Gen Z Plans to Retire By the Age of 40…

...but experts recommend Zoomers should adjust and review their expectations.

For a generation whose oldest members have just turned 26-years-old in 2023, Gen Z is surprisingly savvy about making investments to secure their future. According to a study by Vanguard, an American investment advisor, Gen Z’s retirement savings are a lot higher as compared to young people in the workforce in 2006. According to the report, in 2006, just 30 percent of employees between ages 18-24 participated in their company’s 401(k) plan, a company-sponsored retirement account. This figure doubled in less than 20 years, and recorded at 62 percent in 2021, and the study states that auto-enrollment in retirement plans played a big role in the uptick.

While millennials and boomers might complain about Gen Z’s attitude in the workplace, there is no denying that this generation has become financially independent at a very young age. According to a Mintel study, the majority of the Gen Z population in India is motivated to realise their future ambitions, with 91 percent focusing on the importance of ample savings to reach their goals. The study also states that 77 percent of Gen Z consumers aspire to become homeowners, 59 percent dream of buying a car early in life, and 55 percent desire to travel abroad. As per this Mintel report, Gen Z consumers understand the necessity of saving for financial independence, and 88 percent believe it is necessary to get the best deal on every purchase.

Experts feel that while Gen Z’s aspirational goals are attainable in terms of savings, they don’t necessarily guarantee a comfortable lifestyle.

Multiple studies reflect that most people between the ages of 19-24 have a strong entrepreneurial spirit and have managed to generate multiple revenue streams, or are brainstorming to launch their own businesses. The reason for the same, according to David Stillman, researcher and generations expert, could be that “Gen Z [is] coming of age during the recession, [so] they are putting money and job security at the top of the list.” In the next five years, Gen Z is expected to be the dominant generation in the workforce. They will bring their own set of qualities, beliefs, and modus operandi. And as they hustle to make their mark and fulfil their goals of a long retirement tenure, they’ll need to be more realistic about their finances.

In another study conducted by Northwest Mutual’s Planning & Progress Study for 2023, 65 percent of Gen Z-ers expect to be financially prepared for retirement by the age of 60 by saving $1.2 million—a significantly higher number compared to millennials who stand at 54 percent, Boomers at 52 percent, and Gen X being the lowest at 45 percent. Gen Z also expects to live up to 100 years.

Experts feel that while Gen Z’s aspirational goals are attainable in terms of savings, they don’t necessarily guarantee a comfortable lifestyle, owing to steady inflation, and, of course, the lengthy retirement tenure. Javeri Gokhale, Chief Strategy Officer, President of Retail Investments and Head of Institutional Investments at Northwestern Mutual, states “those are bold and fantastic goals—which means that they will have to be intentional about planning to live four decades of worry-free life in retirement”. Experts who read the study also claim that Gen Z’s $1.2 million retirement expectation does not factor in costs that increase with age, like medical bills, which could put a damper on their plans for an early retirement.