Barron’s Roundtable discusses reports that Gen Z members 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 share say they don’t expect to retire and few are setting aside money to do so.
A new report from the TIAA Institute and UTA’s NextGen Practice shows that a larger share of these adults age 27 and younger do not expect to retire — at least in the traditional sense — after previous data showed that nearly half of young adults who also don’t want to retire, don’t believe they can afford it, or aren’t thinking 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)
Furthermore, only 20% of working-age Generation Z respondents say they are saving for retirement at all. While planning for retirement is important for everyone, saving for the future is crucial for this generation, which is expected to live over 100 years. Still, higher costs of living may impact their ability to do so.
The research shows that almost a third of Generation Z (29%) live paycheck to paycheck, with most of their money going towards financing their basic needs, making it increasingly difficult for them to achieve financial milestones such as homeownership achieve while saving for their income. their financial future.
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“Thirty-six percent of respondents cited high debt or low income as the main reason they don’t save for retirement,” Surya Kolluri, head of the TIAA Institute, told FOX Business. “Gen Z spends more on essentials than previous generations.”
Data shows that inflation is weighing more heavily on Generation Z’s finances than previous generations. (iStock / iStock)
Kolluri said it is true that Generation Z is suffering more from inflation than the generations that preceded them, noting that as of this year, the annual inflation rate for Generation Z was half a percent higher than for other generations during the same period. age.
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But Kolluri also pointed out some positive findings in the data. He said that while only 1 in 5 reported saving for retirement, 66% of those saving for retirement are doing so through 401(k)s.
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There is also at least an awareness among Generation Zers that it is important to save for the future. Eighty-four percent say they save a portion of their income every month (although not for retirement), and 57% say they have a budget they stick to.
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Kolluri noted that 52% of Generation Z reported putting savings in savings accounts because they value the liquidity that supports today’s financial freedom.
“They don’t equate saving for retirement with helping secure their financial freedom later in life… and ‘freedom’ is a concept that is very important to Gen Z,” he said. “They want flexibility and access to savings as and when they want.”
