Millennials and Generation Z have the right idea but circumstances change
With high employment and rising wages, millennials and Gen-Zs know that saving for retirement while they are young is good advice.
But while a new survey shows that 71% of Gen Z and 82% of millennials do not feel too young to start saving for retirement, the issue is how to stop them spending what they’ve saved.
The poll by US money management firm Betterment for Business found that 88% of respondents are active monthly savers with almost half on a mission to save at least US$1 million for their retirement.
Almost three quarters of respondents are contributing at least 3% of their monthly salary to their retirement savings plan.
But one in three said they have dipped into their retirement savings for paying off a credit card, student debt, or medical bills.
And with these generations focused on experiences more than material goods, almost a quarter said they have tapped savings for travel and leisure activities.
Education is key
"It's clear that millennials and Gen Z want to save for retirement, but this goal can be deprioritized when they're faced with student debt, medical bills, or other expenses that arise," said Edward Gottfried, Director of Product at Betterment for Business.
Gottfried says that while employers are offering a range of help for workers such as financial wellness benefits, retirement plans and matching contributions, education is key.
“They should be doing more to educate young workers on things like how to best utilize these offerings, how much they should be saving, and the importance of not withdrawing money from funds early,” he said. “Retirement will look very different for these next generations, so helping them understand the fundamentals of personal finance has never been more important."
