A recent report highlights a concerning trend: only 20% of Generation Z adults are actively saving for retirement. As per FOX 11’s coverage, this demographic, which includes individuals born between 1997 and 2012, represents the youngest group of working adults today. A significant number are expressing a lack of intention to retire, with many stating that traditional retirement doesn’t align with their future plans.
According to a fresh report from the TIAA Institute and UTA’s NextGen Practice, a notable portion of Gen Z adults under 27 do not foresee retirement in the conventional sense. Alarmingly, just 20% of those in the workforce reported having a saving strategy for their future retirement.
With the potential of living to 100 years old, planning for future savings is essential for this generation. However, the high cost of living is severely impacting their ability to save. Research indicates that nearly one-third of Gen Z (29%) rely solely on their wages, the majority of which is consumed by basic needs. This reality makes achieving milestones like homeownership and building savings increasingly challenging.
Surya Kolluri, director of the TIAA Institute, noted that 36% of respondents identified high debt or low income as primary reasons for not saving for retirement. Compared to previous generations, Gen Z is spending more on essential living expenses and is more affected by inflation. As of this year, the inflation rate for Gen Z has been half a percentage point higher than that of other generations.
Despite these challenges, Kolluri points out some encouraging aspects in the data. While only one-fifth of respondents reported saving for the future, 66% of them are contributing through a 401(k) plan. This demonstrates a degree of awareness among Gen Z regarding future savings; in fact, 84% indicated that they save a portion of their income each month, even if it’s not specifically for retirement, and 57% have a budget in place.
Moreover, Kolluri highlighted that 52% of Gen Z prioritize saving in liquid accounts, valuing the financial freedom it offers them in the present. “Gen Z does not perceive retirement savings as a means to secure their future financial freedom,” he explained. “For this generation, the notion of ‘freedom’ is paramount; they desire flexibility to save according to their own preferences.”