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  2. Generational Investment Behavior: Gen Z

Apr 6, 2022

In today’s episode of the “Inside the Plan with the 401(k) Brothers”, host Bill Bush and Andy Bush, advisors at Horizon Financial Group, initiate the ‘Generation’s Series’ where they would go generation-by-generation and talk about some of the saving habits and what's on the minds of individuals. The majority of this generation holds a certain characteristic trend as they're at different stages in their lives. So, in this first episode of the ‘Generation’s Series’, they're going to talk about Generation Z and their behavior when it comes to retirement and saving as per surveys and other resources.

 

 

Episode Highlights

  • 01:50 - Millennials are raising young kids right now, whereas Gen Xers are having children leave the house. Baby Boomers are probably grandparents now.
  • 03:45 – Bill says, folks born between 1997 and 2012 belong to Gen Z. That generation size is about 67 million.
  • 05:43 - The point is that even though for a 23, 24, or 25-year-old, it is nearly impossible for them to even imagine being 65, says Andy.
  • 06:15 – Bill mentions that those pennies you're putting away in your early 20s become the dollars - tens of dollars, or hundreds of dollars over time.
  • 09:30 – Andy states, as per the survey, 73% of Generation Z respondents are contributing at least 3% of their salary to the retirement plan. 
  • 11:10 – According to the CGK Survey, 28% of Gen Z respondents said that they plan to work in some capacity after retirement, and 52% said they will use personal savings to finance retirement, points out Andy.
  • 13:16 – Andy highlights, you cannot control the stock market or the industry trends, but you can control your spending, and savings habits, and those are the things that are within your control. 
  • 15:23 – 38% reported tapping into the retirement fund for an unexpected medical cost while 23% said they did so to fund a travel or leisure activity, mentions Bill.
  • 17:05 – 75% of Gen Z currently maximize their company's match, and 50% have up to their monthly contribution over the past year. 
  • 18:00 - Andy says that Gen Z is projected to hit $33 trillion in income by the year 2030. That'll be more than a quarter of the global income, so that's a big generation.

 

 

Three Key Points

  1. It's hard to grasp when you're that young and making dollars for the first time, but it's the future goals, especially retirement goals are going to be funded by funds that you chose not to spend today. Essentially what saving for retirement is that I want to be funding something in retirement by not spending that dollar now? As a 20 something-year-old, that's hard to do, because they're coming into their own money for the first time. 
  2. You need to be able to save around 15% for your working career for you at the age of 65 to have the best option to retire or not. If you don't do that, then you get to 65 and you look up and say, how am I going to pay my bills?
  3. You need to be careful about trying to identify your life with external stuff and travel. Now, you want to experience great things in life, but don't feel like you're missing out if you don't do that before you're 28 or 30. 

 

 

 

 

 

Tweetable Quotes

  • “Who's your best friend when it comes to investing? It’s time. Time is your best friend. So, the more the longer time you have, the better off you are.” - Andy Bush
  • They had a study and 71% of the Gen Z’s and that surveyor said that they don't feel too young to begin saving for retirement, which is the encouraging part.” – Andy Bush
  • “88% are actively saving every month, including into their retirement plan.” – Andy Bush
  • “77% of the Gen- Z said thinking about finances causes them to stress.” – Andy Bush
  • “75% of the participants in that study of Gen Zers reported credit card debt. Almost one in three said they owe more than $5,000.” – Bill Bush
  • “Debt is kind of a little bit of cancer to folks that are trying to save.” – Andy Bush
  • “The dollars from your younger life have more time to compound from growth over time, and if you strip those away, you can't replace them through the benefit of time.” – Andy Bush
  • “Gen Z has a strong appetite for financial education and is opening a savings account at younger ages than did prior generation that comes from Kasasa.” – Bill Bush

 

 

Resources Mentioned