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Why Gen Z Sees No Point In Saving Right Now

The pandemic affected all of our lives so drastically and there are still ripples of it in the waters all around us. One of the areas its waves touched is how the younger generations are looking at and planning for retirement. In fact, some have stopped saving towards it entirely, choosing instead to make “investments” elsewhere.


Putting Money Anywhere But The IRA

Fidelity Investments 2022 State of Retirement Planning report took a look across the generations at retirement savings. They found that a massive number of Generation Z, 56% to be exact, have completely put their retirement savings on hold during the pandemic. Completely.


Bucking Expert Advice

And halting savings for retirement is going against what nearly every expert advises. These experts encourage everyone to begin planning and saving for retirement by age 25. If you save 15% of your pre-tax income at this age you will greatly benefit from the compound growth of your accounts. This is a solid fact. And Gen Z has actually normally killed it at savings. In fact, per Transamerica Center Retirement Studies, this generation has traditionally started retirement savings at age 19. So why then are more than half of them stopping now?

Photo: Mikulski

Choosing To “Diversify”

As stated above, the pandemic has changed our lives. It took away our “normal” for months and has brought us to where we are today–a new normal. Gen Z feels this too. Before they add to their retirement savings, they are choosing to “diversify” their investments and bet on themselves.

Sometimes this “investing in self” looks like travel and participating in the activities they missed out on the last two years of their lives. They are creating memories and experiences to enrich their lives.

They are also investing in their own personal growth to make themselves more valuable.


Investing In Yourself Rather Than The Market

The stock market, especially recently, can be volatile. Its ups and downs are hard to watch. And inflation in September of 2022 was at a staggering 8.2%. Money put into savings and investment accounts is often shrinking or stretching less far.

Because of this, many in Gen Z are choosing to spend money on bettering themselves rather than placing it in an IRA or 401(k) account. They are going to college to finish degrees, get graduate degrees, and are getting certifications, or starting their own businesses. They are essentially making themselves more marketable. They are upping their skills so they are more valuable in the job market.

Photo: Business Images

Investing In Yourself Is Retirement Planning

Taking the time to hone your skills and make yourself a valuable “commodity” is forward-thinking and does pay off in the long run. Your salary increases and as you find that stable income you are more ready to start those retirement savings. You may begin a little later than some, but you will be able to contribute more. Fifteen percent of a higher salary is more retirement savings.


Just Have A Plan

There is no “one-size-fits-all” plan for retirement. We are all individual human beings with individual needs and desires. The most important part, per Lauryn Williams, a certified financial planner and founder of Worth Winning, is having a plan at all. “The biggest thing is always that planning piece of the puzzle,” she says.

With the plan in place, it’s time to execute. If you know you want to finish a master’s in your field, take the necessary steps in your life to make that happen. You may need to cut back spending on eating out and 401(k) contributions to make that degree happen. Keep your eye on the prize and adjust as needed, where needed. And readjust when the degree is finished. It’s a matter of always moving and growing and betting on yourself.