Gen Z and Gen Alpha are the generations that are often overlooked when it comes to saving for retirement. However, these younger generations should start to think about their financial future early on. With the rising cost of living and uncertainty surrounding social security, it is important for Gen Z and Gen Alpha to prioritize saving for retirement. Saving at a young age, sounds uncool but they can take advantage of compound interest and have a longer time horizon to grow their investments. It may seem daunting, but with proper financial planning and education, Gen Z and Gen Alpha can set themselves up for a secure and comfortable retirement.
- Build Intentional Retirement Plans
- Embrace a Financial Sandbox Mindset
- Consider 401(k) Matching and Compound Interest
- Use Apps for Easy, Automated Saving
- Set Preliminary Retirement Income Goals
Build Intentional Retirement Plans
Gen Z and Gen Alpha face a retirement landscape that’s very different from what previous generations experienced. Traditional pension systems are becoming less common, meaning these younger generations need to be more intentional about building their own retirement plans. The good news is that they have incredible opportunities, thanks to the ability to earn higher incomes and the power of technology.
My advice would be to start saving early, take full advantage of employer-sponsored retirement plans, explore additional investment options like IRAs or self-directed accounts, and consider life insurance as a tool for retirement savings.
Also, don’t just think of retirement as an age; think of it as financial freedom. With the right strategies, you might retire earlier than the typical retirement age or choose to work on projects you’re passionate about, without the financial pressure. Embrace flexibility and innovation, and view your career as a tool to achieve your long-term goals, not just a means to an end.
Delante Greer, Financial Planner, Opulentia LLC
Embrace a Financial Sandbox Mindset
Gen Z and Gen Alpha should consider approaching retirement saving with a “sandbox” mindset—experiment early, fail small, and iterate fast.
Instead of locking into traditional retirement accounts right away, these generations should treat the first decade of their working lives as a financial playground, where they can explore micro-investments in diverse areas like peer-to-peer lending, fractional real estate, or even niche market stocks.
This approach allows them to build a personalized financial toolkit based on real-world experience, gaining insights into what strategies work best for them individually. By the time they’re ready to settle into more conventional retirement plans, they’ll have a solid, battle-tested foundation of financial literacy, unconventional income streams, and perhaps even a few unconventional wins that offer a unique edge over traditional savers.
The key is to make small, reversible mistakes now, so they can make confident, informed decisions later.
Austin Benton, Marketing Consultant, Gotham Artists
Consider 401(k) Matching and Compound Interest
As a recruiter, I advise young workers to consider things like 401(k) matching when job hunting. It’s not easy! They’re more likely looking at overall salary and company culture, and I’m the fuddy-duddy steering them into a role with strong benefits and portfolio options.
My strategy is cold, hard numbers. When I pull out charts showing the power of compound interest, their ears really perk up. The concept of FIRE (Financial Independence; Retire Early) is especially motivating.
Gen Z and Gen Alpha are often still grappling with the transition to full-time work, and promising them a light at the end of the tunnel can encourage candidates to go with a solid offer from an established company with good benefits.
Rob Reeves, CEO and President, Redfish Technology
Use Apps for Easy, Automated Saving
Gen Z and Gen Alpha should approach saving and saving for retirement through apps and resources that are easy to use via a web-based platform, educationally driven, and that have the ability to be set on autopilot. For example, they can utilize the app Acorns, which provides an opportunity to “round up” to the nearest dollar on the majority of purchases that will be invested for them depending on their risk tolerance. Depending on where they shop, there may even be a match. It’s an easy way to make savings a part of normal life.
Karmi Gutman, Financial Planner, Lifestyle Planning, LLC
Set Preliminary Retirement Income Goals
It’s hard to hit a target you can’t see, so the first step toward building a retirement strategy is coming up with preliminary goals for the retirement income plan. Many people spend their entire careers merely “collecting” investments rather than strategically investing toward a desired objective.
The objective (think about it in terms of desired monthly income in retirement) can evolve over time, but there must still be a meaningful, measurable target.
