401(k) Specialist Issue 3 - 2022 - 44

401(k) END NOTES
Gen Z Retirement Saving: Why Many Ask,
'What's the Point?'
By Brian Anderson
DISCOURAGED ABOUT THE present and the
future, an alarming number of the youngest
Americans in the workforce are simply taking a
pass on saving for retirement these days.
If you have an apocalyptic vision of the
future, why would you save for it?
Sure these youngsters still have time on
their side. But there doesn't seem to be a
lot of optimism out there right now that the
future will somehow turn brighter, and it just
might be necessary to start socking away
enough to build a nest egg when immediate
gratification is right outside their front door.
Perhaps you remember a statistic from
Fidelity Investments' 2022 State of Retirement
Planning Study earlier this year, which
sparked many an article in mainstream
media about this newfound sense of no
urgency for retirement saving.
It was the one that found 45% of workers
age 18 to 35 don't see the point of saving for
retirement " until things return to normal, " and
55% in that age range with at least one investment
account said they put their retirement
planning on hold during the pandemic.
The New York Times wrote that many
adults under 35 are throwing financial caution
to the wind-saving less and pursuing
passion projects or risky careers-instead
of saving for a retirement they fear may
never materialize, given the hazards of
climate change, global pandemics, political
upheaval, wars and everything else they see
as putting their future at risk.
Add to this rising inflation, unaffordable
housing, stifling student loan debt, and the
uncertain future of Social Security and perhaps
you can forgive some young Americans
for seeing a secure retirement decades down
the road as an " absolute fantasy " (as one
33-year-old told The Denver Post recently).
There is the current trend of " Quiet
Quitting " -doing the absolute minimum
amount of work a job requires. Advisors,
don't let young workers " Quiet Quit " on their
44
ISSUE 3 2022 | 401kSpecialist.com
your foot in the door, " Wallace said. " All these
swirl together and create a situation where it
is very, very, very difficult to get young people
engaged in financial planning. "
According to new research published
There is the current
trend of " Quiet
Quitting " -doing the
absolute minimum
amount of work a job
requires. Advisors,
don't let young
workers " Quiet Quit "
on their retirement
accounts.
retirement accounts.
Denver-based financial advisor Brandon
Wallace, quoted in that same story, said the
biggest mistake he sees young people making
is to give in to hopelessness. " Things might
be difficult, but if you just pay some attention
to your finances, you won't retire to eat cat
food. You'll retire in a way where you won't
travel to Europe every year, but you won't
have to worry about where you live when
you're 75, " Wallace said. " It comes down to
lack of financial education given to us, a lack
of trust in the institutions, lack of faith it will
pay off and lack of access to resources to get
in September by Bank of America's Better
Money Habits, 73% of Generation Z (ages
18 to 25 in this study), the current economic
environment has made it more challenging
to save. They feel inflation has made it
harder to save for financial goals (59%) and
pay down debt (43%) and has created more
financial stress (56%) in their lives. Forty percent
also say surging rents or home prices
have made it challenging to afford day-today
necessities.
It's not all doom and gloom. The Bank of
America study also found two-thirds (66%)
of Gen Z respondents are actively saving
for financial goals and, despite the current
environment, 58% are optimistic about their
financial futures.
And recent research from BlackRock
found Gen Z workers with access to retirement
accounts are socking away-on
average-14% of their income. That's better
than their older counterparts, with the same
study finding Millennials, Gen X and Boomers
are deferring 12%.
But let's get back to that first question of
this column. If you have an apocalyptic vision
of the future, why would you save for it?
One good reason that leaps to mind?
Because previous generations of Americans
have also had apocalyptic visions of the
future. During the Spanish Flu in 1918. The
Great Depression. World War II. The Cold War
and its Cuban Missile Crisis, when backyard
bomb shelters were en vogue.
The future came anyway. Ignore it at your
peril, Gen Z. No senior citizen wants to eat
cat food.
Brian Anderson is the Managing Editor of 401(k)
Specialist.
http://www.401kSpecialist.com
401(k) Specialist Issue 3 - 2022

Table of Contents for the Digital Edition of 401(k) Specialist Issue 3 - 2022
