Around 12% of Generation Z is saving for retirement, according to a study by the Center for Generational Kinetics.
Considering the first wave of this generation started entering the workforce last year, this figure suggests Gen Z is mindful of the importance of saving for retirement—but they could be doing better. Like millennials before them, Gen Z will likely have to rely completely on personal savings when it comes time to retire.
Ubiquity’s Director of Product Innovation Ashvin Prakash spoke with Employee Benefit News about the saving habits of the youngest members of our workforce, along with retirement strategies catered to Gen Z. He praises the young generation’s willingness to educate themselves and engage with financial products.
So, what can employers do to help Gen Z start saving for retirement? According to Ashvin, there’s four main things you can do:
“First, embrace auto enrollment. We know Gen Z is fast-paced, always connected to devices and adept multitaskers, but it can be difficult to get their attention. Incorporate that and auto escalation into their retirement plan and they’re on track without having to go in and make a proactive choice or selection. Our studies find that making auto enrollment optional boosts employee participation 40%.
Second, make online financial wellness tools available. With Gen Z working for the first time, they’re having to make decisions they haven’t before. I think employers are realizing they have a big role to play here. If they help young workers understand what they’re facing and create a long-term plan for success, they’re going to create loyal employees. One thing I’ve seen work is gamifying financial wellness. We’ll run contests at work where whoever takes the most financial wellness courses gets a prize.
The third thing is embracing digital components of benefits. Historically 401(k)s needed paper documents, but to engage Gen Z you need to offer benefits online. A lot of them make important decisions outside of working hours. Make your benefits easily accessible on personal devices like iPads and iPhones so they can make decisions at a time it’s convenient for them.
Lastly, employers can do a lot to invest in Gen Z’s financial health. As they come on board, you can encourage them to participate in your retirement benefits by matching 401(k) plan contributions.”
