A growing share of Gen Z adults don't think they'll retire: only 20% are saving for it
America's youngest adult generation is projected to live longer than previous generations, but few of them are preparing for a traditional retirement
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Gen Z is the youngest generation of adults today, but with many struggling to make ends meet, a growing proportion say they do not expect to retire and few are socking away money to do so.
A new report from the TIAA Institute and UTA's NextGen Practice found that a greater share of these adults age 27 and below do not anticipate retiring – at least in the traditional sense – after prior data showed nearly half of young adults either don't want to retire, don't believe they will be able to afford to, or are not thinking about it at all.
Gen Z as a whole has a very different view of retirement than previous generations, and a growing proportion of young adults say they do not plan on retiring at all. (iStock / iStock)
What's more, just 20% of Gen Z respondents of working age say they are saving for retirement at all. While planning for retirement is important for everyone, saving for the future is critical for this generation that is projected to live past 100 years old. Yet, a higher cost of living could be impacting their ability to do so.
The study found that almost one-third of Gen Z (29%) are living paycheck-to-paycheck, with most of their money going to funding their basic needs, making it increasingly difficult for them to achieve financial milestones like homeownership while saving for their financial futures.
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"Thirty-six percent of respondents cited high debt or low income as the primary reason they are not saving for retirement," Surya Kolluri, head of the TIAA Institute told FOX Business. "Gen Z is spending more on essentials than previous generations."
Inflation is weighing on Gen Z's finances more than prior generations, data shows. (iStock / iStock)
Kolluri said it is true that Gen Z is bearing the brunt of inflation more than the generations that preceded them, noting that as of this year, the annual inflation rate for Gen Z was half a percent higher than it was for other generations at the same age.
But Kolluri pointed to some positive findings in the data, too. He said that while only 1 in 5 reported saving for retirement, 66% of those who are saving for retirement are doing so through 401(k)s.
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There is also at least an awareness amid Gen Z'ers that it is important to save for the future. Eighty-four percent report saving a portion of their income each month (albeit not for retirement), and 57% say they have a budget that they stick to.
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Kolluri noted 52% of Gen Z reported putting savings into savings accounts because they value the liquidity that supports current financial freedom.
"They do not equate saving for retirement as helping to ensure their financial freedom later in life…and ‘freedom’ is a concept that is very important to Gen Z," he said. "They want flexibility and access to savings if and as they want."