Despite feeling more optimistic about their retirement, nearly half of surveyed Gen Zers continue to financially rely on their parents, finds recent research by Bank of America.
BoFA’s financial education team, Better Money Habits, surveyed 1,091 Gen Z adults between the ages of 18 and 27, and found that 46% look to their parents and family for financial assistance, including for housing (54%).
With the youngest age surveyed being 18, it’s likely that many participants aren’t generating enough income to reach financial independence. Fifty-two percent of those surveyed say they have not earned the income they need to live their preferred lifestyle, with many citing cost of living as a key hurdle to their financial success. Another 30% say they don’t earn enough money to save. As a result of high costs, 50% have delayed buying a home, 46% are not on track to save for retirement, and 40% have not begun investing, and all say they don’t plan on starting within the next five years. While 15% of Gen Zers are adding to their savings account each month, one in five are contributing to their 401(k) plan or a retirement account, according to Bank of America.
Working Gen Zers understand they’re falling off track with their savings. As a result, 67% are implementing actions to cut back on expenses, Bank of America finds. Forty-three percent have rolled back on dining out, 27% are reducing going to events with friends, and 24% are grocery shopping at more affordable establishments.
Others have turned to “loud budgeting”— where they vocalize their savings goals and the financial reasons as to why they can or cannot attend social events with friends or family. Thirty-eight percent say they feel comfortable vocalizing these goals with loved ones, and 63% say they do not feel pressured by their peers to overspend, signifying that Gen Zers are strong in keeping their boundaries compared to past generations, Bank of America notes.
“Though faced with obstacles driven by the cost of living, younger Americans are showing discipline and foresight in their saving and spending patterns,” said Holly O’Neill, President of Retail Banking at Bank of America. “It is critical that we continue to empower Gen Z to work toward achieving financial health and meeting their long-term goals.”