Gen Z Is Blasé About Retirement Planning

Gen Z, the generation born in the late 1990s into the early part of this century, are an interesting lot for advisors to work with. The older members of this group have been working for a few years, indicating some of investable assets and are in need of professional advice.

They’re also tech-savvy and as a result, Gen Zers may be attaining financial advice in all the wrong places. In more positive news, Gen Z is also goal-oriented and they have some lofty financial objectives.

Younger generations, including Gen Z, have ambitious financial objectives, including lofty retirement goals, so inflation is problematic for them just as it is for clients that are nearing or already in retirement. Fortunately, and perhaps to the surprise of advisors, younger clients are proving responsible in the face of still elevated inflation.

On the other hand, and advisors should be aware of this, younger clients and prospects are very much living in the moment. That’s not a knock on Gen Z. It’s something every generation before them has done, but it’s also interrupting Gen Z’s retirement planning.

Advisors, Be Aware of ‘Soft Saving’

Millennials are credited with the mainstreaming of Financial Independence Retire Early (FIRE), which is commendable because FIRE requires intense devotion to saving.

Gen Z is taking a different approach. Studies indicate this demographic are engaging “soft saving.” Soft saving is better than no saving at all and it’s not as bad as it sounds. In fact, soft saving as is it pertains to Gen Z reveals something interesting about this generation.

According to a recent Prosperity Index study by Intuit, soft saving with Gen Z is potentially indicative of some members of this generation planning on not retiring at all. It also jibes with their desire to focus on personal growth and mental wellbeing over the near-term.

“Survey data also identified a new trend: ‘soft saving’—the financial spinoff of the boundary-setting “soft life” trend focused on comfort and minimizing stress. Currently taking over TikTok feeds, this philosophy extends to money,” according to Intuit. “A stark departure from the FIRE (Financial Independence, Retire Early) movement, hustle culture, and the Girlboss ethos dominating the past decade, Gen Z is embracing “soft saving.” Nearly 3 in 4 Gen Zers say they would rather have a better quality of life than extra money in the bank. In fact, experiences matter more than money to Gen Z, as 66% say they are only interested in finances as a means to support their current interests.”

There are positive for advisors. Roughly two-thirds of Gen Zers polled by Intuit know the importance of budgeting and a comparable percentage know they should be investing, but acknowledge needing help on that front. Sixty-three percent consider themselves somewhat financially knowledgeable, but are unsure of how to deploy that knowledge. On all accounts, advisors can bring value to Gen Z clients.

With Gen Z, Consider the Environment

Two things advisors should consider when engaging with Gen Z prospects. First is their social media proficiency. Second is the often turbulent financial markets they’ve seen in their young lives.

Events such as the global financial crisis and the coronavirus bear market have reshaped how Gen Z views financial success. Conversely and more dangerously, those of views of success may be formed by what they see on social media.

“Gen Z has more access to financial information than any other generation, but this doesn’t always translate into decision-making. From financial tips on TikTok to Reddit forums on investing, the survey illustrates that Gen Z is frequently paralyzed by conflicting advice and could benefit from new ways to save,” concludes Intuit.

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