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Understanding Millennial and Gen Z Retirement Savings Habits

At O1ne Mortgage, we understand the financial challenges faced by millennials and Generation Z. A recent survey conducted by Experian in August 2023 sheds light on the retirement savings habits of these younger generations. The survey, which included 1,020 participants, reveals that retirement savings may not be a top priority for many under-40 workers.

Prioritizing Financial Obligations

With the high costs of living, vehicle expenses, and student loan repayments, many younger workers find it difficult to save for retirement. The survey indicates that 53% of millennials and Gen Zers with student loans would cut their retirement savings contributions before missing a credit card or student loan payment.

While missing a credit card payment can lead to late fees and potential credit score damage, suspending retirement savings has its own drawbacks. Restarting contributions can be challenging, and delaying savings can significantly reduce long-term gains. For example, a $1,000 investment with a 5% annual return can grow to $3,300 over 30 years, but waiting five years to start reduces that gain to $2,300.

Trust in Technology for Retirement Savings

The survey also explored trust in technology for managing retirement savings. Both millennials and Gen Zers expressed skepticism about using robo-advisors or artificial intelligence for their retirement plans. Despite this, many well-designed retirement plans already incorporate elements of these technologies, such as target-date funds that adjust asset allocation based on the expected retirement year.

Resuming Student Loan Payments

As student loan repayments resume, most millennials and Gen Zers with student loans expect to start repaying their loans. Income-driven repayment plans, which cap payments based on discretionary income, may provide some relief for those resuming payments.

At O1ne Mortgage, we are here to help you navigate your financial journey. Whether you need assistance with mortgage-related needs or financial planning, our team is ready to support you. Call us at 213-732-3074 for personalized advice and solutions.

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