Gen Z Faces Financial Strain: Rising Debt, Skipped Meals, and Retirement Withdrawals
Gen Z is facing one of the most intense financial challenges of any generation, balancing record debt with rising costs of living. Reports reveal that many young adults are dipping into retirement accounts, skipping meals, and delaying healthcare to stay afloat.
Gen Z faces mounting debt, high rent, and student loans, forcing many to tap retirement savings, skip meals, and delay medical care.
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A 2025 Employee Financial Wellness report by Payroll Integrations showed that 38% of employees across all generations have withdrawn money from retirement savings, with Gen Z leading the trend. Nearly half of young adults have already tapped into these accounts, compared to 31% of millennials. Gen X and baby boomers tied at 41%.
Debt repayment is the biggest reason Gen Z is turning to savings. Among those who withdrew early, 42% used the money to pay off debt. By contrast, only 6% of millennials, 17% of Gen X, and none of the boomers cited debt repayment as the main driver. Across all generations, 37% reported emergencies as the top reason for withdrawals.
Financial strain is not limited to retirement accounts. A Redfin survey revealed that 22% of Gen Z renters skipped meals to pay rent, 22% sold belongings, and 19% delayed medical treatment. These coping strategies highlight how steep housing costs and inflation are forcing difficult trade-offs.
Student loans and credit card balances remain major hurdles. Empower data shows Gen Z pays an average of $526 per month toward student loans, nearly double the $284 average across all generations. A separate Newsweek poll found younger workers carrying more than $94,000 in personal debt—far higher than millennials at nearly $60,000 and Gen X at about $53,000.
Experts note that Gen Z contributes more to retirement accounts than previous generations at the same age, but heavy debt loads and high living costs are undermining their efforts. Natalia Brown, chief compliance and consumer affairs officer at National Debt Relief, explained that many young adults face these burdens right as they are beginning their careers, magnifying the financial pressure.
Housing affordability is another barrier. Zillow reported that homebuyers now need to earn 80% more income than in 2020, while median household income has only grown 23% in the same period. This disparity has forced many to rely on credit cards for everyday expenses, travel, and experiences. According to Experian, the average credit card balance has reached $3,262, adding to the growing debt cycle.
