Gen Z Is Saving at Record Rates, But Beth Kobliner Says One Habit Could Destroy It All

Gen Z is enrolling in 401(k) plans at rates their parents never came close to. But they are also borrowing from those same accounts more often than any cohort before them. That contradiction is why New York Times bestselling author Beth Kobliner argued that today’s young Americans are simultaneously the best-prepared and most-endangered generation of savers in modern memory.

“The number of young people with retirement accounts has increased by 36% since when we were young, and the number of 25-year-olds who own stocks and bonds is up almost sixfold,” Kobliner told HerMoney podcast host Jean Chatzky on a recent episode. “This generation, like the Depression generation, gets that they’re going to need to be smart about money now because they have a lot of obstacles in their way.”

Investing automation embraced by Gen Z gets most of the credit. Auto-enrollment defaults workers into the plan, auto-escalation bumps the contribution rate each year, and target date funds replaced money market accounts as the default investment. A 23-year-old’s first paycheck now buys diversified equity exposure instead of sitting in cash.

The Affordable Care Act gave young adults health coverage, which matters because medical bills remain a leading cause of personal bankruptcy. Low down payment programs from Freddie Mac, Fannie Mae, the VA, and FHA let qualified buyers enter the market with 3% to 5% down, meaningful when housing affordability remains brutal.

Behavior is the weak link

Retirement researcher Michael Finke calls this group, in Chatzky’s words, “a bubble-wrapped generation of investors, meaning we’ve taken such good care of them that they don’t actually know what they’re doing correctly.”

Three forces are working against Gen Z, Kobliner says. First, social media: Young people are “getting 70 to 80% of their advice from social media,” often from paid promoters they know are paid. She suggests running any TikTok financial “tip” against a primary source before acting on it.

Second, what economist Kyla Scanlon calls the “ozempification of the economy”: a hunt for shortcuts. Influencers who promise “instant success” should be treated with a dose of skepticism.

Third, betting apps. Chatzky noted that “roughly half of all American men at this point under the age of 50 now have an active sports book account.”

The math on gambling is settled. Kobliner cited a study of 700,000 people who are online gamblers in which 96% of them lose money overall. The average sports bettor is down about $1,100 a year. Compare that to her benchmark for index investing: “If you invested in the S&P 500 every 15-year period since the 1920s, you would’ve made money 99% of the time.” One activity is a 96% loss rate. The other is a 99% win rate.

Chatzky noted that gambling disorders have “the highest suicide rate of any addiction.” She said “these apps are specifically designed to prey on young men who are economically anxious, who are isolated.”

Living at home as a financial tool

Gen Z’s housing situation is also mixed. The American dream of home ownership seems more difficult and some young people even struggle to pay rent. “Living at home with your parents after you graduate from college is never fun,” Kobliner said. But “it is such a way to save up money.” Roughly half of 18 to 29 year olds now live with parents, against about a third in previous generations. Treat it as a financial tool with a deadline, she advises, and direct the rent you are not paying into a Roth IRA or a 401(k). And, yes, you can also save for a down payment.