A new national study by The Center for Generational Kinetics found that a “new” generational cohort is already working, saving money, and “determined not to end up like Millennials.”
That new cohort has been labeled Gen Z, and this group, aged 14-21, is being described as a true “throwback” generation. More than three-quarters (77%) of Gen Z currently earn their own spending money through freelance work, a part-time job or earned allowance – about the same as today’s Millennials, according to the Center for Generational Kinetics. Moreover, 12% of Gen Z is already saving for retirement.
The biggest, most important generation-defining event that separates Millennials from Gen Z is the terrorist attacks on Sept. 11, 2001. While 9/11 is the defining moment for Millennials, Gen Z – whose first members were born in 1996 – does not remember it at all. The Center for Generational Kinetics traces Gen Z from that 1996 start to somewhere between 2012 and 2015.
As young as Gen Z is right now, they are already aware of the term “retirement,” according to the report. Gen Z is expecting money from multiple sources to fund their retirement: More than half (52%) plan to use personal savings for retirement; 28% will continue to work in some form after retirement, such as freelance, part-time or contract work; and 26% believe they will receive government assistance.
On the other hand, Millennials report being more likely than Gen Z to rely on all three of these sources, including government programs, with 59% planning to use retirement savings, 34% planning to continue working, and 33% relying on government programs.
Twelve percent of Gen Z is already saving for retirement. That is a much bigger number than one might anticipate given the youth of Gen Z in the study, who are ages 14 to 21. Diving further into the question, it was discovered that 35% of Gen Z plans to start saving for retirement when they are in their 20s.
The research results found that unlike previous generations, whose parents didn’t mention money or focus on financial topics with their kids, 56% of Gen Z discussed saving money with their parents in the past six months. The result, according to the researchers, is a young generation that “behaves more like Baby Boomers than Millennials,” is making plans to work during college, to avoid personal debt at all costs, and to save for retirement. More than one in five (21%) of this Gen Z cohort had a savings account before the age of 10.