Gen Z is people born from 1997 through 2012. That means that those born in the last century may already have at least a few years in the workforce under their belts at this point. Contrary to popular belief, these young people may have a bit of an advantage over folks from previous generations when it comes to retirement.
Yes, it’s true that they’re likely not going to be receiving a pension when they leave the workforce. Social Security is another big “if” for them. Where’s the benefit in all of this? They know about their retirement outlook as they are entering the workforce. This means they’re not getting false promises. Here’s the big differentiator for folks in this generation. Some young people are turning into super savers while others are turning into super spenders. It turns out the difference could be where they work.
In a recent article published by CNBC, a Google employee in Boulder, Colorado, boasted about having 6 figure savings while still in her 20s. Of course, she certainly has her merits, but she was helped out by the benefits offered to her by her workplace. One of those benefits was working with a financial advisor to find the best way to have her money work for her. That’s one of the most common phrases used in savings circles. A company like Google probably won’t risk working with low-tier financial advisors that could lower the perceived value of the benefits that they provide for their employees.
The subject of the aforementioned article seems to be in an ideal situation that Gen Z’s can find themselves in if they want to have a worry-free retirement. She has no kids, and therefore lower expenses overall, plus the help of premium financial planning. These super savers could have a very comfortable life once they reach their mid 60s.
Then there are the Gen Z’s who live and work on the other side of the spectrum. They may be self-employed, part of the gig economy, which has been growing in the last few years. In that scenario, they’re left to find their own retirement solutions without the help of their employer. They’ll have a double issue to contend with. Not only will they not have direct access to a decent financial advisor in-house, but they’re also likely to not have an employer that’s actively contributing to their 401ks. In current estimates, that means they’ll miss out on about 9% of their base salary throughout their careers that many current employees are still getting paid to their retirement accounts when their employer contributes to their 401 Ks. If this type of Gen Zer is also an entrepreneur, those savings will be going back into the business, not a retirement account.
Super Savers are on a great path toward retirement. In fact, if they were the majority of the workforce, this would indicate that most of the generation would be in a great spot to retire early. The problem is, their super-spender counterparts could drastically lower that percentage. Gen Z may very well be the generation with the biggest retirement savings gap in history!
