An Unlikely Retirement Role Model: Gen Z Era Retirement

In today’s article, we will be going over an unlikely retirement role model, discussing Gen Z Era Retirement, and learning what we can apply to our retirements today.

Generation Z, the youngest working generation, is commonly thought of as being consumed with the present and uninterested in the future. However, recent research has shown that this stereotype may not be accurate, as many Gen Z individuals are excelling at saving for retirement, despite being in the early stages of their careers.

A study conducted by Allianz Life found that over half of Gen Z (57%) is already saving for retirement, compared to just 44% of millennials. This is a remarkable achievement, given that many members of Gen Z are still in their early 20s and may not yet have the earning potential of older generations.

One possible reason for Gen Z’s financial prudence is that they grew up in a world of economic uncertainty. The Great Recession of 2008 and the COVID-19 pandemic have undoubtedly shaped this generation’s outlook on financial stability and future planning. As a result, many Gen Z members have become more aware of the importance of retirement savings and have started to prioritize it accordingly.

Another factor that may be influencing Gen Z’s saving habits is the influence of their parents. Many Gen Z individuals have grown up with parents who emphasized the importance of saving and financial responsibility. This upbringing has likely instilled a sense of financial discipline in Gen Z and encouraged them to prioritize retirement savings.

Technology is also playing a significant role in Gen Z’s saving habits. Gen Z has grown up in a world where technology is ubiquitous, which has made it easier for them to access information about personal finance and retirement planning. Online resources and apps make it easier for Gen Z to learn about retirement savings and to track their progress toward their goals.

Tips for Saving for a Gen Z Era Retirement

While Gen Z is already on the right track with retirement savings planning, there’s always room to improve. These tips can help Gen Z (and you) save as much as they can toward retirement.

  • Take advantage of your employer match: Why turn away free money? If your employer offers a 401k match, take advantage of it, as it’ll help grow your retirement savings without you having to do anything. 
  • Cash in on compounding interest: Investing as early as you can helps you maximize the value of compounding interest.
  • Contribute to a Roth IRA: If you don’t have a 401k through your employer, consider setting up a Roth IRA. The annual contribution limit for 2023 is $6,500 and is a great vehicle for retirement savings. You can only contribute to a Roth IRA if your income is below a certain threshold, $144,000 for a single filer or $214,000 for those married filing jointly.
  • Start contributing now, even if it’s just a little: While many Gen Z workers might not have a lot to contribute, every dollar counts. Working retirement savings into your budget, even if it’s a small amount, can help get you in the habit of thinking of long-term financial success.

Our Best Advice? Start Today

No matter what generation you belong to, there are steps you can take to ensure that you are on track for a comfortable retirement. And the most critical step is to start saving as early as possible so you can take advantage of this compounding effect and maximize your retirement savings.

As your generation continues to mature, your focus on retirement savings will be crucial to your long-term financial stability and success.

Being proactive in retirement is one of the many ways to help set yourself up for success now and into the future. But before you invest in anything, consider the risk/reward tradeoff, your goals, and your time horizon – and call our office to discuss.

Our team understands the importance of partnering with families to be a financial ally. One who is able to help you put all the pieces of your financial puzzle together from where you’re at right now to beyond and into your legacy.

If you’ve found yourself losing sleep over your approaching retirement, there’s still hope.

We work with affluent clients who are about five years or less from retirement. We’ve developed and refined an approach that helps our clients put all the pieces of the financial puzzle together to ensure they are prepared. We call it The PEAK FORMula.

We’re happy to talk you through your concerns, answer any questions, and give you peace of mind when it comes to what’s next on your retirement journey. You can give our office a call and we can set up a time to talk.