Gen Z May Soon Outnumber Boomers in the Workforce — How Would That Affect Retirees?
Written by
John Csiszar
Edited by
Gary Dudak
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Most people understand that there is quite a difference between Generation Z, defined as those born between 1996 and 2012, and the baby boomer generation, born from 1946 to 1964. But few probably think about what that difference means when it comes to retirement.
Gen Z workers have very different wants and needs than boomers, and it could end up shifting the entire retirement landscape, as they are about to overtake the number of boomers in the workforce. While every individual is different, here are the broad strokes in terms of how Gen Zers differ from their boomer counterparts, and how it might affect retirement in America going forward.
How Are Gen Zers Different in the Workforce?
Retirement, and even the overall experience of work itself, has changed dramatically between the boomer generation and Gen Z. Older generations tended to stay longer at a single employer — sometimes for their whole career — until they earned the stereotypical “gold watch” and a pension once they retired.
Gen Zers, on the other hand, are growing up in an age in which the average worker reportedly changes jobs 12 times by age 55, and that number may actually increase going forward. Pensions are all but nonexistent these days, with workers generally managing their own retirements via IRAs and/or 401(k) plans. But there’s much more to the difference between generations than these factors.
Younger workers seem to have much more to say about how their employers operate in the current day and age. For example, Gen Z workers, on average, want their employers to be more socially responsible, and they want upward career paths and opportunities to expand their skills and talents. They want to be valued regardless of how long they have been with a company, and they seek more collaborative environments instead of a traditional “employer-employee” model. In essence, they want their employers to be more like partners, fighting for political and social causes that they value.
Gen Zers also prioritize a healthy work-life balance more than older generations. According to various surveys, they value flexibility in their jobs even more than job security, which is certainly different than older generations.
All of these factors shift how retirement may play out for Gen Z. Not only will they not generally have a pension to look forward to, they may lose out on some vested 401(k) or options benefits from changing jobs regularly.
When Might Gen Zers Overtake Boomers?
According to a Glassdoor trend forecast report, Gen Zers will outnumber boomers in the workforce as early as 2024. This is due to a combination of boomers retiring and Gen Zers entering the workforce for the first time.
According to the report, Gen Zers will eventually overtake Gen Xers, but it might take longer for millennials, because they currently outnumber all other generations. The Glassdoor report thinks it might take until 2040 for Gen Z to overtake millennials.
Will This Have Any Effect on Social Security?
The rise of Gen Zers and the declining number of boomers in the workforce might suggest that Social Security payouts might somehow change for retirees. But any changes to Social Security aren’t going to be directly affected by the proportion of Gen Zers in the workforce. Rather, the diminishing number of total active workers compared with the number of retirees is what may cause problems going forward.
The latest report from the Social Security trustees suggests that if things stay as they are now, benefits will have to be cut by 20% starting in 2034. This is a direct representation of how an aging retiree population relative to the current workforce can cause imbalances in the system. However, this isn’t being specifically caused by Gen Zers outnumbering boomers in the workforce.
The current state of Social Security may very well affect the retirements of Gen Zers going forward, however. With little likelihood of getting a pension and the very realistic chance that Social Security benefits get cut in some way going forward, Gen Zers will perhaps have to rely on themselves more than any other generation when it comes to preparing for retirement.
Steadily contributing to retirement plans, investing prudently and for the long term and judiciously monitoring expenses can all help Gen Zers better prepare for retirement.
More From GOBankingRates
