Barrons’ roundtable discusses reports that Gen Zers are aggressive about their desire to retire.
Generation Z is the youngest generation of adults today, but as many struggle to make ends meet, a growing proportion say they don’t expect retire and few spend money to do it.
A new report from the TIAA Institute and UTA’s NextGen Practice found that a greater proportion of these adults aged 27 and younger do not plan to retire – at least in the traditional sense – after earlier data showed showed that almost half of young adults do not want to retire, do not do so. I don’t think they can afford it, or don’t think about it at all.
Generation Z as a whole has a very different view of retirement than previous generations, and a growing share of young adults say they have no plans to retire at all. (iStock/iStock)
Additionally, only 20% of working-age Gen Z respondents say they are saving for retirement. While planning for retirement is important for everyone, saving for the future is essential for this generation who are expected to live past 100. Yet the higher cost of living could impact their ability to achieve this.
The study found that nearly a third of Gen Z (29%) live paycheck to paycheck, with most of their money going to fund their basic needs, making it increasingly difficult for them to reach financial milestones like homeownership while saving for their financial future.
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“Thirty-six percent of respondents cited high debt or low income as the primary reason they are not saving for retirement,” said Surya Kolluri, director of the TIAA Institute. RENARD Company. “Gen Z spends more on essentials than previous generations.”
Inflation is taking a greater toll on Gen Z’s finances than previous generations, data shows. (iStock/iStock)
Kolluri said it’s true that Generation Z wears the weight of inflation more than the generations before them, noting that as of this year, Generation Z’s annual inflation rate was half a percent higher than that of other generations of the same age.
But Kolluri also pointed out some positive findings from the data. He said that although only 1 in 5 people report saving for retirement, 66% of those who save for retirement do so. through 401(k)s.
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There is also at least some awareness among Gen Z that it is important to save for the future. Eighty-four percent say they save a portion of their income each month (but not for retirement), and 57% say they have a budget that they stick to.
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Kolluri noted that 52% of Gen Z said they put savings into savings accounts because they value the liquidity that supports today’s financial freedom.
“For them, saving for retirement doesn’t mean helping to secure their financial freedom later in life… and ‘freedom’ is a very important concept for Gen Z,” he said. “They want flexibility and access to savings if they choose.”
