The oldest members of Gen Z are still decades away from retirement, but many are already worried about being able to retire when and how they want to. Nearly a third (32%) of Gen Z predicts that they will have to retire later than planned due to the COVID-19 pandemic, a recent Schwab survey of 410(k) participants found. In addition, only 43% of Gen Z believes they are very likely to achieve their retirement savings goals compared to 53% of other generations.
Here’s what’s causing the youngest generation of workers retirement-related stress.
Gen Z Can’t Yet Predict What Their Retirement Will Look Like
Those that are nearing retirement likely have a pretty clear picture of what that will entail for them based on their current savings. But for Gen Z, looking this far into the future can be daunting.
“Gen Z workers are at the beginning of their retirement journey, so they have a hard time predicting what retirement will look like,” said Catherine Golladay, managing director, head of workplace financial services at Charles Schwab. “They’ve just started building retirement savings and current market gains have a smaller impact on their outlook. With fewer assets, lower incomes and less financial planning than older generations, Gen Zers feel the impact of shorter-term economic disruption more acutely, and that can also affect their long-term view.”
Gen Z May Be Experiencing More Job Insecurity Than Other Generations
Members of Gen Z had either recently entered the working world or were about to enter the working world when the pandemic first hit, which meant many lost jobs or struggled to even find a first job.
“Financial wellness is a product of much more than your 401(k) balance,” Golladay said. “Since [Gen Z’s] unemployment rate is higher than other generations, it’s natural to be more stressed about losing a job.”
Gen Z Doesn’t Believe Social Security Will Be Able To Fund Their Retirement
The future of Social Security remains uncertain, so it’s not too surprising that Gen Z isn’t counting on it as a significant contributor to their retirement income. According to the survey, Gen Z only expects 7% of their retirement income to come from Social Security, while other generations believe Social Security will make up 17% of their retirement income.
“The oldest members of Gen Z are about 24 years old. We can’t predict what Social Security benefits will look like in forty years, but Gen Z’s tendency to take this potential financial risk seriously is very positive,” Golladay said. “A long-term view supports good financial planning, and you can see this with Gen Z in other areas too. Compared to older generations, Gen Zers tell us they are more likely to save more in general (62%), pay off debt (48%), increase 401(k) contributions (47%), invest more outside their 401(k) (44%) and rebalance their 401(k) (40%). These are strong indicators that, when it comes to personal finances, Gen Z workers are mature for their age.”
Take a Look: 4 Best Starter Credit Cards for Gen Z
Gen Z Feels They Are Behind in 401(k) Savings
Only 31% of Gen Z believes they are on top of their 401(k) investments, and 51% say they don’t know what investments to choose for their 401(k), the survey found.
“Competing financial priorities can make it difficult for workers to be more involved with their 401(k),” Golladay said. “While the survey found uncertainty about 401(k) investments, the good news is that Gen Z is open to advice. Almost two-thirds (62%) of Gen Z participants in the survey say their financial situation warrants advice from a professional, and many are comfortable moving between human advice and apps or other tools that offer computer-generated advice. One-third of Gen Z workers say they are very likely to follow computer-generated advice versus one-quarter of other generations, and 60% of Gen Zers are very likely to follow financial advice from a human compared to 54% of other generations.”
Golladay recommends that any Gen Zer who is feeling behind takes the time to seek out the tools and advice that will help them feel confident that their retirement savings are on track.
“Spending some time with online retirement tools or speaking with a financial professional are great options to help address unknowns in your retirement plan, like the right investment mix and contribution rate,” she said. “Most 401(k) plans offer some type of financial advice to help answer these questions. That’s a great place to start.”
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Less Than Half of Gen Z Is Optimistic About Reaching Retirement Goals, Survey Finds