- Gen Z is often stereotyped as frivolous spenders, but new data reveals a far more sobering reality. Nearly half have already dipped into their retirement savings—not for luxuries, but to pay down debt and cover emergencies. Many are also skipping meals, delaying medical care, and selling belongings just to make rent. Despite being the most active 401(k) contributors, Gen Z is being forced to choose between financial responsibility and basic survival.
The generation that’s spending on the latest TikTok shop splurge or limited edition Labubu is the same one that’s also skipping meals and dipping into their retirement accounts just to survive.
A new report from Payroll Integrations 2025 Employee Financial Wellness found that while 38% of employees across all generations have withdrawn money from their retirement accounts, Gen Z did the most. Nearly half of the young adults have already dipped into their retirement funds, compared to 31% of millennials. Boomers and Gen X were tied at 41%.
More surprisingly, withdrawals were not about splurging on the latest concert, they’re doing it to escape their looming debt. Among all generations, 37% of early withdrawals went toward unexpected emergencies. But for Gen Z, the biggest driver was paying off their debt: 42% who tapped into their savings did so to pay it off. By comparison, just 6% of Millennials, 17% of Gen X and 0% of Boomers resort to this.
And it’s not just savings they’re draining. A separate survey from Redfin found that Gen Z is skipping meals and putting off doctor’s visits just to pay their rent. More than one in five (22%) of young renters report skipping meals completely to make their monthly payments, 22% have sold their belongings, and 19% have delayed medical treatments.
Gen Z’s debt problem: student loans and credit card balances
For Gen Z, the problem isn’t understanding money; they’re the generation that contributes to their 401ks the most. While they may be saving more than their parents did at their age, they’re more under pressure to squeeze out money from other areas of their lives, or basic needs.
Younger workers aren’t only entering adulthood with sky high housing prices, they’re also grappling with student loans and credit card bills.
According to Empower, Gen Z participants pay an average of $526 per month toward student loans, nearly double the average of $284 across all age groups. Younger workers are also carrying more than $94,000 in personal debt, a separate Newsweek poll shows, which far surpasses millennials with almost $60,000 in debt and Gen X with about $53,000 in debt.
“Many [Gen Zers] are entering adulthood with a heavy financial burden—student loans, credit card debt, and rising costs of living,” Natalia Brown, chief compliance and consumer affairs officer with National Debt Relief, previously told Fortune. “Their debt feels heavier because it hits earlier—right as they’re launching their careers.”
Despite inflation cooling from its 2022 peak, some are still struggling to recover from lost purchasing power. A Zillow report found that homebuyers need to earn 80% more than 2020, while median income has risen 23% in that time.
To stay afloat in today’s economy, many young adults are relying on credit cards to cover everyday expenses, experiences and travel. Without proper financial literacy, or a steady income, mounting credit card bills and interest payments are adding up. Experian data showed the average credit card balance is around $3,262.
