Schwab 401(k) Study: Gen Z Wants to Retire by 61, but Reports the Greatest Financial Stress, Savings Obstacles

Rhea-AI Summary

Younger workers face obstacles to saving for retirement, but are willing to forgo raises for better benefits and flexible work arrangements

Positive

• Younger workers (Gen Z) want to retire at age 61, but 99% say they are facing obstacles to saving for retirement, a 9% increase over last year
• Gen Z workers are more willing than older workers to forgo a salary raise for better benefits or more flexible work arrangements

Negative

• Financial challenges are impacting younger workers' ability to save for retirement
• Gen Z workers are experiencing financial stress that is impacting their ability to do their job

Younger workers most willing to forgo a raise for better benefits, flexible work arrangements

WESTLAKE, Texas--(BUSINESS WIRE)-- The youngest members of the workforce say they face the most obstacles to saving for a comfortable retirement, yet their timeline to ‘logging off’ for good is the most ambitious, according to Charles Schwab’s annual nationwide survey of 401(k) plan participants. Gen Z workers (21 – 26 years old) want to retire at age 61, but 99% say they are facing obstacles to saving for a comfortable retirement, a nine percent increase over last year and higher compared to 88% of Millennials, 91% of Gen X and 86% of Boomers. Inflation (54%), keeping up with monthly expenses (35%), and paying for unexpected expenses (31%) are among Gen Z’s top obstacles. Gen Z is also the most likely to say financial stress has impacted their ability to do their job (26%), followed closely by Millennials (22%), while Gen X (15%) and Boomers (10%) report a much lower impact.

“Younger workers are still finding their financial footing in an economic environment that is challenging for everyone. They are just starting out, so it’s no surprise that they may feel greater financial pressure, especially with such an ambitious timeline to retirement,” said Brian Bender, Head of Schwab Workplace Financial Services. “However, saving for retirement and paying the bills doesn’t need to be an ‘either/or’ situation. You can work toward multiple financial goals at once. This is especially important for younger workers to remember as student loan payments resume and become yet another monthly expense for many.”

Despite the financial challenges that younger workers are facing, they are more willing than older workers to forgo a salary raise for better benefits or more flexible work arrangements, such as a hybrid or remote setting or more flexible hours.

Willingness to Forgo Salary Raise For…

	Better Benefits	More Flexible Work Arrangement
Gen Z	86%	76%
Millennials	74%	67%
Gen X	60%	49%
Boomers	50%	29%

Managing financial stress

More than half of all workers say that their employer did something in the past year that helped them manage their financial stress. Gen Z (71%) is the most likely to say that their employer took steps to help in the form of increased pay (31%), increased 401(k) match (25%), increased current employee benefits (23%), additional bonus (19%), decreased hours for better work-life balance (17%), and new employee benefits (15%).

“It’s great that employers are already playing such a big role in helping workers manage financial stress,” said Marci Stewart, Director of Communications Consulting and Participant Education at Schwab Workplace Financial Services. “Employers should continue to focus on areas that are challenging workers the most when it comes to financial wellness and retirement saving. That can go a long way toward helping to boost retention and slow job hopping among younger workers.”

Gen Z - The Advice Generation

More than any other generation, Gen Z workers think their financial situation warrants advice from a professional (Gen Z (62%) vs. Millennials (56%), Gen X (56%), and Boomers (52%)). Specifically, they would like more personalized 401(k) advice as almost half are not sure what investments to choose for their 401(k). Gen Z is also much more likely than older workers to want more help managing their current expenses to save more for retirement (Gen Z (41%) vs. Millennials (31%), Gen X (26%), and Boomers (14%)).

I would like personalized investment advice for my 401(k)			I don’t know what investments to choose for my 401(k)
Gen Z	83%		Gen Z	48%
Millennials	78%		Millennials	38%
Gen X	75%		Gen X	36%
Boomers	62%		Boomers	28%

Gen Z is already tapping into several sources for advice more proactively than their older peers – 98% say they are currently seeking financial advice from at least one source, compared to 81% of Millennials, 82% of Gen X, and 85% of Boomers. Over half (52%) are asking family and friends for advice. They are also accessing advice through their 401(k) plan provider (37%), employer (31%), financial advisor (30%), and social media (28%).

The survey also found Gen Z (75%) and Millennials (66%) are comfortable asking AI tools for help with financial planning, but adoption is still very low across generations (Gen Z (9%), Millennials (8%), Gen X (3%) and Boomers (2%)). Gen Z and Millennials are more likely to follow recommendations from a human financial professional than a computer, but they are more open to both types of advice overall than their older peers.

I am likely to follow recommendations from a human financial professional			I am likely to follow computer-generated recommendations
Gen Z	97%		Gen Z	87%
Millennials	97%		Millennials	85%
Gen X	95%		Gen X	74%
Boomers	93%		Boomers	61%

“It’s encouraging that younger workers are so open to different sources of human and digital advice, and that they are actively seeking it out,” said Stewart. “When workers engage, that’s when a professional can really help them with decision-making and financial next steps. We know having a plan in place boosts employee confidence and can lead to better outcomes.”

About the survey

This online survey of 1,000 U.S. 401(k) plan participants was conducted by Logica Research between April 19 and May 2, 2023. Survey respondents were actively employed by companies with at least 25 employees, were 401(k) plan participants and were 21-70 years old. Survey respondents include participants served by approximately 15 different retirement plan providers. All data is self-reported by study participants and is not verified or validated. In order to analyze Gen Z results against other generations, an additional 100 plan participants aged 21 to 26 completed the survey. Detailed results can be found here.

About Charles Schwab

At Charles Schwab, we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at aboutschwab.com. Follow us on Twitter, Facebook, YouTube, and LinkedIn.

Disclosures

Workplace Financial Services is a business enterprise which offers products and services through Schwab Retirement Plan Services, Inc.; Schwab Stock Plan Services; and Designated Brokerage Services. Schwab Retirement Plan Services, Inc., provides recordkeeping and related services with respect to retirement plans. Schwab Stock Plan Services is a division of Charles Schwab & Co., Inc. providing equity compensation plan services and brokerage solutions for corporate clients. Schwab Designated Brokerage Services (DBS), a division of Charles Schwab & Co., Inc., provides technology solutions for corporate clients with regulatory requirements to monitor employee security transactions. Schwab Retirement Plan Services, Inc., and Charles Schwab & Co., Inc. (“Schwab”) (member SIPC, www.sipc.org), are separate but affiliated entities, and each is a subsidiary of The Charles Schwab Corporation.

1023-3ZV0

View source version on businesswire.com: https://www.businesswire.com/news/home/20231011994442/en/

Mike Peterson

Charles Schwab

330-908-4334

mike.peterson@schwab.com

Carly Taylor

The Neibart Group

973-618-6993

SchwabRPS@neibartgroup.com

Source: The Charles Schwab Corporation

FAQ

What age do Gen Z workers want to retire?

Gen Z workers want to retire at age 61.

What percentage of Gen Z workers are facing obstacles to saving for retirement?

99% of Gen Z workers are facing obstacles to saving for retirement.

What are the top obstacles for Gen Z workers?

The top obstacles for Gen Z workers are inflation (54%), keeping up with monthly expenses (35%), and paying for unexpected expenses (31%).

Are younger workers willing to forgo raises?

Yes, younger workers (Gen Z) are more willing than older workers to forgo a salary raise for better benefits or more flexible work arrangements.

What steps have employers taken to help workers manage financial stress?

Employers have taken steps such as increased pay, increased 401(k) match, increased current employee benefits, additional bonus, decreased hours for better work-life balance, and new employee benefits.

Do Gen Z workers seek financial advice?

Yes, Gen Z workers seek financial advice and are already tapping into several sources for advice, including family and friends, 401(k) plan provider, employer, financial advisor, and social media.

Are Gen Z workers comfortable asking AI tools for help with financial planning?

Yes, Gen Z workers are comfortable asking AI tools for help with financial planning, but adoption is still low across generations.

Do younger workers follow recommendations from human financial professionals?

Yes, younger workers are more likely to follow recommendations from a human financial professional than a computer.

Why is engagement important for workers seeking financial advice?

Engagement is important because it allows professionals to help with decision-making and financial next steps, leading to better outcomes.