Retirement Savings: 7 Biggest Obstacles Gen Z Faces In Saving For the Future
Written by
Vance Cariaga
Edited by
Nicholas Morine
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
In yet another example of the confidence of youth, Gen Zers feel pretty optimistic about their ability to save for retirement despite numerous financial obstacles. A 2023 survey from GOBankingRates found that nearly one-third (31%) of Gen Z Americans said they’ll have enough savings when it comes to retirement. Half said they are “somewhat confident,” while only 19% said they are not confident at all.
This isn’t just idle talk on their part. As Business Insider reported, a May 2023 survey from the CFA Institute found that more than half of Gen Z respondents said they were already investing, while 82% of American Gen Z investors said they began investing before they turned 21. That’s much higher than the 31% of millennials and 14% of Gen Xers who said, in a 2018 survey, they began investing at that age.
Many financial experts give Gen Z credit for taking a more proactive approach to retirement savings than previous generations, or at least having greater awareness of its importance. The challenge is meeting retirement savings goals.
In its latest Retirement Survey & Insights Report, Goldman Sachs polled different generations on the biggest obstacles they face saving for retirement. Here are the seven biggest obstacles cited by Gen Z.
Too Many Monthly Financial Expenses (78% of Gen Z)
This is a problem for many Americans, but it is especially tough on Gen Zers who are just starting out in the working world. A recent survey from Assurance IQ found that 44% of Gen Zers said they had skipped a meal just to pay their monthly bills, Newsweek reported — let alone save for retirement. That compares with 30% of millennials, 23% of Gen X and 10% of baby boomers.
“Gen Z is likely to skip meals due to the fact they are likely to have the least amount of assets due to time and ability by which to save,” Kevin Thompson, a financial planner and the founder of 9i Capital Group, told Newsweek.
Financial Hardship: 77%
A 2023 study from EY found that more than half of Gen Zers said they are “extremely worried about not having enough money” to pay bills or save for retirement, Forbes reported. Many face financial hardship due to a combination of economic uncertainty, corporate downsizing, inflation and other factors. This makes saving for retirement especially challenging.
Caring For/Financially Supporting Family: 75%
As GOBankingRates previously reported, a survey last year by EduBirdie found that 22% of Gen Z college students work to support their parents. That’s a pretty high percentage considering that many parents of Gen Z students have not even reached retirement age yet.
Time Out of the Workplace: 73%
Spending time out of the workplace isn’t just a matter of being laid off or struggling to find the right job — it is also a conscious life decision. A Visier survey of 1,000 U.S. employees found that work aspirations ranked fourth in priority for Gen Z respondents. Two-thirds prioritized spending time with family and friends over work. A similar percentage (64%) prioritized health over work, while 58% prioritized traveling over work. Taking a break from work might be good for the mind and soul, but it can also put you behind on retirement savings.
Paying Down Existing Loans: 71%
The biggest loan obligations for many Gen Zers are student loans. Those with federal loans got a break during the COVID-19 due to a three-and-a-half year payment pause, but that ended last fall. A GOBankingRates survey found that only 5% of Gen Z respondents factored their student loans into their new budgets, while 29% said it will “drastically affect” their budgets.
Credit Card Debt: 68%
A 2023 GOBankingRates survey found that 33% of Gen Z Americans have credit card debt. More than one-quarter (27%) carry between $5,000 and $20,000 in non-mortgage debt.
“Gen Z needs to understand that carrying credit card debt early on can lead to a lifetime of financial struggles,” said Trinity Owen, a certified financial education instructor and founder of The Pay at Home Parent. “One missed payment can lead to late fees and higher interest rates, making it even harder to pay off the debt. The longer they carry the debt, the more interest they will accrue, making it harder and harder to get ahead.”
Saving for College: 64%
According to another GOBankingRates survey, nearly 15% of Gen Z respondents believe they can realistically save up at least $20,000 in the next year, while 22% think they can save between $10,001 and $20,000. Although those savings goals did not specifically mention college, many Gen Zers do need to save for college to avoid going into debt. This is a smart strategy, though it does mean putting a pause on retirement savings.
More From GOBankingRates
