Aging Options

Younger Workers Spending for Today, Not Planning for Retirement

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Here at AgingOptions and Life Point Law, our focus is on planning for retirement. It’s our desire to see people plan for retirement in such a way that they approach their life after full-time work with enthusiasm and a sense of security. Will planning for retirement help you avoid becoming a burden to those you love, exhausting your assets, and being forced against your will into institutional care? Rajiv’s answer – for the vast majority of us – is a confident “yes.”

However, that idea presumes that people are taking the notion of planning for retirement seriously. Sadly, if this recent CNBC article is to be believed, today’s Gen Z workers – those between 18 and 25 who are just starting their work lives – are placing a higher priority than any previous generation on living in the now versus saving for the future, let alone planning for retirement.

We share this article here on the Blog because these young people are your kids, grandkids, nieces, nephews, and neighbors. Let’s look at the CNBC article, based on recent research, to get clearer insight into how Gen Z young adults are thinking – or not thinking – about the future. Maybe you can find ways to share your hard-earned wisdom with a Gen Z-er in your life.

Planning for Retirement Takes a Back Seat to “Soft Saving”

We all know the traditional model for retirement: you spend your career days working hard, saving money, and then (hopefully) retiring early enough so that you can enjoy the fruits of your labor later in life. But younger workers are starting to rethink that model, introducing what experts are calling “soft saving” into the culture at large.

CNBC article author Quek Jie Ann writes, “Soft saving refers to putting less money into the future, and using more of it for the present. Generation Z — a generation that puts experiences before money — is leading the so-called soft saving wave, according to the Prosperity Index Study by Intuit.”

Or, as the report puts it: “Soft saving is the soft life’s answer to finances.” (A question that occurs to us: what’s the difference between “soft saving” and not saving at all?)

And what is a soft life? Ann defines it as “a lifestyle that embraces comfort and low stress, prioritizing personal growth and mental wellness.”

Saving for Retirement Means Planning for an Unknown Future

The report’s findings, and the use of the word “soft” to describe the new trend, all points to the idea that those in Gen Z—defined as those born after 1997—tend to invest their money in causes that reflect their personal views, rather than any societal concept of what they “should” put their money toward, such as long-term saving.

The Intuit report explains, “Though Gen Z is interested in exploring and learning about saving and investing, the approach is much softer than in previous decades. It’s all about personal growth and mental well-being in the now, and they would rather feel more fulfilled now than save for a future that is unknown.” 

Liz Koehler, head of advisor engagement for BlackRock’s U.S. Wealth Advisory, notes that Gen Z also seeks out an emotional connection with the brands and professionals they choose to engage with. Again, the emphasis is on emotion, not practicality.

Planning for Retirement Competes with “Quality of Life”

The chief focus of most of today’s younger workers appears to be freedom from financial constraints. According to the Inuit report, three in four Gen Z individuals would rather have a better quality of life than extra money in their savings accounts.

“In fact,” Ann writes, “personal saving rates among Americans today seem to mirror the soft savings trend.  According to the U.S. Bureau of Economic Analysis, Americans are saving less in 2023. The personal saving rate — the portion of disposable income one sets aside for savings — was significantly lower at 3.9 percent in August, compared to the 8.51 percent average in the past decade, according to data from Trading Economics which goes as far back as 1959.”

Ryan Viktorin of Fidelity Investments told CNBC that one of the reasons for a drop in personal savings is the rebound from the COVID-19 pandemic. “As Americans spent significantly lower during the pandemic in the last two to three years, people more are likely to spend a lot more now to make up for lost time,” she says.

Inflation Makes Planning for Retirement Tougher for Gen Z

Aside from cultural shifts, other forces contribute to the lack of savings among Gen Z, including inflation, according to Koehler. But the decrease in personal saving rates reflects an overall change in the financial goals of today’s workers.

When these younger generations enter the workforce, they bring in new financial priorities and are more likely to seek a “balance between the traditional ‘hustle’ to save every single penny and using some of their extra income to enjoy life now,” Viktorin says.

Retirement Planning when the Goal is Elusive

Retirement is often considered the “grand finale” for most people’s working lives. But more and more individuals, especially younger ones, are concerned that retirement will never be in the cards for them.

Ann writes, “A report by Blackrock shows that in 2023, only 53 percent of workers believe they are on track to retire with the lifestyle they want. A lack of retirement income, worries over market volatility and high inflation were some of the reasons cited for a lack of confidence about retirement among workers.”

This worry is shared by Gen Z: two in three Gen Z individuals are unsure if they will have enough money to retire. “However,” Ann notes, “this fear may not be that much of a concern for the younger generation, as most are actually not looking to retire early — or to retire at all, the report by Intuit showed.”

Planning for Retirement when the Definition is Changing

The traditional goal of retirement at age 65 or 66—leaving the workforce entirely, in other words—may soon be a thing of the past. Ann writes, “Additionally, the Transamerica Center for Retirement Studies found that almost half the working population either expects to work past the age of 65, or do not have plans to retire.”

She adds, “About 41 percent of Gen Z and 44 percent of millennials — those who are currently between 27 and 42 years old — are significantly more likely to want to do some form of paid work during retirement. That’s higher than the 31 percent of Gen X (those born between 1965 to 1980) and 21 percent of Baby Boomers (born between 1946 to 1964) surveyed, the report by the Transamerica Center for Retirement Studies showed.”

These numbers reflect a preference for a “lifelong income” which could make the very act of retiring completely obsolete.  Of course, that presumes we’ll all live in robust good health well into old age, which is clearly not guaranteed for any of us.

Instead of Planning for Retirement, Where Are They Spending?

So, where is that income going, if not toward savings? According to the Intuit study, millennials and Gen Z are more willing to spend their money on hobbies and non-essential purchases, compared to their Gen X and Boomer predecessors.

“About 47 percent of millennials and 40 percent of Gen Z expressed a need to have money to pursue their passion or hobby, compared to only 32 percent of Gen X and 20 percent of boomers,” Ann writes.

Fidelity’s Viktorin agrees. Travel and entertainment are high on the priority list for younger generations, she says. And post-pandemic travel is also rising again as a focus for Americans, another factor in decreased saving rates.

This lack of savings doesn’t reflect “paycheck to paycheck” living, on the whole. Ann writes, “In fact, Gen Z appear to be living within their means, and their increased spending seems to reflect rising costs of essentials more than a rising taste for luxury.” 

She concludes, “Spending money on things that truly make you happy is great … [but] people should satisfy their near-term needs and stay on-track with their long-term goals before spending freely.”

Breaking News: Rajiv’s New Book is Here!

We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public.  As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.

Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important new book. And remember, Age On, everyone!

(originally reported at

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