A new study shows Gen Z workers are itching to retire at age 61. If that’s the case, they have a lot of hurdles to clear.
According to Charles Schwab’s annual nationwide survey of 401(k) plan participants released Thursday, Gen Z employees, or those who are 21 to 26 years old, want to retire at age 61, but 99% say they are facing obstacles to saving for a comfortable retirement, a 9% jump over last year and higher relative to the 88% of millennials, 91% of Gen Xers and 86% of boomers who cited such concerns.
The top obstacles to meeting their retirement goals for Gen Z are inflation (54%), meeting monthly expenses (35%), and paying for unexpected expenses (31%). Gen Z is also the generation that’s most likely to say financial stress has impacted their ability to do their job, at 26%, followed closely by millennials (22%), while Gen X (15%) and boomers (10%) report a much lower impact.
The online survey of 1,000 U.S. 401(k) plan participants was conducted by Logica Research between April 19 and May 2. The survey respondents worked for companies with at least 25 employees, participated in the 401(k) plan and were 21 to 70 years old.
“Just a few years ago, Gen Z’s were all about F.I.R.E., or Financial Independence Retire Early. now given higher inflation and other issues like student loans, they don’t feel they have the resources to save for retirement,” said Scott Bishop, managing director at Presidio Wealth Partners.
Bishop added that 401(k) plans allow workers to save pre-tax, while Roth options offer tax-free income in retirement.
“They are a great way with forced savings to get you toward a retirement at some point, and many employers help with matching contributions if you participate,” he said.
Elsewhere, the report showed more than half of all workers say that their employer stepped up in the past year to help them manage their financial stress. Gen Z (71%) is the most likely to say that their employer took steps to help in the form of increased pay (31%), an increased 401(k) match (25%), increased current employee benefits (23%), an additional bonus (19%), decreased hours for better work-life balance (17%) and new employee benefits (15%), according to the survey.
Marci Stewart, director of communications consulting and participant education at Schwab Workplace Financial Services, said in a statement she’s pleased with the increased role that employers are taking in helping workers manage financial stress.
“Employers should continue to focus on areas that are challenging workers the most when it comes to financial wellness and retirement saving,” Stewart said. “That can go a long way toward helping to boost retention and slow job-hopping among younger workers.”
Finally, 62% of Gen Z workers think their financial situation warrants advice from a professional, more than any other generation. Specifically, the survey showed they would like more personalized 401(k) advice, as almost half are not sure what investments to choose for their 401(k).