Jonathan Lee, Private Wealth Management investment portfolio manager at U.S. Bank, offers practical guidance to put Gen Z on the road to retirement savings

For Gen Z — those born roughly between 1997 and 2007 — the decisions made today shape future financial freedom and retirement security. Delay carries a real cost that compounds over time.

“Time is an asset when you’re young, and you should use it,” Lee said. “Putting time on your side is an incredibly powerful compounding tool.”

The math behind starting early

Compound growth — where investments earn returns and those returns then earn further returns — can create exponential gains. A U.S. Bank investment portfolio manager calculated that an investor contributing $200 per month starting at age 25, earning 7% annually, would accumulate more than $530,000 by age 65. An investor making the identical monthly contribution – but starting at age 35 – would accumulate only $246,000 by the same age.

“The difference can be life altering,” Lee said.

For those who can’t contribute much at first, Lee recommended starting with small amounts to establish good habits, then increasing contributions after a raise or bonus.

What tax-advantaged retirement accounts should young people use?

Tax-advantaged retirement accounts reduce the drag of taxes on investment growth — what Lee compared to running a race without hurdles.

“If you don’t have to jump over hurdles throughout a race, you’re going to run faster, more efficiently and with less friction,” he said.

Workplace plans: 401(k) and 403(b)

If a workplace retirement plan is available — such as a 401(k) or 403(b) — Lee advised young people to contribute to it. These plans use payroll deductions, so contributions are invested before they can be spent. Two key tax structures are available:

• Traditional 401(k): Contributions are made pre-tax, reducing taxable income now. Withdrawals in retirement are taxed as ordinary income.
• Roth 401(k): Contributions are made with after-tax dollars. Qualified withdrawals in retirement are tax-free.

Many employers also match employee contributions up to a set maximum. Lee’s guidance: contribute at least enough to capture the full employer match.

“You don’t want to leave free money on the table,” he said.

Individual Retirement Accounts for those without a workplace plan

For those who don’t have access to an employer’s plan, an Individual Retirement Account (IRA) is the primary alternative. IRAs come in two varieties:

• Traditional IRA: Contributions may be tax-deductible, and growth is tax-deferred until withdrawal.
• Roth IRA: Contributions are made after tax, and qualified withdrawals in retirement are tax-free.

How should young investors choose their asset allocation?

For young investors with decades ahead of them, Lee generally recommends a growth-oriented approach.

“If you’re several decades away from retirement, you can weather the inevitable ups and downs that come with investing, in return for the potential of long-term growth,” Lee said.

A higher allocation to stocks is typically appropriate for investors in their twenties and early thirties. As retirement approaches, a shift toward more conservative assets helps protect accumulated wealth.

Target-date funds: a hands-off option

For investors who prefer a simpler path, target-date funds are worth considering, he said.

These are diversified baskets of investments that automatically shift the asset allocation over time, moving from a growth-oriented mix of stocks, bonds, and cash toward a more conservative mix as the target retirement date approaches.

The rebalancing happens automatically, without requiring the investor to actively manage the portfolio.

What does working with a financial advisor do for retirement savings?

According to a 2025 U.S. Bank survey, 78% of those with a financial advisor feel confident in meeting their retirement goal, compared to 48% of those without one.

A financial advisor does more than pick investments. Lee described the role as bringing together all the pieces of a client’s financial life to inform how much the client can realistically contribute toward retirement. An advisor can also review appropriate retirement vehicles, recommend an asset allocation, and run hypothetical models to project how much money a client might have at retirement.

“It’s OK to ask for help, and most successful people do ask for help and have advisors to walk them through establishing a plan and executing the plan,” Lee said.

Take the first step toward retirement savings

Retirement may feel distant for a 22-year-old, but the path to financial freedom is built from small, steady steps taken today.

“Gen Z has the power and tools to build lasting retirement security and independence,” Lee said. “Your future self is counting on you — so take that first step and start building toward the retirement you want.”

Read the full survey report here: U.S. Bank 2025 Wealth Report