Does Gen Z Already Have a Retirement Problem?

Although they've only been in the professional sphere for less than a decade, Gen Z has already shaken up work as we know it. They're quiet quitting, overcoming imposter syndrome, taking adult gap years, and fully embracing being the personality hire. But they're also, apparently, not saving enough for retirement.

According to the Teachers Insurance and Annuity Association, a financial services company, only 20 percent of Gen Zers are currently saving for retirement. Surya Kolluri, head of the TIAA Institute, says there are a myriad of reasons as to why Gen Z may be behind on starting to save for this milestone: The cost of living is higher, financial pressures are abundant, student debt is climbing, and there's been more of a desire to achieve a healthy work-life balance and flexibility in careers instead of a six-figure salary. And of the 80 percent of respondents who haven't started saving, 35 percent of them admit they don't even know where to start.

Kolluri says one of the biggest roadblocks in Gen Z's path to retirement is a lack of knowledge. Saving, investing, and the power of compounding aren't exactly taught in schools, and there are enough fin-fluencers and resources out there to make even the most dialed-in Gen Zers feel overwhelmed.

Surya Kolluri is the head of the TIAA Institute, specializing in research on lifelong financial security.

Haley Sacks, also known as Mrs. Dow Jones, is a finance influencer, the CEO of the Finance Is Cool media company, and an American Express Rewards Checking partner.

The most common — and easiest — path toward retirement is taking advantage of an employer's 401(k). Lauren, 24, does, but while her current company matches 4 percent of her contributions, she tells PS her former employer didn't match at all. "I didn't even realize that that was such a benefit I was missing," she says. "When I would tell people that they weren't matching it they were like, what? How are they getting away with that? And I had no idea." Now, of course, Lauren is taking full advantage of her employer's plan — but she would've been more ahead in her saving game if she knew what to look for before.

Of the 20 percent of the Gen Zers surveyed currently saving for retirement, 66 percent of them do so through their employer, according to the TIAA. But thanks to dwindling job security and the rise of the gig economy, a chunk of the workforce has been left behind on retirement planning.

Angelina, 27, comes from a family of restaurateurs and is currently partial owner of a restaurant. Currently, she has zero retirement savings. Her dad, however, opened his first restaurant at 36 and was able to retire at 60. "He was able to start something and retire in less than 25 years, which I think gave me a false perception of reality," she says. "I think I'm going to be able to achieve the same thing, but I haven't saved a dime.

"I pay into social security, but that's not necessarily enough to survive on, if that even exists by the time that I'm able to collect it," Angelina adds.

Jane, 25, is at the opposite end of the spectrum: She's currently planning to retire in her 30s — at least, in a way. For most of her working life, she's held two full-time jobs and currently owns a townhouse in downtown Toronto that she rents out to tenants. She lives with her parents to save money and tells PS that 50 percent of her income goes to investments, including retirement.

Right now, she's using Financial Independence, Retire Early (FIRE) as a guide, which follows a formula of saving, investing, and frugal living to reach "financial independence" in a short time frame.

"It's a more flexible variation of retirement," Jane explains. "Retirement doesn't just take one form. There are a lot of different types of it. It's not never working — it's being work-optional, being flexible, being able to take really long breaks."

The first milestone under FIRE is called "barista fire," which Jane is currently working toward obtaining. "It gives you flexibility to be work-optional and gives you flexibility to have enough [saved] that you can be a barista, for example, or work part-time for the rest of your life so you're not dependent on a full 9-to-5 corporate job," she says. "My first FIRE milestone is hopefully saving $700,000. That would enable me to find alternative sources of income as opposed to a full 9-to-5."

Jane's not exactly the norm, however. Kolluri says that employers like Lauren's play a vital role in enabling their workers to get on a strong financial plan, meaning that freelancers or those who are self-employed, like Angelina, need to work that much harder to get themselves started. If you fall into that bucket, he says that looking into individual retirement accounts (IRAs) are a good place to start.

Haley Sacks, a financial influencer known as Mrs. Dow Jones, agrees that endless opportunities to buy and consume don't help very much when it comes to saving. "I think it's really hard when you're constantly bombarded with so much to buy and so much FOMO," she says. "It's very easy for people to spend everything that they make."

Jane, Lauren, and Angelina all cite similar reasons for their age group's lack of retirement funds: the rising cost of living, a shortage of knowledge, and endless opportunities to spend money under capitalism. "We live in a time where our FYPs and our Instagram feeds are perfectly tailored to things we want to purchase and overconsumption is so normalized," Angelina says. "I would say [Gen Z not saving] is more because of overconsumption and the need to shop that's ingrained in us versus not having things like a 401(k), or whatever the hell it's called."

Kolluri says education and instilling confidence among young people when it comes to their money is a must. Saving for retirement is vital — not only for living expenses to be covered with age, but medical expenses, too. "The average couple spends over $300,000 on healthcare in retirement in cash," Sacks says. "The funds that you're saving are not just to live in Boca and play golf all day they're also to take care of yourself as your health deteriorates."

Kolluri says that what's different about Gen Z is they value one thing above all else: freedom. "People in this demographic express interest in wanting to maintain the freedom to pursue their interests and being able to financially manage their lives," he says. "That is a new combination we have not seen in other generations."

Retirement is a long way off for Gen Zers. Angelina, though, is already looking forward to the future. "2025 is my year to get my shit together," she says.

Elizabeth Gulino is a freelance writer who covers trends, wellness, and all things lifestyle. Previously, she was a senior staff writer at Refinery29. Her work has been featured in Cosmopolitan, PS, Bustle, Wirecutter, and more.