Why Gen Z is Getting a Jump Start on Retirement Planning
Originally published: May 16, 2024
Updated: July 2, 2026
When you think of “retirement planning”, you probably don’t associate this topic with someone in their twenties. But saving for retirement is becoming more and more important to the younger generations for many reasons.
According to a recent report by Handshake, which surveyed undergraduate students, nearly two-thirds (65 percent) stated that they would not accept a job offer lacking an employer-provided 401(k) or similar retirement benefit. While time off and healthcare coverage remain the top two essential benefits desired by students, retirement benefits followed closely behind.
More than a quarter of the students surveyed consider retirement planning to be moderately important, with 15 percent giving it significant thought. In fact, they even considered retirement planning over student loan repayment in terms of importance when it comes to employer benefits. The respondents hailed from 601 U.S. colleges and universities, all pursuing bachelor’s degrees.
In response to the question, “Why is retirement planning so important to the younger generation?” a report titled, “Gen Z Brings New Expectations to the Workplace” will tell you it is because they have witnessed their parents’ retirement plans being affected by financial crises and pandemics, leading to economic instability and mounting student loan debt. Even so, much of Gen Z anticipates facing even greater challenges than their parents in saving for retirement, primarily due to heightened cost of living.
In alignment with Millennials, a significant portion of Generation Z does not envision a traditional retirement. Instead, 32 percent aspire to pursue passion projects, while 27 percent aim to establish their own businesses post-retirement. As a result, many of those who have already started planning for retirement actually wish they had done so sooner.
Many young savers are of course making contributions to a 401K through their employer, investing in brokerage accounts, or building their own IRAs. But, with the volatile retirement saving circumstances they have seen their parents endure, many Gen Z members are seeking safer vehicles within which to build their nest eggs. One such vehicle is called a Fixed Index Annuity (FIA).
FIA’s start with an initial payment that grows over time and is then used down the road to provide income during retirement. The money that is put into an FIA usually grows at a conservative, yet reasonable, rate of return over time. It typically follows specific market indices; however it is backed by the insurance company and therefore is not put at risk during down-markets. This “safety” feature of an FIA is especially important given the market volatility we have experienced and are likely to keep experiencing.
FIA’s are also appealing to younger generations because they follow a “set it and forget it” strategy, which means it’s one less thing to think about during the hustle and bustle of work, school, and socializing. Alternative strategies like this, especially those dedicated to retirement income needs, can diversify one’s portfolio to better prepare for their future.
At Summerlin Benefits Consulting, we specialize in retirement income protection and finding the best and safest strategy for each individual client, regardless of where they are in their retirement planning journey. We applaud Gen Z for realizing the importance and urgency of planning for their future early in life. If you’d like to discuss simple, personalized strategies for building a retirement nest egg, give us a call today for a no-obligation meeting. You don’t have to use the same strategies your parents did!
Note: This content is for informational purposes only and does not constitute tax or legal advice. Summerlin Benefits Consulting does not provide social security, specific advice related to taxes, or legal advice. Consult a tax/legal professional for guidance with your individual situation.
Frequently Asked Questions
Q: Why should Gen Z start saving for retirement so early?
A: Compound growth is the main reason — the earlier you start, the more time your money has to multiply. Gen Z also faces unique headwinds: higher costs of living, reduced pension availability, and Social Security uncertainty. Starting in your 20s, even with small amounts in a 401(k), IRA, or Fixed Index Annuity, gives your savings decades of growth and builds financial flexibility for a retirement that may look very different from your parents’.
Q: What is a Fixed Index Annuity and why is it appealing to younger savers?
A: A Fixed Index Annuity (FIA) is an insurance contract where your money grows linked to a market index — like the S&P 500 — but is protected from market losses by the issuing insurance company. For young savers, the appeal is twofold: principal protection against down-markets, and a “set it and forget it” simplicity that doesn’t require active management. An FIA funded early can become a meaningful source of guaranteed retirement income decades later.
Q: Can I use a Fixed Index Annuity alongside my 401(k) and IRA?
A: Yes — a Fixed Index Annuity (FIA) can complement a 401(k) and IRA as part of a diversified retirement strategy. While a 401(k) and IRA provide tax-advantaged growth with market exposure, an FIA adds a protected component with no downside market risk. This diversification can be especially valuable for younger investors who want growth potential but also want a safety net against the kind of market downturns their parents may have experienced.
