We understand the key to successful 401(k) participant outcomes is to get them while they’re young, but we’re just not sure we’re ready to deal with another generation’s wants, needs and idiosyncrasies.
Lincoln Financial recently surveyed Generation Z, and found members of this generation (those born starting in 1995) are more optimistic about their financial futures than any other generation, with 89 percent of them feeling optimistic compared to 83 percent of Millennials and Gen Xers, and 78 percent of Baby Boomers.
While optimistic, Gen Zers nonetheless have concerns.
“The survey shows Generation Z’s three top priorities—graduating from college, getting a job and saving for their future are also their three biggest financial concerns,” said Dr. Keith Weigelt, professor of strategy at The Wharton School of the University of Pennsylvania and founder of Building Bridges to Wealth.
These financial concerns surface because the generation is already starting to prepare for their financial futures—60 percent have a savings account and 7 percent are already investing in stocks.
Weigelt also noted that while it can be difficult to change long-term financial behaviors, it isn’t impossible. The survey shows that by age 13 Gen Zers are having conversations about retirement, and that they are looking for guidance from their parents.
“The survey also showed that 66 percent of Gen Zers go to their parents for advice,” said Jamie Ohl, president of Retirement Plan Services for Lincoln Financial Group. “That paints a picture … on how to reach this generation early, to help change saving behaviors and increase financial literacy. It starts with helping to educate their parents about retirement.”
Further underscoring the need for more education, Ohl pointed out that Americans in the workplace are leaving about $24 billion on the table, in terms of matching contributions that their employers would make if they saved enough to get the full match.
She added that when “we think about retirement it’s the outcome that is important.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.