No matter your age, you’re probably saving for at least one milestone — whether it’s buying your first car, starting a family, buying a home, or funding your golden years.
As you get older, your savings goals will likely change, and your savings account balance will fluctuate as well. This is why it’s important to have perspective and come up with a savings strategy that makes sense for your future goals and current finances.
Still, it can be helpful to see how you compare to your peers. Here’s a look at how different generations save for the future.
Average savings by generation
The amount each generation saves will fluctuate based on the current economic climate, cultural attitudes toward saving, and individual financial circumstances. The following is a breakdown of how much each generation saved last year, according to a study by New York Life.
Millennials took the lead with $9,299 saved, on average, in 2023. Generation Z followed closely behind with more than $6,000 saved, and Generation X came in third with $5,132 saved for the year. Baby boomers came in last with just over $4,000 saved.
While these averages don’t tell the story of every saver, there’s a clear pattern: Savings balances tend to grow at a slower pace during a person’s earlier years when they’re adjusting to life as an adult and getting started in their careers.
One of the biggest obstacles to saving that younger generations face is time. Less time in the workforce and less time to pay down debt translates to lower savings account balances, on average. Another contributing factor is the cost of living. The price of everyday goods and the cost of education have continued to increase, which puts younger generations in a precarious position when it comes to saving.
Many Gen Zers, for example, are still in college or have yet to attend. Older members of this generation, as well as millennials, make up the largest share of federal student loan borrowers, according to recent figures from the Fed. Those who are actively paying down student loan debt may find it difficult to build up significant savings with these competing obligations.
As people approach their higher-earning years, they’re presumably able to save more. However, credit card debt, which has recently reached a record high of $1.115 trillion cumulatively, is another barrier to saving. According to the most recent figures from Experian, Generation X has the highest credit card balance at $9,123, on average, followed by millennials at $6,521. In addition to inflation and student loan debt, individuals in this age range face numerous financial obligations such as mortgages, car payments, and childcare.
This is not to say that older generations don’t face their own obstacles when it comes to saving. Health care costs, for instance, tend to rise substantially with age. However, as individuals near retirement age, they transition from earning income through employment to relying on their savings, pensions, Social Security, and other retirement funds. This shift often means they are drawing down their savings rather than adding to them.
This can be seen on a more long-term scale when you examine the average savings balance by age, according to the Federal Reserve’s Survey of Consumer Finances.
Tips to grow your savings
If you feel like your savings account balance isn’t quite measuring up to your peers, don’t worry. There are steps you can take to give your savings a boost.
Choose the right type of savings account
Savings accounts are not one-size-fits-all. Choosing the right account type — such as a high-yield savings account or money market account — or even switching banks can help you achieve a better interest rate and help your savings balance grow over time.
Work on paying down high-interest debt
Debt payments and interest eat into your budget, making it more difficult to allocate money toward your monthly savings. Prioritize paying down your high-interest debt ASAP, even if it means slowing down on saving temporarily. The interest rates on credit cards, car loans, and student loans are much higher than the yields offered by savings accounts, which means you’re losing money as long as you’re carrying that debt.
Look for ways to cut costs
Unused subscriptions, unnecessary splurges, and one-too-many DoorDash orders may not seem like a big deal, but these costs add up over time. Take a close look at your monthly expenses and see if you can identify areas in your spending where you can afford to cut back and shift some of that money toward your savings account.
Automate your savings contributions
Saving money can be tough, especially on a tight budget. But there’s also a psychological component. You may avoid logging into your online banking and transferring money out of your checking account because you don’t want to see your balance drop. However, automating your savings contributions can take away some of that mental pain and ensure you’re saving consistently
