Gen Z is falling behind on many financial milestones, besides investing in the stock market and for retirement.
Credit: MoMo Productions / Getty Images KEY TAKEAWAYS
Generation Zers have a spending-to-savings ratio that’s higher than that of older generations.
Gen Z is also delaying major milestones like homeownership and having children due to rising costs and slower wage growth.
However, Gen Zers are investing in the stock market and saving for retirement earlier than previous generations.
Young adults may be more inclined to buy themselves a “little treat,” even at the cost of savings. But they’re investing for the future earlier than any previous generation.
Generation Z adults (those born between 1997 and 2008) have the lowest savings-to-spending ratio of any generation, according to a Bank of America report. Young adults without a college degree face the highest unemployment rate of any group of workers, at 7.2%. The unemployment rate for young adults with a college degree has also risen, from 4.2% three years ago to 5.7% in June, with many recent graduates struggling in the labor market.
Yet many Gen Zers have kept spending on small indulgences—makeup, coffee—even as inflation and unemployment have climbed.
“For Gen Z, this trend is consistent with the ‘little treat economy,’ where smaller discretionary indulgences remain appealing and might even be worth spending more on when larger financial milestones feel harder to reach,” Bank of America’s researchers said.
Why This Matters
Even as they’re often putting off buying a home and raising children, Gen Zers are investing earlier than previous generations did. Starting young gives their money more time to compound, which means more wealth by the time they need it.
Gen Zers entered adulthood as the cost of many monthly expenses rose faster than wages, making it harder to reach the middle class.
Home prices have risen about 210% since 2000, according to the Federal Housing Finance Agency’s house price index. Raising children has grown more costly, as childcare and school costs have climbed nearly 190% since 2000. Meanwhile, wages have grown by only about 84% over the same period.
More than three in 10 Gen Zers say money problems have pushed back their plans to buy a home, and a quarter say the same about having children, according to Northwestern Mutual’s 2026 Planning & Progress survey.
While fewer young Americans are buying homes and more of them rely on help from their families to afford a down payment, Gen Zers are ahead of previous generations in investing.
In 2024, 37% of 25-year-olds had moved significant money from checking into an investment account since turning 22, according to the JPMorganChase Institute. In 2015, just 6% had.
Gen Z’s higher participation in the stock market results in part from the pandemic-era savings boom, which left young adults with more cash to invest, and a stock market that has more than tripled over the past decade. And as housing has become less affordable, more Gen Zers may be steering their savings into stocks rather than real estate.
Gen Z is also investing in their retirement at higher rates than any generation before them. In a recent survey by Bank of America, the average Gen Z worker started saving for retirement at 24, a decade younger than the average baby boomer.
With Social Security’s trust fund projected to run short in the mid-2030s, many Gen Zers are planning to live more off their 401(k)s and IRAs than previous generations. Just 5% of Gen Zers expect Social Security to be their main source of retirement income, according to a 2025 survey by the research firm Cerulli Associates. Among millennials, the generation just ahead of them, 16% do.
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