Millennials’ and Gen Z’s financial regrets are sending them into a stress spiral

Nearly three-quarters of Americans have some type of financial regret, according to a recent Bankrate survey of nearly 3,700 adults. For the Gen Zers and millennials who feel this way, 60% and 57%, respectively, say it’s stressing them out more this year than last year—compared to just 45% of Gen Xers and 38% of baby boomers.

At the top of both millennials’ and Gen Zers’ financial regrets: not socking away enough money for emergency expenses (at 21% and 17%, respectively). No wonder; most of them think they’re unable to pay one month of expenses if they lost their job today.  

While funding an emergency account has long been a “high-priority financial goal” for Americans of all ages, younger workers struggle more to meet that goal than older workers, Suzanne Schmitt, head of financial wellness at New York Life, told Fortune. Because they’ve had a longer time to build wealth, boomers’ emergency savings accounts are significantly beefier than those of millennials and Gen Zers. Millennials, generally no less frugal than their forebears, have spent their adulthood struggling to build wealth thanks to two recessions, a pandemic, an unforgiving housing market, and a historic student debt crisis. And over 30% of Gen Zers, who have also had their fair share of economic challenges, have no emergency savings at all. 

The need for an emergency fund is growing. Several studies have found that since the pandemic, over half of Americans say an emergency fund is more crucial now than ever before and that they wouldn’t be able to afford an emergency $1,000 expense right now. 

It’s not millennials’ and Gen Z’s only financial regret, though. For both age groups, “taking on too much credit card debt” was their second-place regret, followed by “not saving for retirement early enough” for millennials and “taking on too much student debt” for Gen Zers.

Everyone is more concerned about their savings than their debt

Despite mounting debt and interest rates, savings-related regrets continue to outpace debt-related regrets, Greg McBride, Bankrate’s chief financial analyst, wrote in the report. Failing to save enough money weighed more on Americans’ conscience than overpaying on their mortgage, education, or credit card purchases. 

Overall, the largest share of adults surveyed with a financial regret said their biggest one is neglecting to save for retirement earlier on in their careers (21%), followed by taking on too much credit card debt (15%), and failing to save sufficient money for emergency expenses (14%). Boomers and Gen X were more likely than younger generations to regret not saving enough for retirement, which makes sense considering that’s the life stage they’re currently in or approaching. 

But when you consider that boomers benefited from a stronger economy, the fact that even they feel their retirement savings aren’t enough might be a bad sign for younger generations, whose on-ramp to financial independence has been infinitely more fraught. (Nearly 80% of young workers still rely on their boomer parents for money.) 

Experts say $1 million is no longer enough to retire, and Americans are feeling it. The share of workers who don’t feel confident that they’ll ever be able to comfortably retire—period—has more than doubled (from 10% to 24%) since 2021, per a BlackRock report. Gen Zers felt the least confident.

“The onset of the COVID-19 pandemic rocked the economy as Gen Z entered young adulthood,” Charlie Pastor, a financial planner, told Fortune’s Alicia Adamczyk. “Older generations should understand that the next generation of savers has seen a lot of economic turbulence in a short period of time.” Between historic interest rates, hundreds of thousands of layoffs, and the ever-vanishing possibility of owning property or escaping student debt, that may be an understatement. Yet, as Bankrate finds, the regrets over missed opportunities still linger. 

“The power of compounding has the potential to magnify regrets about foregone savings over time as a ‘what could have been’ realization becomes more stark,” McBride explained. “At a modest 6.5% annual return, every dollar you put away in your twenties becomes $17 by the time you retire.” Put another way, McBride added, every dollar you don’t invest in your twenties “is $17 you won’t have in retirement.” 

But young workers, despite having less saved up, are nonetheless working to build a solid foundation. Gen Z workers were more likely to invest in their company’s retirement plan than colleagues in older generations were at their age in 2021. That suggests Gen Z is more future-minded than they give themselves credit for.