Workers ages 21 to 26 want to retire at age 61. However, these Generation Z members say inflation, monthly bills and unexpected expenses are among the obstacles to saving for a comfortable retirement, according to a new Schwab study.
“Younger workers are still finding their financial footing in an economic environment that is challenging everyone,” said Brian Bender, head of Schwab Workplace Financial Services, in an announcement of the findings. “They’re just starting out, so it’s no surprise that they may feel greater financial pressure, especially with such an ambitious timeline to retirement.”
And while 99 percent of Generation Z respondents noted hurdles to retirement savings, they’re not the only ones: 91 percent of Generation X members, 88 percent of Millennials and 86 percent of Baby Boomers also share their worry.
The good news: 69 percent of all workers said their financial stress has not impacted their jobs. However, Generation Z workers (26 percent) were more likely to report the impact than other generations in the workforce—22 percent of Millennials, 15 percent of Generation X respondents and 10 percent of Boomers.
Additionally, slightly more than half (52 percent) of the 1,000 U.S. workers surveyed said their employers took steps in the past year that helped them manage their financial stress. Among Generation Z workers who credited their employers with some type of action:
“Employers should continue to focus on areas that are challenging workers the most when it comes to financial wellness and retirement saving,” said Marci Stewart, director of communications consulting and participant education at Schwab Workplace Financial Services.
Various recent reports have pointed to the financial stress that workers are feeling.
The Employee Benefit Research Institute’s (EBRI’s) 2023 Workplace Wellness Survey found that for nearly half of 1,505 individuals, having enough savings for an emergency (47 percent) and paying their monthly bills (45 percent) are their top financial stressors. Less than half (41 percent) said they were “very prepared” to handle unexpected expenses of $500; only 20 percent said they could handle an unexpected expense of $5,000. The EBRI surveyed full-time and part-time workers July 8 to Aug. 1 using 20-minute online interviews.
A 2023 Wellness Barometer Survey of 1,400 U.S. workers found 92 percent of workers are worried about their finances. The findings are from BrightPlan, an investment advisement firm headquartered in San Jose, Calif.
Nearly half of employees have more debt than is manageable, BrightPlan found, and just more than one-third have no emergency savings or only two months’ worth of funds.
Who You Gonna Call?
All generations look to several sources for financial advice. For Generation Z, friends and family are their first choice, while Millennials and Generation X first seek advice through their 401(k) providers and Boomers consult their financial advisors, Schwab found. However, all generations were open to receiving professional advice, with 83 percent of Generation Z wanting personalized 401(k) investment advice, followed by Millennials (78 percent), Generation X (75 percent) and Boomers (62 percent).
Nearly all respondents (95 percent) said they are more likely to follow advice from a human rather than artificial intelligence, but Generation Z and Millennials are more comfortable than Generation X and Boomers in asking AI-based digital tools such as ChatGPT for financial planning assistance. Only 12 percent of all respondents said they would never be comfortable using AI tools for help with financial planning.
The survey for Schwab was conducted April 19 to May 2 with respondents who work at companies with 25 or more employees and who contribute to their employer’s 401(k) plans. Respondents included participants served by about 15 different retirement plan providers.
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