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You might not know it from reading the news, but Gen Z is making waves with their approach to retirement planning. Born between the late 1990s and early 2010s, this tech-savvy, socially conscious generation is setting a new standard when it comes to financial preparedness.
GOBankingRates spoke with financial experts to learn five ways Gen Z has an advantage over Baby Boomers when it comes to securing their financial future.
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Retirement planning: Whether you’re planning for retirement, dealing with a major life event, or simply want to make smarter financial decisions, a financial advisor can provide the expertise and guidance you need. Here are some compelling reasons to consider a financial advisor, even if you’re not wealthy.
Start saving for retirement early
One of the biggest advantages Gen Z has over Baby Boomers is that they start planning for retirement earlier. “Gen Z is shaking up the game when it comes to retirement planning, and they’re doing a lot of things right,” says Brandi Burch, CEO of Benefitbay. “First, they’ve got a head start. Many of them already started saving and investing in their early 20s, which gives them a huge advantage thanks to the magic of compound interest growth.”
Tyler Meyer, CFP® and founder of Retire To Abundance, agrees: “Unlike Baby Boomers, who often began investing for retirement, Gen Zers are starting to contribute to retirement accounts in their early 20s. Starting earlier allows them to take full advantage of compound interest, which can lead to a more substantial retirement fund.”
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Leveraging technology in financial management
Gen Z is tech-savvy, and that’s a huge advantage when it comes to retirement planning.
“They’re technology gurus,” says Burch. “Gen Z uses apps and online platforms to manage their finances, track their spending and invest. Robo-advisors and investment apps make it easy and inexpensive to get started, making them a great choice for young people looking to get started.”
Meyer adds: “Generation Z is embracing technology to better manage their finances. With an abundance of budgeting apps, investment platforms and financial planning tools, they appear to be more knowledgeable and proactive about their financial situation compared to their Baby Boomer counterparts.”
Focus on financial education
Unlike many Baby Boomers who relied heavily on financial advisors or learned by trial and error, Gen Z is actively seeking out financial education — and that’s a good thing.
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“Financial education is also a big priority for them,” Burch says. “They’re absorbing personal finance knowledge from YouTube, online courses and blogs. This smart approach helps them avoid mistakes and make smarter financial decisions.”
Ethical and sustainable investment
Gen Z’s approach to investing goes beyond just profits – they want their investments to align with their values.
“What’s really interesting is their focus on ethical investing,” Burch said. “They want to put their money into companies that align with their values, like companies that are focused on sustainability and social responsibility.”
Ethical investing not only reflects Gen Z’s commitment to social responsibility, it also sends a message to companies that they should care.
A holistic approach to retirement planning
Gen Z appears to be taking a more holistic view of retirement planning, considering factors beyond simply financial savings. “Gen Z is also health-conscious and understands that maintaining their health will have a major impact on their financial security in retirement,” Meyer says. “They’re more likely to invest in health and wellness programs, which can lead to lower healthcare costs and a better quality of life in retirement.”
This holistic approach, considering both financial and physical health, sets off a retirement planning strategy for Gen Z. Investing in your health now can reduce future healthcare costs and (as a bonus) improve your quality of life in retirement.
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This article originally appeared on GOBankingRates.com: 5 Ways Gen Z Will Handle Retirement Better Than Baby Boomers
