An analysis of financial behaviour from social finance app Frich’s community of more than one million Gen Zers reveals a generation with ambitious retirement dreams but a concerning financial reality.
Retirement optimism vs. financial constraints
Gen Z’s confidence about their financial future contrasts sharply with their current saving behaviours:
- 38% believe they’ll retire before age 67 (the official retirement age for those born after 1960)
- 53% think they’re on track with retirement savings
- 53% believe they can afford to buy a home
- Yet 54% admit their current lifestyle isn’t sustainable long-term
However, their actual retirement preparation tells a different story:
- Only 23% consistently maximize their 401(k) contributions
- 34% say they can’t afford to max out their 401(k)
- 43% don’t invest in a 401(k) at all
- Just 25% maximize Roth IRA contributions (a tax-advantaged retirement account)
- 42% don’t invest in a Roth IRA at all
Investment behaviour: engaged but volatile
Gen Z has embraced investing more enthusiastically than previous generations:
- 65% actively invest money
- 47% invest in cryptocurrency
- 50% would invest a $1,000 windfall vs 50% who would save it
- Yet their approach reveals concerning patterns:
- 58% have sold investments too early due to nervousness
- 50% have made investments driven by fear of missing out (FOMO)
- 49% couldn’t live off their savings for three months
The emergency fund gap
Despite early investment adoption, Gen Z struggles with financial fundamentals:
- Only 46% have recurring monthly investments outside their 401(k)
- 48% have taken early withdrawals from retirement accounts for emergencies
- 56% prioritize enjoying money now over saving for later
- 52% feel more pressure to enjoy life now rather than save for retirement
How Gen Z learns about money
Gen Z’s financial education comes largely from non-traditional sources:
- 38% rely on family for financial advice when investing
- 32% trust their financial advisor most for investment advice (compared to 67% of Boomers)
- Social media, internet searches, and family are primary learning sources for investing
External research supports these concerning patterns. According to the TIAA Institute, only 20% of Gen Z are saving for retirement, with 35% citing they don’t know where to begin. Meanwhile, research shows 60% of Gen Z and millennials have less than $5K in retirement savings.
Despite these challenges, Gen Z workers are expected to outnumber baby boomers in the American labour force for the first time in 2024.
Aleksandra Medina, CPO and co-founder of Frich, said, “The data shows a generation facing a fundamental disconnect between their financial reality and their expectations. Nearly half have already dipped into their retirement savings for emergencies, yet most still believe they’ll buy homes and retire early.
“Gen Z is incredibly engaged with investing from a young age, but they’re making decisions driven by anxiety and social media rather than long-term strategy: a natural response to the economic volatility and uncertainty they’ve inherited. They’ve gamified investing, but retirement success requires consistent, boring habits that don’t trend on TikTok.”