A recent survey by Forbes Advisor of 1,000 Americans sheds light on how different generations are navigating the current economy—and a significant gap in savings by generation.
The study shows that 28% of respondents have less than $1,000 in savings. Most of those who fell into this category were in the Millennial and Gen Z demographic. Over 55% of Gen Xers and 63% of Boomers reported having more than $5,000 in savings.
This may be a reflection of the time these cohorts have had to build savings. Both Millennials and Gen Z have had less time in the job market compared to Gen X and Boomers. However, most Millennials, who are now between 28–43 years old, have been in the workforce for at least six years, and some as much as two decades, so the lack of savings is still alarming.
This falls in line with the Federal Reserve, St. Louis’s August 2024 estimation that overall, the average American has $1,000 in savings.
The Forbes Advisor survey also found that Gen Z stands out as the most optimistic and ambitious savers. Forty-six percent aim to save over $5,000 by the end of 2024, compared to 36% of Millennials. If 2024 shapes up to be as successful a New York Life study found 2023 to be, just over half of them will reach their goal.
Despite the availability of various savings options that could yield higher returns, 68% of all respondents hold standard savings accounts. Gen Z prefers cash management accounts, while older generations lean toward retirement accounts.
The rising cost of living is the primary reason many Americans expect to save less in 2024 compared to 2023. Nonetheless, 69% of Gen Z remains optimistic about saving more, compared to 50% of Millennials and just 27% of Boomers.
Notably, the savings goals also differ by generation: 22% of Gen Z are saving for a car, 25% of Millennials and 28% of Gen Xers prioritize emergency funds, while 30% of Boomers focus on retirement savings.
Many have adopted strategies like cutting unnecessary expenses (57%), taking on second jobs, or even relocating to more affordable areas.
Yet, financial strain is evident.
Fifteen percent of Gen Z has dipped into savings for daily expenses, a higher rate than other generations. Moreover, if faced with an unexpected expense, most respondents (59%) would tap into savings. Others said they would consider loans or selling possessions.
Moreover, the rates of maxxed out credit cards are on the rise, as are accounts going into delinquency, meaning they are overdue by 30 days or more.
Those indicators that many Americans are living on the edge of financial instability. The rising costs of living means that many more are being slowly pushed there too.
