Want to attract Gen Z talent? Help them retire.

Protecting Gen Z’s financial future

“Young workers are likely to live longer than ever,” says Brendan McCarthy, head of retirement investing at Nuveen. “So they need to be thinking about retirement savings. A lot of them are saddled with student loan debt and are worried about other areas of financial stress, like buying a home or starting a family.”

As a result, Gen Zers are less interested in short-term employment perks and more interested in their long-term well-being—including financial security in retirement. In fact, 65% of undergraduates say they would not accept a job that doesn’t offer retirement benefits.3 This demographic has been bombarded with messages about waning social security and the erosion of spending power caused by inflation. According to Mr McCarthy, “they’re looking at when they are likely to be able to retire and want to know what they can do to prepare.”

Fortunately for these entrants to the workforce, the current market is a good one for long-term investment thinking. And products such as guaranteed lifetime income, which companies can use to provide workers with a guaranteed paycheck for life, may assuage the worries of young workers. “There is no more important time for them to engage. And, thanks to compounding interest and compounding returns, factored in with longevity risk, it is increasingly important for them to build best practices and start their financial knowledge early in their career,” Mr McCarthy adds.

Educating Gen Z on financial well-being

Unlike previous generations at the same age, Gen Z is hyperfocused on its financial health, says Marcie Merriman, cultural insights and customer strategy leader for the Americas at the professional services organization EY. She studies how cultural shifts shape human behavior and has conducted extensive research on the workforce’s youngest cohort.

Ms Merriman points out that Gen Zers have been witness to the financial blows dealt to older generations. The Great Recession, crushing student debt, disappearing pensions and shrinking social security have spooked many of them, prompting financial conservatism and hypervigilance about the future. “With Gen Z, we’re seeing much greater awareness and worry about whether they’re going to be able to take care of themselves, whether they’re going to be able to get the jobs that they want, whether they’re going to be able to have a family, and whether they’re going to be able to have houses.”

Yet things may not be as bad as all that, she says. Gen Zers’ concerns over their financial futures may be unnecessarily inflated. Social media, for instance, can ratchet up panic. Yet Gen Zers are much smarter in wanting to plan for their later years, and they expect their employers to play a key role. Ms Merriman has seen in her research that, in addition to financial benefits solutions, Gen Z expects employers to offer some kind of financial education.

They need it too, Mr McCarthy says. It takes a long time to help young workers build the vocabulary and understanding necessary for smart retirement investing. His advice? Start sooner, rather than later. “Annuities provide an income stream that is comparable to a paycheck, a regular monthly amount that is deposited into their account. But there’s also a lot of nuance to these complex products, and it takes years to build that knowledge.”

Mr McCarthy also recommends tailoring financial education to young workers, who speak a unique language and have their own specific needs. “We can utilize things like gamification, charts and graphs, or things that they’re more familiar with seeing, whether it’s on social media or streaming services that are delivered to the younger generation in a different manner.”

Smart retirement planning strategies are inherently different across age brackets, he notes. What a younger generation needs is quite different from the requirements of someone in the pre-retirement phase of life.

“They want to do more, they want to be responsible, they want to prepare,” Ms Merriman explains. They may worry too much at times, “but it shows an interest and a desire. They crave for companies to help them understand what they should do and how to do the right thing.”