Key takeaways

• Pooled together, Gen Z and Millennials allocate 27.3% of their retirement savings to Roth IRAs — even as 401(k)s remain dominant by total dollars.
• As of March, Gen Z saw a 27.5% year-over-year increase in average Roth IRA balances, while Millennials were up 11.1%.
• The data suggests younger investors are layering strategies, contributing to 401(k)s for tax-deferred growth potential while using Roth IRAs to help build tax-free retirement income.

Younger generations are steadily allocating a meaningful share of their retirement savings to Roth IRAs, according to Empower Personal Dashboard^TM data. As of March 2026, Roth IRAs account for 32.3% of Gen Z’s retirement savings and 25.3% of Millennials’ — a breakdown that has remained consistent in recent years and reflects the sustained role Roth IRAs play in young investors’ portfolios.

This shift comes as Empower research shows Gen Z and Millennials are spending nearly five hours a day thinking about money — more than any other generation — and checking their accounts more frequently than their older peers.*

Read more: Young investors turn to Roth IRAs for retirement planning

The Roth IRA advantage

According to Empower 2025 data, over half of Millennials (57.9%) and Gen Z (55.7%) are utilizing Roth IRAs, reaffirming these accounts as an essential part of the retirement planning toolkit. Roth IRAs can be especially appealing to younger savers, who are generally more likely to be within the income limits to contribute. For 2026, individuals earning less than $153,000 (or $242,000 for married couples filing jointly) are eligible to contribute the full amount of $7,500. Making post-tax contributions can be a tax-smart long-term strategy, since younger savers may expect to be in a higher tax bracket later.

That participation is translating into real growth. Gen Z saw a 27.5% year-over-year increase in average Roth IRA balances, rising from $30,151 in March 2025 to $38,530 one year later. Millennials experienced an 11.1% increase over the same period, climbing from $68,944 to $76,592.

Stacking strategies

Even as Roth IRAs grow, 401(k)s remain the dominant retirement savings vehicle across generations. Gen Z holds 2.7x more in 401(k)s than in Roth IRAs; for Millennials, the ratio is 3x. The combination of pre- and post-tax contributions to retirement accounts suggests a willingness among younger generations to layer tax strategies for retirement planning.

Read more: Can I contribute to a 401(k) and an IRA?

How to balance Roth and 401(k) contributions

For many younger investors, the question isn’t whether to choose a Roth IRA or a 401(k) — it’s how to use both.

Financial professionals generally recommend prioritizing employer-matched 401(k) contributions first, since matching dollars offer an immediate return. From there, contributing to a Roth IRA can provide tax diversification, allowing savers to build a pool of money that can be withdrawn tax-free in retirement.

For Gen Z and Millennials, the strategy can be especially relevant early in their careers, when incomes are lower and Roth eligibility is more accessible. Allocating savings across both account types can help balance immediate tax benefits with long-term flexibility.

Read more: Roth IRA investment returns: How to grow your wealth for retirement