When mentioning retirement to Generation Z, you may think you’d get an eyeroll–that it’s simply too early to be a concern to them. But according to a study from BlackRock, Gen Z is saving an average of 14 percent of each paycheck for retirement. Yet despite this optimistic savings rate, over a third of them believe $250,000 is an adequate amount saved, compared to Baby Boomers, who believe $1-3 million is needed to retire comfortably. This stark generational contrast reflects different levels of financial literacy. Many people believe Gen Z has an unrealistic idea of how to plan financially. Gen Z is still coming of age and does not yet have the financial footprint that older generations have; its members’ financial habits are now being discovered and may even change in the future.
Being aware of both this high savings rate and this unrealistic assessment of what it takes to have a comfortable retirement, advisors can home in on providing guidance to a financially uninstructed generation. Generation Z is juggling a lot of financial challenges: inflation, housing, and health care costs, among many others. 72% of Gen Z say they would save less for retirement if faced with other big-ticket goals, according to the BlackRock study. This figure attests to the notion that Gen Z have a lot of financial challenges to juggle and would therefore benefit from financial guidance. Financial advisors have their work cut out for them if they want to help Generation Z meet all their financial goals