Generation Z has the bad reputation of being financially irresponsible and little aware of their future. However, they have been trying to prove collectively and en masse that their priorities for retirement go beyond a simple accumulation of large amounts of money.
Recent statistics have been showing that they are increasingly valuing certain things for their retirement, such as prioritizing mental health and happiness.
Gen Zers Are Prioritizing Happiness During Retirement
Generation Z wants to have the flexibility to work from anywhere in the United States or the world, even after retirement. Many of them are not even thinking about stopping working altogether after the Full Retirement Age (FRA).
This means that they value options such as remote work, moonlighting and self-employment, which allow them to have international mobility and flexibility in their schedules.
Beyond money, the generation is looking for a retirement that allows them to enjoy good mental and physical health, spend time with their loved ones, enjoy their hobbies and pursue their passions and tastes.
Of course, this includes access to medical health services, healthy and nourished community environments, and physical activity and leisure in warm and welcoming social settings.
How Is Generation Z Saving for Retirement?
While many millennials and members of Generation Z worry about not being able to enjoy a comfortable retirement, in the face of an increasingly bleak outlook for the social security system in the United States, the reality is that Generation Z is approaching the responsibility of retirement in a much more mature way than baby boomers believe.
In fact, Generation Z is focused on their retirement because they have noticed how previous generations are facing difficulties to retire with a good quality of life and with good payments.
Many young people have witnessed that their parents and grandparents struggle to make ends meet during retirement and that motivates them to take proactive and accurate measures to ensure a stronger financial future. They are aware of the change in the retirement landscape because traditional pensions are becoming less common and, as we said before, social security faces an uncertain future.
Is Social Security Reliable in the Future?
In fact, recent analyses have found that the social security system could run out of funds by 2035, as we have reported in this article.
The average age at which Generation Z starts saving for retirement in the United States is 22, much earlier than previous generations. With access to more information and with greater analytical capacity, thanks precisely to having more information at hand in the internet age, they take advantage of employer-sponsored retirement plans, such as 401(k)s, which allow them to save and invest with deferred taxes.
Additionally, Generation Z is much more interested in investing in stocks and mutual funds than previous generations. This allows them to grow their savings at a faster and more sustained rate than in other systems or with other types of investments.
It’s Not All Rosy: Gen Z Faces Challenges Ahead of Retirement
Apart from the advantages and this proactive approach of Generation Z, there are high living costs that they have to deal with, such as housing, healthcare and education, which are higher than those of previous generations. This interferes with their retirement savings abilities.
In this same area, many young people have significant student debt: there are currently $1.75 trillion in total student loan debt (including federal and private loans), and the average per borrower is $28,950. Despite this and other dark clouds on the horizon, young people of Generation Z are determined to have a good time during their retirement, unlike other generations who do not have an entirely good or even bad time.
Start Saving Early for Retirement and Watch Your Savings Grow
Although the priority is not exactly to have too much money to live like rich people during the golden years, today’s young professionals are prioritizing that time of their life like never before. As we said, Generation Z starts saving for retirement on average at the age of 22, millennials start at the age of 27.
These are better averages than those of Generation X, who started at age 31, and baby boomers who started only at age 37 on average in their eras. The sooner you start saving for retirement and the more advisors you get to diversify your retirement savings into safe and separate investments, the more your retirement savings will grow to reach a senior age with all expenses covered.
This way, you can also prioritize other things like what we said before: mental and physical health and well-being in general beyond the typical health and housing expenses that come with retirement.
