Gen Zers aiming to retire earlier than boomers, study shows

Not only does Generation Z have big retirement plans, but a new study shows its members are actively taking steps to achieve them.

According to Northwestern Mutual’s 2022 Planning and Progress Study, those Americans between the ages of 18 and 25 — otherwise known as Gen Zers — are seeking to enhance their financial well-being with the relatively aggressively goal of retiring at age 59.

More than any other generation surveyed, members of Gen Z improved their financial habits during the pandemic, with 70% of respondents reporting higher savings over that time period. The youngest American adults were also more likely to seek professional financial help, with nearly three in 10 (29%) saying they did not have an adviser before the pandemic but have either “started working with one or plan to moving forward.”

Furthermore, even though they made significant gains during the pandemic, the Gen Z respondents realized they still have room for improvement, with close to 75% of those surveyed admitting that their financial planning needs improvement.

“It’s encouraging to see the youngest generation of adults showing an inclination to plan and holding themselves to a high bar,” Christian Mitchell, executive vice president and chief customer officer at Northwestern Mutual, said in a statement. “Developing a plan isn’t just the first step toward achieving your long-germ goals, it’s also what allows you to enjoy your life more along the way.”

“This trend mirrors similar shifts within the millennial generation seen over the same period," said Brian Bunker, senior director of practice management and consulting at Stratos Wealth Partners. "Throughout the pandemic, many people had the opportunity to save — a lot. And while they may not have felt financially secure during those years, the fact remains that many younger investors started saving significant sums. This presents an opportunity for advisers and investors to develop mutually beneficial relationships as this generation begins to plan for the future.”

Elsewhere, the report showed that Gen Z members had an extremely high level of belief in their ability to achieve financial security. They plan to retire before the age of 60 — a full 12 years earlier than the mean age at which boomers expect to retire, according to the report.

Nevertheless, despite their drive to stuff their retirement accounts so they can comfortably retire at 59 or earlier, Gen Z members say they're not obsessed by money, with almost two-thirds (64%) of respondents saying “personal fulfillment” is more important in a career than money (36%).

“The fact that Gen Z had the largest increase in seeking professional financial help and increasing their savings rate is not a surprising finding due to their stage of life," said Robert A. Pearl, wealth advisor at SageView Advisory Group. "This generation was graduating from college and getting their first professional jobs at the beginning of the pandemic and have continued as we have been battling inflation. Since Gen Z entered the workforce, the labor market has been historically strong, leading to higher wages and more leverage for employees. The forecast for 2023’s economy is still uncertain, so Gen Z should be doubling down on their savings efforts and focusing on their financial and mental resiliency.”