Gen Z Is the Most Confident About Their Retirement: 4 Things They’re Doing Right
Written by
Yaël Bizouati-Kennedy
Edited by
Nicholas Morine
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Feelings around retirement have been negatively impacted recently due to a confluence of factors. Inflation and soaring rates, combined with the resumption of student loans, have put a dent in many Americans’ savings and in turn, left little for retirement planning. What’s more, worries around the future of Social Security have further dampened many consumers’ optimism. Yet not all is doom and gloom when it comes to how some Americans view their golden years.
It appears Gen Z feels good about their retirement. Not only that, they are also the generation that feels the best about it, according to recent data.
Study Suggests Gen Z Looking to the Future
The numbers speak for themselves: 65% of Gen Zers say they are confident they’ll be financially prepared for retirement when the time comes, according to the 2023 Planning and Progress Study by Northwestern Mutual. In comparison, only 54% of millennials, 45% of Gen Xers and 52% of baby boomers feel the same way, the study found.
Of note, Gen Z women are especially confident they will be financially prepared for retirement (59% said as much) — and at a significantly higher proportion than reported by women of other generations. In comparison, 43% of millennial women, 38% of Gen X women and 48% of baby boomer women feel that way.
“Gen Z women are able to ride the coattails of all those before and are finally able to have some power and control,” said Stoy Hall, CFP and CEO of Black Mammoth. “This is again due to transitioning of the ‘old guard’ to the new, which is beyond needed!”
Another factor is that women are outpacing their male counterparts in higher education and earnings in many fields, said Stephen Kates, CFP and principal financial analyst for Annuity.org.
“This makes it likely that young women now and in the future will have the benefit of higher average earnings when compared to earlier generations and this gives them a leg up on savings,” said Kates, noting that saving early and often lays a foundation of good habits that become harder to break later in life.
“Women of all ages have a longer life expectancy than men, which means all else being equal, they will need more money saved for retirement,” added Kates.
Longer Runway to Retirement — More Time for Compounding To Work its Magic
According to Jay Zigmont — PhD, MBA, CFP and founder of Childfree Wealth — one of the reasons Gen Z is more confident is they simply have more time to plan and save than older cohorts.
“More time means longer for compounding to work its magic,” added Zigmont.
Another expert echoed Zigmont’s sentiments, suggesting Gen Z has the most time to hit their goals — and that they are likely more aware of the hurdles involved compared to other generations.
“Even a little bit goes a long way when you can let your money compound over many years,” said Kates.
Saving Earlier Is Key To Retirement Success
In addition, Zigmont noted that Gen Z is also thinking about retirement (and saving for it) earlier than most other generations.
“When I was their age, I don’t remember thinking about retirement at all,” he said. “It may not be that Gen Z is doing anything remarkably different in their financial plan, but that they are just being more mindful and getting informed earlier.”
Being Inquisitive Comes Naturally to Gen Z
One factor that is helping Gen Zers? More access to more financial tools (and much earlier than other generations), including access to a glut of personal financial education — thanks, in part, to the rise of social media.
“Gen Z has a lot of awareness and that is essential in this area. It will serve them well as they go through many financial milestones,” said Bobbi Rebell, CFP and founder of Financial Wellness Strategies.
A second expert pointed out the fact that Gen Z has benefited from the explosion of personal finance content on the internet and social media.
“Despite some misinformation or outright bad advice out there, the general trend toward talking, thinking, and strategizing about money is as good as it’s ever been in America,” said Kates.
Gen Z May Hold More Pragmatic Views Regarding Retirement Planning
In addition, according to some experts, one thing that has made Gen Z stand out is their extremely — perhaps surprisingly — pragmatic views of their later-in-life financial prospects.
“Almost half of them do not expect the Social Security system to be there for them when they reach retirement age, and three-quarters of them say they anticipate working to some extent or another in their retirement to make ends meet,” said Peter C. Earle, senior economist with the American Institute for Economic Research.
According to Earle, Gen Zers, and Gen Z women especially, have not been “hoodwinked” by government promises regarding the perpetuity of Social Security.
“They seem to have embraced the need for personal financial planning and readiness at an uncommonly young age, which is impressive. Let’s hope they continue living along those lines,” he added.
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