7 Things Gen Z Can Do Now To Grow Their Wealth With an Eye Toward Retirement
By Adam Palasciano,
2024-09-07
Retirement should be a time of rest, relaxation, and enjoyment. Today, Gen Z, those born between 1997 and 2012, has one of the most optimistic outlooks when it comes to retirement.
The median retirement savings for a Gen Zer is about $29,000.
Almost 50% of Gen Zers expect to retire before age 60.
3 in 4 Gen Zers are planning to retire with less than 70% of their working income.
61% of Gen Zers expect to fund less than half of their retirement savings from personal savings (vs Social Security or pensions).
“They’re new to the workforce, so they seem to be fairly optimistic about where they stand, and I think that makes sense,” said Chris Ceder, senior retirement strategist at Goldman Sachs Asset Management. “They’re saving earlier than other generations.”
However, if you’re a Gen Zer and you feel like you’re behind when it comes to retirement savings , there are a bunch of ways to remedy this right now.
PeopleImages / iStock.com
7 Ways Gen Z Can Grow Their Wealth Ahead of Retirement
Here are seven things Gen Z can do now to grow their wealth with an eye on retirement, according to GOBankingRates:
Investing is one of the best ways to grow your wealth. Starting to invest early and often is crucial to securing a bright financial future. The earlier you start, the longer your money has to grow and compound over time. Starting to invest in your 20s can have huge implications on how much money you have once you retire compared with someone who doesn’t start investing until their 30s.
Whether you’re contributing to a 401(k) or IRA, contributing the maximum to your retirement accounts each year should set you on the right path toward a comfortable retirement. For 2024, the IRS contribution limit for employee 401(k)s is $23,000 and the limit for IRAs is $7,000.
Additionally, if your employer offers a dollar-for-dollar percentage match on your 401(k) contributions, be sure to contribute at least the minimum to get the full match. Otherwise, it’s like leaving free money on the table. As a general rule, you should contribute at least 15% of your annual income toward retirement savings (more if you can).
BartekSzewczyk / Getty Images
Diversify Income Streams
Diversification is key when it comes to investing . Stocks, bonds, ETFs, mutual funds, real estate, and more are all great investments to grow wealth. However, investing too much money in just one or two different types of assets can be risky. If one company fails, you could potentially lose a huge percentage of your net worth. Investing in a wide array of assets provides a hedge against risk and can help protect you from stock market swings and economic uncertainty.
Ridofranz / Getty Images/iStockphoto
Eliminate and Manage Debt
Before you focus on retirement savings , kill your debt first. Reducing and eliminating your debt as soon as possible should be on your list. Debt eats a hole in your wallet and creates a continuous financial drain. By paying off your highest-interest debt first, you’ll reduce the amount you owe in the long term.
Life can throw surprises at you: an unexpected layoff, an injury that puts you out of work, etc. Sufficient e mergency savings can mean the difference between financial stability or going into debt to make ends meet. It’s best to park your emergency savings in a high-yield savings account, which offers significantly higher interest than savings accounts at traditional brick-and-mortar banks. As a general rule, you should aim to have 3-6 months’ worth of living expenses saved up (more if you can).
Xavier Arnau / Getty Images
Stay Informed About Financial Trends
Staying up to date on the latest financial trends can give you the edge you need to ensure a secure retirement. From learning about new investment opportunities and financial best practices to understanding how to shift investment strategies based on IRS rule changes, you’ll be better equipped to ensure a secure financial future.
bymuratdeniz / iStock.com
Set Up Multiple Streams of Income
It’s hard to generate sizable wealth on a single salary, even if you save a large portion of it. To build wealth fast, set up multiple streams of income. For example, in addition to your day job, pick up a side hustle that matches your talents and abilities. If you’re a freelancer, try to find additional clients in a variety of different industries. Not only will this bring you additional income, it will also help protect you during economic downturns if you happen to lose one of your sources of income.
You’ll never generate any wealth at all if you spend more than you earn. To set yourself up for a lifetime of prosperity, it’s important to create a strict budget and stick to it. Make sure that in addition to all of your unavoidable expenses, you’ve got a significant line item for saving and investments. Every month that you can come in under budget, you’re adding to your pool of lifetime wealth.
nortonrsx / iStock.com
Invest in Your Career
Consider taking a course or getting an additional certification, which might give you more credibility as a professional in your chosen career. Continuing education is a smart way to sharpen your existing skill set, learn new skills, and perhaps make yourself a more desirable candidate in the job market. As they say, knowledge is power.
Get updates delivered to you daily. Free and customizable.
It’s essential to note our commitment to transparency:
Our Terms of Use acknowledge that our services may not always be error-free, and our Community Standards emphasize our discretion in enforcing policies. As a platform hosting over 100,000 pieces of content published daily, we cannot pre-vet content, but we strive to foster a dynamic environment for free expression and robust discourse through safety guardrails of human and AI moderation.
Local News
Comments / 0