Move over, Boomers. The generation you've been lecturing about financial responsibility is now outperforming you at retirement planning—and they're barely out of their twenties.

The Numbers Don't Lie

According to a recent Vanguard study, 47% of workers aged 24 to 28 are currently on track to have enough money to maintain their current lifestyle in retirement. That's not just good—it's the best performance of any generation:

  • Gen Z (ages 24-28): 47% on track
  • Millennials: 42% on track
  • Gen X: 41% on track
  • Baby Boomers: 40% on track

The findings contradict the narrative that young people are financially irresponsible "doom spenders" frittering away their paychecks on experiences and trendy purchases. In reality, Gen Z is leveraging advantages their parents never had.

The Secret Weapon: Automatic Enrollment

Gen Z didn't necessarily make smarter choices—they were given better defaults. The proliferation of automatic 401(k) enrollment has fundamentally changed how young workers start their careers.

"Gen Zers are automatically enrolled in their retirement plans, and oftentimes the savings rates are set for them, and it escalates with time."

— Kelly Hahn, Investment Strategist at Vanguard

Under provisions from the SECURE 2.0 Act that took effect in 2025, new 401(k) and 403(b) plans must automatically enroll employees at a 3% contribution rate, with automatic escalation up to 15% over time. This "set it and forget it" approach capitalizes on inertia—the same force that used to keep people out of retirement plans now keeps them contributing.

The Roth Revolution

Perhaps the most striking difference in Gen Z's retirement strategy is their overwhelming preference for Roth accounts over traditional tax-deferred options.

  • 57.9% of Millennials use Roth IRAs
  • 55.7% of Gen Z use Roth IRAs
  • One-fifth of Gen Z 401(k) participants choose Roth options within their workplace plans
  • 95% of Gen Z IRA contributions go into Roth accounts (vs. 75% for Millennials, 66% for Gen X)

This Roth preference reflects a sophisticated tax calculation: Gen Z workers correctly recognize that they're likely in lower tax brackets now than they will be in retirement. By paying taxes today at lower rates, they're setting themselves up for tax-free withdrawals when their income—and presumably tax rates—are higher.

Anxiety as Motivator

Here's the complicated truth: Gen Z's retirement success isn't just about better systems and smart choices. It's also driven by anxiety about a future that feels increasingly uncertain.

Young workers have started their careers facing:

  • An unwelcoming job market with multiple recessions
  • A student loan debt crisis totaling $1.7 trillion
  • Rising housing costs that make homeownership feel impossible
  • Serious questions about Social Security's long-term viability

The result? Gen Z is saving partly because they're convinced the traditional safety nets won't be there when they need them. It's prudent planning, but it's rooted in worry rather than optimism.

The Social Security Skepticism

Interestingly, 43% of Gen Zers still believe Social Security alone will provide enough income for comfortable retirement—despite the 2025 Trustees Report estimating trust fund depletion by 2034, after which benefits would be reduced to 81% of scheduled amounts. This disconnect between concern and understanding creates both risk and opportunity for better financial education.

Alternative Investments Attract Young Money

Gen Z's investment approach extends beyond traditional stocks and bonds. According to recent surveys:

  • 81% are interested in adding alternative investments to their portfolios
  • 58% list cryptocurrency as their top alternative investment
  • 49% favor real estate alternatives
  • 39% are interested in commodities

This appetite for alternatives represents both innovation and potential risk. Crypto volatility has burned many young investors, but exposure to real assets and non-correlated investments could provide valuable diversification over a multi-decade investment horizon.

Earlier Retirement Dreams

Gen Z isn't just saving more—they're planning to enjoy it sooner. Expected retirement ages by generation:

  • Gen Z: Age 62 (expected)
  • Millennials: Age 65 (expected)
  • Gen X: Age 66 (expected)

Whether these expectations prove realistic depends on sustained savings rates, market returns, and healthcare costs. But the ambition itself may be self-fulfilling: people who plan to retire early tend to save more aggressively than those with distant retirement horizons.

The Gen X Warning

While Gen Z's success story provides optimism, the struggles of Gen X offer a cautionary tale. Often called the "forgotten generation," Gen Xers face the most challenging retirement outlook:

  • Too young for traditional pensions that benefited older Boomers
  • Entered the workforce before automatic enrollment became standard
  • Hit peak earning years during the 2008 financial crisis and 2020 pandemic
  • Sandwiched between supporting aging parents and adult children

Gen X's struggles highlight how much timing and policy environment matter for retirement outcomes—factors largely outside individual control.

What Gen Z Is Teaching Everyone

The lessons from Gen Z's retirement success apply across generations:

  1. Start immediately: Every year of delay costs more than the last due to compound interest
  2. Automate everything: Remove decisions from the equation by setting up automatic contributions and escalation
  3. Consider Roth options: If you're in a lower tax bracket now than you expect in retirement, Roth contributions make mathematical sense
  4. Don't rely on Social Security alone: Even if benefits aren't cut, they were never designed to be sole retirement income
  5. Let anxiety motivate, not paralyze: Gen Z has channeled economic uncertainty into action rather than avoidance

Looking Ahead to 2026

The IRS has raised 401(k) contribution limits to $24,500 for 2026 (up from $23,500), with catch-up contributions of $8,000 for workers 50 and older. For those aged 60-63, a new super catch-up provision allows $10,000 in additional contributions.

Gen Z workers maximizing these limits from the start of their careers will compound these advantages over 40+ years—potentially retiring with portfolios that dwarf what previous generations accumulated.

The stereotype of the irresponsible young worker needs to retire. Gen Z is proving that given the right tools, defaults, and information, they'll make choices that set them up for financial success. The question for policymakers and employers is how to extend these advantages to everyone.