Despite retirement being decades away, Gen Zers planning their future are not anticipating a “traditional” post-work life.
Instead, more believe they’ll continue to work late into their 60s and 70s, with some even believing they won’t ever retire, finds a recent survey by the TIAA Institute. With this belief, a growing number of Gen Zers are instead adopting a “spend now, save later” mindset, with just 20% of younger workers currently saving for retirement. Rather, when asked what they’re saving for most, 19% of Gen Zers said travel, following by living expenses like housing (17%) and transportation (18%).
“Their life goals involve learning new skills, exploring the world, and having multiple careers with distinct breaks from the work,” writes TIAA researchers Annie Ollen, Sofia Raymond, Steph Strickland, and Emily Watson, in the report. “While Gen Z may be charting a new course, the deprioritization of retirement saving and planning will impact the economy for all generations.”
TIAA notes that the younger work group does see value in saving—84% report allotting a portion of their income each month to savings, and 57% say they have a budget they stick to. Yet, over half (52%) report only using traditional savings accounts to set money aside, while 17% are using retirement accounts to save money.
Of those who are saving for retirement, 66% use workplace 401(k) accounts.
Despite the lack of savings, Gen Zers are still expected to ultimately surpass Gen Xers in retirement savings thanks to automatic enrollment features, TIAA reports.
Financial education sources
When it comes to how they obtain financial education, most say it starts at home. Sixty-one percent of respondents to the TIAA survey receive financial education from their parents or guardians. However, as past studies from TIAA find, less than half (48%) of Americans have strong financial literacy, meaning that relying on family members could lead to missing out on additional help.
And, unlike their parents’ experience, Gen Zers have the advantage of exploring a wealth of advice and guidance digitally, whether from financial influencers or brands like Robinhood, SoFi Invest, and Acorns. According to TIAA, 65% of this cohort follow financial institutions or personal contacts in finance on social media.
With a surplus of information, TIAA suspects Gen Zers could be overwhelmed in deciding how to save and invest their money, or even who to seek for personal financial guidance.
“The overabundance of options for learning and managing money could play into Gen Z’s hesitance to move from mostly liquid options, and the popularity of some platforms or creators over others may simply boil down to cultural relevance,” researchers write.
Ultimately, professionals and employers wanting to gain this cohort’s trust will need to meet them where they’re at—financially, professionally, and personally—and will need to pivot their own understanding of retirement.
“Positioning long-term saving as a pathway to attain financial freedom [rather than for retirement)] that enables career breaks, industry transitions and a general feeling of flexibility will make “retirement” relatable to more Gen Zers,” TIAA concludes. “Employers can leverage their current position as the first stop on the retirement savings path through incentivizing savings behavior, holistic financial and longevity fitness educational programs, and strategic retirement plan design.”
More findings from TIAA’s survey can be found here.
SEE ALSO:
Gen Z Leans on AI for Personal Finance
Gen Z is Focused on Saving—But the Struggle is Real
Gen Z Names Savings, Not Debt Management, as Top Financial Goal
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
