Gen Z, the generation born between the mid-1990s and early 2010s, has entered adulthood with an optimistic financial outlook. This optimism is supported by a strong labor market that has provided a significant portion of Gen Z workers with raises or better-paying jobs. In fact, according to a Bankrate survey, 75% of employed Gen Zers received a raise or found a better-paying job in the past 12 months. This optimism also extends to the future, as a majority of Gen Z, 58%, felt optimistic about their financial future heading into 2024.
However, this optimism appears to be out of step with their savings habits for retirement. Gen Z is the most likely generation to say they are saving less money compared to last year at 17%, and that they didn’t save for retirement this year or last year, at 29%. 29% of Gen Z didn’t contribute to their retirement account in 2022 or 2023, the Bankrate poll found. Despite this, 45% of Gen Z and millennial workers feel like they’re on track with retirement savings, compared to 26% of Gen X and 34% of boomers.
The strong labor market has undoubtedly helped Gen Z’s financial situation, with wages growing at a much faster pace for this age group than for other demographics. However, there are concerns about the long-term sustainability of the job market and the impact of economic cycles. Additionally, factors such as student loan debt, inflation, market volatility, potential job market fluctuations, and the rising cost of living, particularly housing, can all pose challenges for Gen Z.
In order to secure a bright financial future, Gen Z should prioritize building an emergency fund, prioritize debt management, invest early and consistently, and seek professional guidance. By taking these steps, Gen Z can increase their chances of achieving their financial goals and navigating the complexities of personal finance. While early retirement may remain a dream for some, a secure and prosperous future is definitely within reach for this ambitious generation.