Almost two-thirds (62%) of adult Generation Zers (those aged between 18 and 24) say they are happy to spend less on themselves so they can help loved ones and any children they have in future, according to new insights1 published today by Standard Life, part of Phoenix Group, the largest long-term savings and retirement business in the UK.
Demonstrating a positive awareness of the demands that may be put on their retirement finances to help others, a quarter (25%) of Generation Z expect to be paying for long-term care for a loved one in retirement, and 25% also expect to help their parents/in-laws financially.
The findings are contained in Standard Life’s study Bringing Retirement into focus: 2021 which looks to understand the attitudes, hopes and behaviours of people as they manage their finances to and through retirement, while considering the influence that age, affluence, education, and gender have on their financial engagement and wellbeing. The research was conducted among almost 5,000 consumers nation-wide across the UK.
The research reveals Gen Zers to be a highly caring generation with 39% believing it’s the responsibility of adult children to provide financial support to parents (compared to 29% of 45 to 54 year olds, and 21% of 55 to 64 year olds).
Gen Z are already planning ahead
Providing fresh insight into the financial behaviours and attitudes of various socio-groups, the report shows Gen Z adults are already thinking about their future finances, with three in ten (29%) saying they have done ‘a great deal of planning or thinking’ about how much money they will need to live on in retirement. They appear to have done more planning than their elders, as only a fifth (21%) of Generation X say they’ve done a great deal of planning or thinking about retirement. Gen Z are thinking about future finances almost as much as the Baby Boomers – the generation closest to or currently in the early stages of retirement – where 31% say they have done a substantial amount of planning.
Furthermore, 62% of Gen Z adults state they are even worried they’re spending too much money now in case they run out later in life.
However, while Gen Z show a high level of consideration for how much they may need in retirement, and what they may spend their money on, there are still some elements they are unsure about, with a fifth (20%) not having given any thought to their potential funding sources for retirement – the highest of any age group.
Sangita Chawla, Chief Marketing Officer at Standard Life, comments: “Younger generations deserve much credit for planning ahead and beginning to think about retirement when it will still feel so far away for them. The pandemic will likely have impacted their mindset, with issues such as longevity and later life care now at the forefront, and providing a stark reminder of the need to have provisions in place for the future – to support both themselves and loved ones.
“Generation Z appear to be rising to the challenges they face so far and planning for the road ahead and the additional strains their finances will likely need to cover. Generation Z is also the first to have been auto enrolled into a workplace pensions scheme from the start of their working lives, and will have an entirely different saving experience to that of their parents and grandparents. It’s important we make efforts to understand all the differences that set them apart from other generations, so that we can better support them and their aspirations for saving and pensions, and help them adequately plan for their future.”
Learning from your elders
As Generation Z begin their savings journey, they may look to benefit from the wisdom of those currently in retirement. Standard Life’s research shows that, with hindsight, a quarter (26%) of retired people wish they had saved more, while 25% felt they underestimated the potential length of their retirement and wish they had known this before they stopped working.
On the other hand, 20% of retirees realised they didn’t need as much money to fund their retirement as they originally thought, and 7% actually curbed their spending too much during their early retirement, when they were still fit and active, for fear of running out of income as they aged.
Sangita Chawla, continues: “Recognising that we all have different experiences and attitudes towards savings and retirement is really important if we want more people to engage with their finances and plan for the future. With Gen Z already thinking about their commitments in later life and their financial futures it’s important that we begin to look at the specific support this generation will need to bring their retirement into focus. What’s abundantly clear is that a one size fits all approach won’t work. With our research insights we want to do more to ensure that we create the best outcomes for all five generations.”