Generation Z workers are rewriting the playbook on retirement planning. Despite being the youngest generation in the workforce, 76% are already saving for retirement through 401(k)s and similar workplace plans. Still, traditional retirement benefits alone aren’t cutting it for this financially stretched demographic.
Recent research from the Transamerica Center for Retirement Studies cited in Employee Benefit News reveals a generation caught between competing priorities and mounting financial pressures. More than half of Gen Z workers worry that artificial intelligence will make their job skills obsolete, driving over a third to juggle multiple jobs while 59% maintain side hustles. Add caregiving responsibilities, which affect 41% of this group, and you have stressed-out employees being pulled in multiple directions by a variety of financial demands.
“Gen Z workers are financially stretched thin by meeting their obligations,” explained Catherine Collinson, founding CEO and president of Transamerica Institute and Transamerica Center for Retirement Studies, who was quoted in Employee Benefit News. “Any enhancements to their compensation and benefits, especially those that will improve their situation and ease their burden, will be welcomed.”
This financial strain is taking its toll. Nearly 60% of Gen Z employees report feeling exhausted and burned out, according to the Transamerica research, yet they’re remarkably proactive about retirement planning. They’ve witnessed their parents’ financial challenges and absorbed lessons about the importance of early saving. However, their current reality often forces them to tap into retirement accounts for immediate needs—a concerning trend that undermines long-term wealth building.
For plan sponsors and advisors, this data points to a fundamental shift in how retirement benefits should be positioned and enhanced. Gen Z workers need more than just access to a 401(k); they need comprehensive financial support that addresses their immediate needs while protecting their future security.
Ms. Collinson recommended that employers consider offering emergency savings programs alongside traditional retirement plans. “Financial wellness programs can help employees learn about personal finance and inform their goal setting, planning and decision making,” she noted in EBN. These tools can help prevent early retirement plan withdrawals that derail long-term accumulation.
The implications for plan design are significant. While previous generations might have viewed enhanced benefits as nice-to-haves, Collinson emphasized that for Gen Z workers, “they will be must-haves.” This generation’s willingness to change jobs for better benefits packages means that robust offerings can serve as powerful recruitment and retention tools.
The data suggests that successful retirement programs for Gen Z will need to address both immediate financial stress and long-term wealth building. This might include features such as student loan assistance, expanded emergency savings options, enhanced financial education, and more flexible access to funds during financial hardships, all while maintaining strong incentives for long-term retirement accumulation.
Plan sponsors who recognize and respond to these evolving needs won’t just be helping their youngest employees build more secure retirements; they’ll be positioning themselves as employers of choice in an increasingly competitive talent market.
