Dec 8, 2022 - Economy

Generation Z has a different view of retirement

Illustration of a briefcase in a trash can.

Illustration: Gabriella Turrisi/Axios

Younger generations of Americans have visions of early retirement, but what that actually means is an evolving concept.

Why it matters: “You’re looking at a generation that’s thinking in a much more agile way,” The Harris Poll CEO John Gerzema tells Axios.

By the numbers: 43% of Gen. Z workers (people up to 25 years old) plan to retire before age 65, according to a Harris Poll conducted on behalf of the Transamerica Center for Retirement Studies.

  • Not surprisingly, expectations get less optimistic with each successive generation. 37% of Millennials (age 26-41) — many of whom are more likely by now to have seen the realities of a retirement account — said they expect to retire before 65. Generation X (42-57) came in at 24%.

The big picture: Gen Zers' expectations for early retirement may have less to do with overly confident financial projections, however, and more to do with a fundamental shift in attitudes about what work — and therefore retirement — really is.

  • Younger people, including 41% of Gen Zers, are significantly more likely to dream of paid second acts in retirement, the survey found.

What they're saying: “When you ask a young person about retirement and you ask an older person about retirement, they’re thinking about two fundamentally different things,” Northwestern Mutual executive vice president Christian Mitchell tells Axios.

  • “Retirement may be a second career, retirement may be doing more gig work, retirement may be working for a nonprofit. They’re thinking about it in more nontraditional ways.”

Yes, but: There are also some potential red flags between now and retirement, whatever it means, for Gen Z.

  • For one, they are more likely than other generations to embrace alternative assets, such as crypto and NFTs.
  • Their path to financial independence in their 60s is off to a rocky start, weighed down by recent stock market losses, cryptocurrency’s winter and the continued burden of student loans.

Meanwhile, 79% of people ages 18-24 say high inflation and market volatility "has significantly increased" their "financial stress," compared with 59% of ages 65 and up, according to HR consultancy Mercer's recent Inside Employees' Minds research.

  • Only 35% of Gen Zers say that saving for retirement is a financial priority for them, compared with 48% of millennials and 66% of Gen Xers, according to The Harris Poll.

The bottom line: The definition of retirement is changing.

Go deeper