Gen Z Has a Huge Head Start on 401(k) Savings Compared to Older Workers. Here’s Why
By:
Sarah Hansen
Sarah Hansen
Senior Writer | Joined October 2021
Has also written:
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Editor:
Brad Tuttle
Eddie Lee / Money; Getty Images
Gen Z is getting a serious head start on retirement savings.
A new report from Vanguard finds that Gen Z’s 401(k) participation rate in 2021 — 62% — was more than twice as high as the participation rate for similarly aged employees in 2006, which was 30%.
401(k) accounts are tax-advantaged retirement plans. Traditional 401(k)s allow workers to contribute pre-tax money that is then taxed upon withdrawal in retirement, while contributions to Roth 401(k)s are taxed up front and can be withdrawn tax-free in retirement.
