What will retirement look like for Gen Z? Three ways to appeal to young workers

Ideas about retirement change with every generation, but Gen Z (those 27 and younger) face an extra challenge: They’ll live longer than ever before. Life expectancy in Canada is a little over 83 years old, but many young workers expect to live to 100, leaving decades of retirement to fund, not to mention more years to work. At the same time, a high cost of living and other economic worries make it harder to save the money needed to approach retirement with confidence. They’ll need help saving and working in ways that fit their lifestyle.

How do Gen Z workers feel about retirement?

Because of their young age, most Gen Z workers are early in their career and just settling into the workforce. According to our recent survey, this group is most concerned about the cost of living, inflation, interest rates, and other economic conditions. There’s a good reason for these fears—40% rate their finances as fair or poor. Understandably, they focus more on their debt, monthly rent/mortgage payments, and emergency savings. That’s not to say that retirement is completely out of their thoughts. They want to retire early and say 60 is their ideal age to stop working, but they’re already planning to retire late due to the cost.

How do employers factor into retirement planning?

In just five years, Gen Z will account for about a third of the total workplace and occupy nearly every entry-level position. It’s important for employers to understand the needs and goals of this generation and plan accordingly. Although the days of staying at a single organization for the bulk of one’s career are mostly over, Gen Z workers very much value financial support from their workplace. In fact, almost three in five say their employer influences their financial decisions. Additionally, most anticipate using their workplace plan as a main source of retirement income in the future.

What do Gen Z workers want from their employers?

As mentioned, Gen Z employees can have significant financial stress, and those worries spill into the workplace. The vast majority worry about their money matters while on the job, so helping your workers prepare for retirement starts with helping to manage their current financial health.

Three ways to support Gen Z retirement planning

About half of Gen Z employees say they would save more for retirement if they could juggle their other financial priorities. Because of this, it’s important to adapt your support. Unlike older workers, they generally have the most time left to build a nest egg, which can be a big advantage. Still, keep in mind they may have fewer assets to invest due to student loans and other responsibilities.

1. Sharing strategies and tips on compounding interest, repaying loans, and managing credit card debt is a great place to start helping build a foundation of financial wellness.
2. You can provide information on the different types of savings accounts like group RRSPs and TFSAs. Providing a basic background on personal finances and financial literacy can be hugely beneficial as only about half of Gen Z consider themselves knowledgeable about investments. 
3. Employer matching contributions are a big benefit to young workers but most limit this option to RRSPs or pension plans. While understandable, it’s important to consider other accounts for young workers who may not yet be thinking of retirement, like TFSAs and FHSAs. Offering these group accounts, along with matching contributions, could better support employees with more immediate financial goals like buying their first home.

Considering these approaches can help you truly support your young workforce and make a difference in their preparation for retirement. Their lifestyle and circumstances are different than previous generations, so your approach should be too.