Reed said.

Austin added that educating this workforce is important, but support shouldn’t stop there.

“Make it easy,” he said. “Don’t just sit there and say, ‘This is what you should do.’ Create it so that people can do it — whether that’s using agentic AI or some other ‘easy’ button that lets people go ahead and take that action. Knowledge only gets you so far; you have to actually execute.”

Nationwide’s Marasco said the future of retirement planning is making those plans more automatic, more intuitive and more focused on outcomes.

“When plans are designed to make good behavior easy, workers are far more likely to build lasting confidence,” she said.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics: