5 Retirement Contingency Plans Gen Z Can Start Working on Now

No one wants to spend their 20s or 30s thinking about what could go wrong decades from now. But if there’s one thing we can learn from what boomers and Gen X are dealing with, it’s that retirement doesn’t always go as planned.

Some older Americans spent decades saving diligently, only to watch the market tank right as they were ready to retire. And others were even forced to delay retirement altogether due to a variety of factors, like inflation and medical costs.

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But don’t worry. If you’re still young, you have plenty of time to do things differently. Here are a few smart (and not-so-obvious) retirement contingency plans Gen Z can start working on now.

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Build a Skills-Based Side Hustle Now

Your investments could be on track for years, and then suddenly crash 30% because of one global crisis. And though the stock market has always recovered eventually after major crashes in the past, the recovery time can take months or years.

So if you don’t want to be so dependent on your portfolio, consider investing in a high-income skill that can help you make money regardless of how the economy is doing, like content creation, coding or freelance photography. That way, you won’t feel forced to pull money out of your retirement account at a loss if you know you can earn a few thousand a month on the side.

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Consider a ‘Plan B’ Living Situation

Retiring in a high-cost U.S. city can be difficult if you don’t have much in your nest egg. If you’d rather have financial breathing room than stress about covering rent in a big city, consider moving abroad or downsizing.

Even though you might not be retiring soon, you can start researching alternative retirement destinations now.

That could mean scoping out low-cost cities in the U.S., learning about countries with digital nomad or retirement visas, joining Facebook groups or Reddit threads where expats share real numbers and experiences, learning about what it means to downsize, or calculating how much you’ll need to retire comfortably, depending on your desired living situation.

Get Comfortable With the Idea of Semi-Retirement

The idea of never working again sounds nice until you realize how long retirement can last, and how expensive healthcare, housing and just living can be.

If you don’t mind continuing to work after 65, semi-retirement can be a plan that works better for you than fully retiring. That can mean working seasonally or part-time doing something you enjoy, taking a few years off and returning to work later, or taking mini-retirements throughout your life instead of saving it all for the end.

What makes semi-retirement worth considering is that it gives you more control and lets you stay financially afloat even if the markets don’t cooperate.

Don’t Rely on Just One Type of Investment

Even the most “safe” investments can take a hit when the economy gets shaky. Stocks go through bear markets. Bonds lose value when interest rates spike. Real estate markets can crash. In other words, there’s no such thing as a totally risk-free investment. That’s why you should never put all your eggs in one basket when it comes to investing for retirement.

So if you haven’t already, work with a financial planner to help you create a mix of assets that can support you no matter what the market’s doing. You’ll also want to diversify your income streams so you can keep growing your retirement fund even if you lose your main source of income.

Pay Off High-Interest Debt

You can have a diversified investment portfolio, a fully loaded retirement account and a six-figure income, but if you’re still carrying high-interest debt into your 50s and 60s, it can drag down everything you’ve worked for. Especially in retirement, when you’re no longer earning a full-time income, debt payments can feel heavier than ever.

If you focus on paying off high-interest credit cards and minimizing lifestyle inflation in your 20s and 30s, you free up money that can go toward savings, investing or building the kind of flexibility you’ll need later. It also makes it easier to retire on your own terms, without being tied to monthly payments that limit your options.

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