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Retirement Planning > Saving for Retirement > 401(k) Plans

Gen Z Workers Are Financially ‘Mature for Their Age’: Schwab

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What You Need to Know

  • Forty-four percent of Gen Z and 38% of millennial employees say financial stress interfered with their ability to do their jobs.
  • Gen Z is more open to advice than other generations.
  • Gen Z workers are mature about personal finances and are searching for tools to help them manage their money.

Stress about finances has had an outsize effect on the ability of Generation Z and millennials to do their jobs during the pandemic, according to a survey of 401(k) plan participants released Wednesday by Schwab Retirement Plan Services.

Yet Generation Z is already developing good financial habits.

“When it comes to personal finances, Gen Z workers are mature for their age,” Catherine Golladay, head of Schwab Workplace Financial Services, said in a statement. “They are clear-eyed about the challenges they face, looking for more tools to manage their finances, and optimistic that the right resources will help them improve their financial behavior.”

Forty-four percent of Gen Z workers and 38% of millennials reported that financial stress had interfered with their ability to do their jobs this past year, compared with 24% of all workers. 

About one-third of these younger 401(k) plan participants had already predicted that their retirement would be delayed because of the pandemic, compared with one-fifth of their older Generation X co-workers. 

“Gen Z workers are just starting their careers at a time of upheaval at home and in the workplace — from new health and safety challenges to the rapid expansion of virtual offices and dramatic swings in our economy and markets,” Golladay said.

“It’s a stressful environment, and young people are looking to their employers for support. The labor market is tight, and companies have an opportunity to attract and retain talent by providing tools and resources that help workers manage their money.” 

Schwab said the survey results suggest that employers that handle the pandemic crisis well can build employee loyalty. About one-quarter of Gen Z workers and one-third of millennials said their loyalty to their employer has increased because of how their employer has managed COVID-19. 

Logica Research conducted the survey in April among 1,000 respondents age 21 to 70 who were actively employed by companies with at least 25 employees and were 401(k) plan participants. They were not asked whether they had 401(k) accounts with Schwab Retirement Plan Services.

Gen Z Participants 

Gen Z workers are looking for help to manage their financial lives today and to plan for their futures, according to the survey. Sixty-two percent of Gen Z respondents said their financial situation warrants advice from a professional. 

One-third said they are very likely to follow computer-generated advice, versus a quarter of other generations, and 60% of Gen Z participants are very likely to follow financial advice from a human, compared with 54% of older respondents. 

One in 3 Gen Z participants said they want help managing their current expenses so that they can save more money for retirement, versus 22% for all other participants, and 29% want help managing their debt, versus 15% for all others. 

They are also interested in their general financial wellness; about half welcome online assessment tools that can give them an overall financial picture and action plan. 

Gen Z is more optimistic than other generations about adopting positive financial behaviors in the post-pandemic world:

  • Saving more in general: 62% vs 47%.
  • Paying off debt: 48% vs 33%.
  • Increasing 401(k) contributions: 47% vs 36%.
  • Investing more outside their 401(k): 44% vs 34%.
  • Rebalancing their 401(k): 40% vs 30%.

The survey findings indicate that saving and investing for retirement may prove more important for Gen Z workers than other generations. Only 43% of Gen Z are optimistic about reaching their retirement goals, compared with 53% of all other participants, and just 7% expect retirement income to come from Social Security, compared with 17% for older generations. 

Gen Z workers said they expect 36% of their retirement income to come from their or their partner’s 401(k) savings, whereas older workers expect 41% from these sources. 

Helping Younger Workers Plan and Save 

Across generations, 401(k) plans continue to be a must-have benefit for workers who often struggle to keep track of multiple accounts as they change jobs, according to Schwab. This includes Gen Z participants, who reported having changed jobs twice already on average. 

Thirty-one percent of Gen Z said they do not feel on top of their 401(k), versus 23% of older participants, and 51% acknowledged that they do not know what investments to choose for their 401(k) to have enough for retirement, compared with only 32% of older participants. 

Many Gen Z and millennial participants said they want more investment options in their retirement plans. Forty-five percent of Gen Z and 52% of millennials wished they had an annuity that offers guaranteed income as an option in their retirement plan, compared with 39% of Gen X and 26% of baby boomers. 

Similarly, more Gen Z and millennials than Gen X and boomers want ESG and socially responsible investment options. More of the former than the latter also wish they had fractional shares as an investment option.

The younger and older generations differ as well in their interest in benefits beyond the 401(k), including emergency savings accounts, financial wellness programs and tuition reimbursement — all these to manage everyday finances in addition to saving for retirement.


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