The kids are probably alright, but a reality check couldn’t hurt. That’s one takeaway from a recent report that found Generation Z workers — people born between 1997 and 2012 — severely underestimated how much they need to have saved for retirement.
The study found that 36 percent of Gen Z workers, who will retire when they’re 63, think they need to have $250,000 saved for their golden years. It’s not hard to see that number is way off. Even without doing any math, when it comes to saving for retirement, you want to shoot for the stars. If you miss them, maybe you’ll land on the moon. In other words, it’s better to think you need a huge amount of money to retire comfortably than to think you need a small amount.
As USA Today reports, the math also doesn’t hold up for Gen Z workers. The Bureau of Labor Statistics says that a typical household with an adult 65 or older spent about $47,579 in 2020. Years from now, obviously, that number will go up. If you estimate that the number will be around $50,000, your $250,000 will be gone in about five years. When you consider that the average person will spend about 20 years in retirement, Gen Z has a lot of saving to do.
The good news about this study is that Gen Z workers are young, and thus have plenty of time to get their savings up to par. The earlier they start saving, the better. It’s better for them to aim way too high than to aim way too low. Time is on their side. For now.