Early thoughts of retirement
The Empower study, which surveyed more than 1,000 Americans about their spending and saving habits, revealed that Gen Z is planning early for their retirement. On average, they’ve started setting aside money at age 23 — a full seven years younger than the national average of 30.
“Gen Zers’ early start on retirement savings points to their focus on financial goals to enjoy life in the here and now, while being able to retire comfortably,” the survey explained.
This tracks with the generation’s overall approach to money. “Soft saving” is a popular TikTok money approach. Instead of aggressively hustling and saving, Gen Z wants to both use their money to enjoy life now, while also putting some aside for later.
But not all young people are like this. A 2023 survey from fintech company Intuit discovered that 73% of Gen Zers are hesitant to save for the long-term. Even if they are saving, 66% of them don’t think they’ll ever have enough money to retire.
Many Americans may identify more with those anxious Gen Zers than the ones building up their nest egg. However, you should take a page from the more prudent youth. Social Security isn’t enough to live on right now — and it may shrink further in the next decade.
Unfortunately, time is not your friend when it comes to retirement savings. It’s better to start putting money in a 401(k) sooner rather than later so that you can build up a good lump sum to help you retire.
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It turns out that kids care about their parents a lot: when it comes to financial planning, 21% of Gen Zers are factoring in support for aging relatives, according to the Empower survey. This is a bit higher than the 18% of families who have factored this in, but less than the 34% of extended families living together who have done the same.
This isn’t just out of the goodness of Gen Z’s heart, either. The younger generation is watching the aging population grow, while facing the reality that 28% of Americans — some of whom may be Gen Z’s own parents — don’t have any retirement savings, according to the Federal Reserve.
Even if their parents do have savings, it may not be enough. It costs an average of $23,232 per year to support a single older person in excellent health, living in a mortgage-free home, according to the Elder Index, developed by the Gerontology Institute at the University of Massachusetts Boston. The number is even higher if you’re in poor health or a renter.
The best way for those nearing retirement to plan for their long-term care is the aforementioned 401(k) savings, as well as the possibility of purchasing long-term care insurance.
But the most important thing for your long-term care financial plan is to actually have a conversation with your kids about your financial situation, even if it’s awkward. This way, you can both figure out how they can help you as you age, but you can also pass down your wisdom to help them plan for their own futures.
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