Although the coronavirus crisis has impacted the financial futures of nearly all Americans in some way, younger adults seem to be more negatively affected by the changes that have taken place over the last year and a half.
New findings from Schwab Retirement Plan Services indicate that pandemic-related financial stress has disproportionately affected the ability of Gen Z (44%) and millennial (38%) workers to do their jobs over the past year, compared to the overall workforce (24%).
Perhaps this is due in part to the challenges of saving for retirement during the health crisis, as the report showed that about a third of millennial (35%) and Gen Z (32%) workers believe that the COVID-19 crisis has delayed their retirement (compared to only 20% of Gen X respondents who say the same).
Gen Z respondents interested in money management advice and assistance
According to the Schwab survey, Generation Z employees aren't deterred by the challenges that lay ahead of them. In fact, many are looking to get ahead of their finances instead.
In addition to the 30% of Gen Z respondents who want help managing their current expenses so they can put more towards their retirement fund, 29% want help with managing their debt — especially important considering that many Americans spend about a third of their income on personal debt. Nearly two-thirds (62%) of employees from Generation Z also believe that their financial situation could benefit from professional financial advice.
Despite their circumstances, this cohort remains more optimistic than other generations when it comes to adopting positive financial habits in the future, including:
- Saving more in general (62% versus 47% for other generations)
- Paying off debt (48% versus 33%)
- Increasing 401(k) contributions (47% versus 36%)
- Investing more outside their 401(k) (44% versus 34%)
- Rebalancing their 401(k) (40% versus 30%)
However, Gen Z respondents are much less optimistic about reaching their retirement goals compared to the rest of the workforce (43% versus 53%). Some believe that they aren't on top of their 401(k) plan (31% versus 23%), while others admit they don't know what 401(k) investments would give them enough money for retirement (51% versus 32%).
Gen Z and millennial employees want employers to offer more diverse benefit options
The Schwab report also suggests that younger employees in general are interested in more diverse benefit offerings than their older counterparts. Some of the most popular suggestions include:
- Annuities that offer guaranteed income as an option in their retirement plan (45% of Gen Z and 52% of millennials)
- Environmental/Social/Governance (ESG) or socially responsible investments (SRI) (41% and 43%)
- Fractional shares as an 401(k) investment option (41% and 39%)
- Emergency savings accounts (28% and 31%)
- Financial wellness programs (22% and 28%)
- Tuition reimbursement (22% and 27%)
Supporting employees and their needs during this time can prove especially beneficial for employers in the long run — a previous survey from Guardian found that workers were much more likely to remain loyal to employers who handled the pandemic well.
Similarly, the Schwab survey noted that 24% of Gen Z workers and 36% of millennials say that their loyalty to their employer increased after seeing how they managed the COVID-19 crisis.
Methodology: On behalf of Schwab Retirement Plan Services, Logica Research conducted an online survey of 1,000 Americans (and an additional 100 Gen Z plan participants) between April 1-15, 2021. All respondents were between 21-70 years old, worked at companies with at least 25 employees and were 401(k) plan participants. The generational breakdown for this survey is as follows: