💸30% of Gen Z are Making this one Financial Goal a Top Priority, Leaving them $33k Better off!

Gen zers are no stranger to change. Many of us were barely enrolled on our uni courses before the pandemic kicked us in the butt. And now we’re entering the workforce only to find it littered with layoffs. Ugh. I bet you all know someone who’s been fired recently. And something tells it’s going to get a whole lot worse before it gets better. (Psst: read here how to bullet-proof your finances to survive a layoff).

When it comes to nasty economic times, pretty much like the one it feels we’re going through or about to enter, the one thing people ditch is their finances.

And not just any area of finances: our precious pensions!

And young workers like us have every reason to quit saving for retirement or at the very least have a loooong pause. After all, inflation is at a 40-year-high gobbling up what little disposable income we have, not to mention the fact that our wages are barely keeping up. We might think if we stopped sending funds to our future self, would it even make a difference.

Gen z is bucking the trend and we’re caring for our futures

We’re resilient little zoomers. We ain’t giving up. Gen zers are not taking the risk. We are not making the same mistake.

Forbes found that gen zers are investing 20% of their salary on average to fund their retirement! This is despite a looming recession, a bear market and inflation/interest rates.

Trust me, if anyone has an excuse not to invest for retirement right now, it’s us!

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We don’t own a property, many of us still living at home and we’re asset- light folks. Despite all that, we’re taking advantage of the one thing we do have over our older gens: time.

If you want more money in retirement you have 2 options: 1) invest a little over a long period of time or 2) invest a lot over a short(er) period of time. You know which one we’re choosing! Time + money is the only 2 ingredients we need for this pension pie to grow. 

I’m currently investing 15% of my salary into my pension so I’m a bit below the average, actually! I did the calculation, if I have £5k in my pension pot at the end of the year, and it remains invested for 50 years, I’ll be left with £99k!!!! If that doesn’t blow your socks off then I dunno what will. We’re talking £5k here, not a tiny sum I know but it’s nothing drastic, either.

Small is powerful! Look what it can do for you

See what small investments over a really long time can do! So even if you can’t afford to invest that much in your pension, at least make sure you’re investing something. A small sum over a bunch of decades is infinitely better than nothing! Read here why you must think about your retirement now, not in 20 years’ time! 

The interesting thing is that pre-covid only 7% of gen zers had any sort of retirement account. Now that number has jumped to over half (59%). I think we’re worried about the future. And rightfully so. When people get laid off, when the stock market sours, when our money can no longer buy it what it used to, when we’re having to cut back, it is 100% normal to feel helpless but gen z – my gen – is taking control of their future.

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We’re controlling what we can control – like how much we’re investing for our future, and how often. We’re making sacrifices now (many of us don’t own cars – nor do we want to!) so that we get to have a comfortable pension pot later down the line. Read here what you should do the minute you start earning for a lifetime of freedom.

We’re taking control of our futures

Putting away 20% of our salary has, according to a report by TransAmerica Center for Retirement studies, meant that gen z has a median of $33,000 across all of their retirement savings accounts!

How does that compare to other gens? $162,000 boomers have $162, gen x has $87k while millennials have just $50k. The estimated median savings among all workers is $67k.

This isn’t a surprise – we’re the youngest of the bunch and have just started the workforce so it makes sense we have lower amounts but we’re actually saving a much bigger % of our salary than the others! The experts recommend 10-15% of our salary should go towards retirement saving. Gen z is clearly smashing this one outa the park! 

It’s never too early or too late to start investing for your future

But whatever stage of life you’re at, it really is never too late (or too early) to start saving for retirement. It creeps around quicker than you think and when you get older, you have more responsibilities (KIDS!!!) that usually means your money has to stretch farther.

Obviously when you’re young (and living at home) you have the luxury of being able to save way more. So take full advantage of that. Different stages of life call for different things and when you start having kids you might not be able to afford to devote such a high % of your salary to retirement savings and that’s totally normal. 

Just make sure that when you can, for as long as you can, you’re showing your retirement account some love. 

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It’s so much easier to cut back when you’re young than when you get old. The trouble is that things that should be seen like luxuries – like owning your own car – have morphed into “must-haves”. This is a dangerous mindset.

You’re committing yourself to monthly payments, paying off a depreciating asset when you could channel all those $$$ to your future. The thing is, we don’t like to be different and we don’t like to stick out. We also don’t like making the hard choices.

But my gen got off on the right foot. We’ve got our priorities straight! We don’t wanna be tied down by bills, bills, bills. We wanna be free to choose how and when we spend our time. And what better way to do that than making sure we’ve got a comfy retirement waiting for us. 

Do what no one else is doing now to live a life no one will live later. Hard choices make for an easier life. Dare to make the hard choices and prioritise your finances and your future You! 

Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment

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