Retirement readiness obstacles facing the next generation

Today’s young adults, including the youngest millennials and older Gen Z members, are experiencing a decade of working that’s very different from those of previous generations. Among the differences? 

• High levels of educational attainment
• Significant student debt
• A greater proportion of gig work
• Fluid expectations for their career paths
• Lingering effects of a global pandemic
• A perceived unfathomable retirement target date

It’s important to recognize the ways work, life and retirement savings have changed over the decades. How does uncertainty impact retirement planning? And how can young adults prioritize and achieve retirement savings while also responding to ever-changing conditions at work and in life?

Young workers’ experiences: why differences matter

The early working years often set the theme and tone for the rest of a person’s career. That’s when workers learn critical skills, start building professional networks and get grounded in the basic knowledge of a career field. It’s also during this time that foundational habits are often developed — and that includes saving and planning for retirement.

Many young adults already faced significant disruptions from the pandemic early in their careers. And while they have more education, it can come at a cost: greater debt. Plus, those extra years of study delayed the start of work, so younger adults may have begun to earn and save later than previous generations.

How financial professionals & plan sponsors can help young adults establish balance

There’s a positive side to the fast pace of change in young adults’ lives. In general, they tend to embrace lifelong learning and aren’t daunted by new technologies, systems and ways of working. They accept the reality that new experiences require new learning, and are willing to look for information in unconventional places. 

Another plus? Young adults today may have 40 years or more to prepare for their retirement.

How can you help? First off, now is the time to make younger employees aware of the smart choices and habits that can help them get started (or get back on track) with saving for retirement. Here are a few important considerations for helping young adults.

1. Remember, there is no monolithic generational attitude. Millennials and Gen Zers are more diverse than previous generations. Their varied experiences engender differing perspectives on issues including financial priorities.
2. Young adults are in a prime habit-building phase of life. Now is the moment to help them understand and build healthy habits at work and in life and retirement planning. 
3. Specific triggers can spur young adults to start saving. Recognizing and understanding employer-provided benefits and matching contributions may help motivate them to increase their own contributions and maximize benefits. So can reminders that they’re not getting any younger.
4. Basic financial literacy is an important place to start.  And we’ve seen this statistic within the plans administered by Cuna Mutual Group. In the 2023 Retirement Education Survey, 86% of participants surveyed indicated that they found the education program moderately helpful while 39% indicated it was very to extremely helpful.¹ Making sure participants understand concepts like compound interest, inflation and basic investment principles can help them build confidence and prioritize financial wellness.
5. Young adults are ready and willing to learn. As digital natives, they’re comfortable using technology to access learning. They’re a prime audience for online influencers, so it may be helpful to identify and share legitimate budgeting, saving and investing tips from influencers in, for example, the FIRE (Financial Independence, Retire Early) movement.
6. A written plan can help. Young adults can benefit from feeling prepared for the inevitable: major life milestones, job changes and even unexpected economic challenges. A written plan can help them keep retirement goals in mind, prepare for the unexpected and move forward with confidence.

Retirement solutions

What might young adults be looking for when it comes to financial stability and their retirement? Whether it’s practical tips, investing confidence or gaining the most from an employer plan, we offer a comprehensive suite of retirement plan solutions and resources that can help. Contact Cuna Mutual Group if you’d like to learn more.

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