8 Mistakes Gen Z Is Making When Planning for Retirement
Generation Z may have the longest timeline to retirement of anyone currently working, but those who are already beginning to save for it may not yet have the life experience to know what they’re doing wrong.
According to a study by the TIAA institute, Gen Zers who are not saving for retirement don’t know where to start, leaving only 20% of them saving for their golden years at all.
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Experts explained some mistakes Gen Zers may be making so they can start to get ahead before they run out of time.
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Gen Zers may be missing out on possible savings by failing to budget, according to Anne Marie Ferdinando, member outreach manager at Navy Federal Credit Union.
“Your budget will be a helpful guide to keep your spending within certain parameters, but it should specify some savings goals, as well,” Ferdinando said. “To ensure you are staying on track, you should also check in on your budget regularly to see if or where you need to make changes.”
An easy step to take is to put aside “found” money, she advised.
“Invest birthday or holiday cash gifts, work bonuses and tax refunds directly into your savings account and see how quickly you can reach your savings goal,” Ferdinando said.
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For Gen Zers, retirement may seem like a world away, but the earlier you can start saving for retirement the better, said Ferdinando.
If you’re not taking advantage of any employer sponsored retirement plans and maxing out what they will match, you’re literally miss out on free money, she said.
Without a budget, it’s easy to overspend.
“Get into the habit of being aware of what’s in your wallet and your bank accounts,” Ferdinando said. “I recommend tracking your daily or weekly purchases to see if these have increased over time, to get a better sense of your financial shifts.”
Gen Zers tend to favor flexibility over consistency, according to Matthew Reakus, CFP with Sound Wealth.
While this makes sense, as many of them are just starting their careers, he pointed out, “when it comes to retirement, consistency is king.”
He urged them to make small but steady contributions to retirement accounts starting now, which can make a major difference over decades.
“Avoid the start-stop habits and try for a constant contribution, even during life’s bumpy phases,” Reakus said.
Because Gen Zers are younger, they may feel like they have all the time in the world to save up for retirement, but Reakus noted that time is exactly the secret they have on their side.
“And that’s what makes early saving so powerful,” he said. “Even if you’re putting away a small amount, compound growth will take your funds further than you’d expect.”
Even $50 a month to start can add up significantly over time.
Because Gen Zers grew up in the digital age, many of them may lean toward tech-heavy portfolios, Reakus said.
“But too much exposure to a single sector, especially a volatile one, can lead to big risks,” he explained. “Balance is key here — don’t be all-in on any one trend or industry.”
If retirement still feels like a far-off goal, it may be a lack of financial literacy, Reakus pointed out.
“Knowing the ‘why’ behind saving and investing decisions is empowering,” he said. “Seek out resources, ask questions and dive into the basics of budgeting and investing — this helps you invest in a lifelong skill set.”
Planning for retirement might seem like a distant goal for Gen Zers, but each of these steps can make the journey smoother and put more money in the pot later on.
A steady approach, combined with a willingness to balance current trends with future goals, can help them retire with more than just a hope and a dream.
While Gen Zers are young, and estate planning is likely far from their minds, the unexpected can happen at any age, Betsy Simmons Hannibal, senior legal editor for Nolo.com, pointed out.
“Estate planning can protect you, your assets and your loved ones from the fallout of an unexpected accident, medical event or other emergency,” Hannibal said.
While she doesn’t recommend perseverating on end-of-life issues, it still makes sense for them to plan for the unexpected.
“For young people, estate planning is like rental insurance or putting on your seatbelt,” Hannibal explained. “These are things we do, not because we expect something bad is going to happen, but because we know that the possibility of bad things happening exists, and we want to protect against them.”
Estate planning is not just planning for who gets your stuff when you die, it’s also about who will make medical and financial decisions for you if you cannot speak for yourself.
“So even though Gen Z might not be worried about death and might not have accumulated as much stuff as older generations, they still have their health and financial well-being to protect,” she added.
Taking little steps now can put Gen Zers on solid financial position by the time they come of retirement age.
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