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The silver lining on Gen Z’s generational trauma

America’s youngest adults are charting a more pragmatic and thoughtful approach toward education, work and saving.
Photo Illustration: A teenager sits atop a pile of money
NBC News / Getty Images

New evidence suggests our youngest working generation is going further than others to secure its economic future. A report just released by investment management company BlackRock reveals Generation Zers are already putting  an average of 14% of their salary toward retirement. According to CNBC, this is a higher percentage than any other generation is saving right now. 

This rate also exceeds what millennials did at the same age Gen Zers are now. 2021 research by Fidelity found that 15.8% of Gen Zers were investing in 401(k)s compared with 11.4% of millennials who did so at that life stage. 

The message for Gen Z from these formative events is clear: You can’t rely on others to take care of you.

Gen Zers — the oldest of who are turning 25 this year — are blazing their own path when it comes to other aspects of career and work as well. Many are forgoing the traditional four-year college degree in favor of options like trade school and digital credentials. Compared with millennials and Gen Xers, recent research shows Gen Z is instead looking for “shorter, less expensive, more direct-to-career pathways in high-demand industries.” 

It’s noteworthy but not surprising that America’s youngest adults are charting a more pragmatic, thoughtful approach toward education, work and saving. After all, events that occur during our childhood, adolescence and early adulthood have a strong influence on our attitudes and behaviors — even stronger than things we experience later in life. For our oldest Gen Zers, that has meant growing up during a tide of dislocation — particularly of the economic variety.

Those in this generation were children when the Great Recession of 2007-2009 occurred, with some surely seeing their families and friends lose jobs, homes and college funds. They were teenagers as the era of fake news and social media distortion exploded, and their college years have been rocked by a global pandemic. 

Essentially, the fundamental needs of safety and security have been shattered, repeatedly, at a time when this generation was most impressionable. The message for Gen Z from these formative events is clear: You can’t rely on others to take care of you. Life is risky. Don’t trust an institution or a country or a company to protect and secure your future

Other parts of the BlackRock research assess how these disruptive events affected the behavior and attitudes of our youngest generations compared with their impact on older Americans. While 90% of Gen Zers reported that the pandemic and inflation had influenced their attitude toward retirement savings, 82% of millennials, 79% of Gen Xers and 75% of baby boomers say the same. 

Danny Molloy, 25, a consultant (and a former university student of mine), agreed that the state of the world had an impact on his planning for the future. “Going through multiple shocks by the time the first Gen Zers have reached their mid-20s has made some of us more keenly interested in making sure our house is in order in case things go south again. The current state of the housing markets and the total supply crunch of affordable homes has also forced us to save more to get anything.”   

Gen Z, of course, is hardly the first generation to be buffeted by economic downturns and the failure of institutions. It’s perhaps no surprise that its shift toward saving and security mirrors that of the Silent Generation (those born between 1928 and 1945), who grew up in the economic shadow of the Great Depression and started to come of age during World War II. They, too, learned early in life that nothing was certain, and as a result became known for their balanced and prudent approach to both career and finances.↕ 

But one glaring difference exists between the Silent Generation and Gen Z: The Silent Generation was the last that could count on pensions to fund retirement. In the decades since, young people have been told as early as high school economics class that they shouldn’t rely on Social Security to be available when they retire, much less an employer-provided pension. Now, only 38 percent of Gen Zers believe Social Security will help fund their retirement, compared with 42% of millennials, 64% of Gen Xers and 83% of boomers. 

Michael Rudolph, financial adviser for Eagle Strategies, a subsidiary of New York Life, attributes this difference in attitude to something beyond formative events. He believes earlier educational opportunities to create high school financial literacy have spiked a greater interest in learning about and then acting on the idea of savings. Rudolph noted that in recent seminars with high school students, “the interest level was incredible. This did not exist 10 years ago.”

They’re also absorbing the lessons they learn at home to save for retirement, sometimes before they’ve even left for college. Molloy told me, “My parents were adamant that I put aside portions of my paychecks even back when I was umpiring Little League as a 12-year-old. Those lessons stuck over time.”   

Sierra Whittmore, 24, received similar advice: “My dad motivated me, telling me about how saving even a little at 15 could multiply to a large amount. I met with an adviser, and he showed how much I could have by just putting $5 a month away, and that really encouraged me.”

Saving an average of 14% of their salary for retirement is even more impressive when you consider that Gen Zers are beginning their adult lives in the midst of growing inflation. As Patrick Donovan, also 24, put it: “Life is expensive!” So he’s grateful for an automatic deduction from his paycheck that goes right into his retirement account without him having to debate how to spend the money.

Gen Zers might have been given an uncomfortably chaotic world to grow up in, but the positive news is that they aren’t looking to others to provide safety and security. The early evidence shows they are determined to do what they can on their own to forge a more secure future. Gen Z is ready to take care of itself.