Gen Z are more bullish on early retirement than millennials and think they can quit work with $500K

Retirement may be a long way away for Gen Z and millennials, but they’re already ambitiously planning the seven-figure sum they’ll need to be able to kick their feet up and retire one day—and an optimistic cluster are hoping that’s much sooner than usual.

That’s because a 2024 YouGov survey revealed that for millennials, the magic number to quit working for good is somewhere between $1 million and $2 million.

Meanwhile, the majority of Gen Zers (37%) estimate they’d be able to comfortably live on around $500,000 to $1 million in their old age, or in some cases, even before even hitting middle age.

14% of the youngest generation of workers aim to retire in their 40s—double the number of millennials who expect to retire between the ages of 40 and 50.

But with an estimated life expectancy of around 100 years old, frugal Gen Zers will need to make do with their pot sum of half a million for a staggering 60 years.

Most millennials realistically think they’ll retire between 51 and 60 years old.

That’s still shy of the actual age workers in the U.S. generally retire (at around 64) today, and it does not account for the fact the retirement age keeps rising as people live longer.

Although various attempts have been made to raise the full retirement age to 70, less than 2% of Gen Z and millennials predict retiring after their 70th birthday.

They’re more likely to still be working, with at least one in 10 of both generations declaring that they never want to retire—like Dolly Parton.

Pension pots not stretching

It’s all well and good estimating that by 40, you’ll be kicking up your feet and saying adios to your work inbox for good when you’re in your twenties.

But in reality, those who are actually reaching retirement age are taking stock of the current climate and realizing they can’t afford to retire.

In fact, 18% of baby boomers and late Gen Xers have been forced to unretire—or they plan to—because their pension pot isn’t stretching quite like they thought it would.

The current climate is having a double-whammy impact on pensioners’ pockets: For more than a third of respondents, the cost of living is now higher than they’d planned for, and 24% said that their retirement income is no longer enough to actually live on. In fact, the average American thinks they’d need $1.46 million to retire comfortably.

Separate research has echoed that the number of those who have continued to work past 65 in the U.S. has quadrupled since the 1980s, according to the Pew Research Center.

What’s more—and perhaps a word of warning to bullish Gen Zers—nearly half of those who retired early during the pandemic fell into poverty.

Plan for retirement early

Although Gen Z’s early retirement plans may be somewhat unrealistic, starting retirement planning is never too soon.

The renowned financial expert Suze Orman even thinks that Gen Z and millennials could retire as millionaires if they make the most of compound growth.

Depositing a monthly investment of $100 into an account with a 12% yield would net someone approximately $1,188,342 in 40 years’ time. But the longer you delay your investment journey, the lower the accumulated amount of money will be.

A millennial who started their investment journey just five years later, at age 30, would accumulate around $649,626 by age 65.

What’s more, the 12% annual average rate of return, which would make a Gen Z worker a millionaire before the age of retirement, is a conservative percentage, according to Orman, who estimates you can expect up to a 25% rate of return on your money.

“You want to play and have fun, that’s on you later on in life when you can’t pay your bills,” she warned. “If there’s anything the younger generation needs to understand, it’s that the key ingredient to any financial freedom recipe is compounding.”

A version of this story originally published on Fortune.com on April 23, 2024.