Report: Retirement Benefits Highly Important to Gen Z

Looking to attract younger workers to your organization? Pay attention to your retirement benefits.

Nearly two-thirds (65 percent) of 2,518 undergraduate students surveyed said they wouldn’t accept a job that didn’t include an employer-administered 401(k) or similar benefit, according to a recent Handshake report.

Time off and health care coverage are the top two essential benefits students want from an employer—72 percent and 70 percent, respectively—with retirement benefits close behind at No. 3, sought by 65 percent of students.

For more than one-fourth (27 percent) of students, retirement is on their minds “a fair amount,” and 15 percent have thought about it “a lot.” Lower on the list of essential benefits were caregiving (37 percent), learning and development (29 percent), and student loan repayment (22 percent). The respondents were from 601 U.S. colleges and universities and were pursuing bachelor’s degrees.

“This generation has seen their parents’ retirement plans disrupted by a financial crisis and a pandemic, and they’re facing economic instability along with heavy student loan debt—all of which makes retirement planning feel like a priority. … [M]any believe it’s important employers help them reach that goal,” according to the report, Gen Z Brings New Expectations to the Workplace.

Meanwhile, the 2024 State of Retirement Planning study from Fidelity Investments found 56 percent of members of Generation Z—born between 1997 and 2012—think they’ll have a harder time saving for retirement than their parents because of the higher cost of living. Respondents were ages 18-26 and had at least one retirement account. On average, they started a retirement account at age 20 but wished they had begun at age 18.

Along with Millennials, Generation Z respondents “have their eyes set on being debt-free and reaching career goals,” according to Fidelity. But a traditional retirement is not the goal of 60 percent of this age group. For example, 32 percent want to take on a passion project when they retire, and 27 percent want to own their own business post-retirement.

Financial Wellness

Like older employees, students want employers to educate them on financial topics such as budgeting, taxes and retirement planning, Handshake found. Three-fourths (75 percent) said employers should provide financial literacy programs, and 89 percent said colleges and universities should do so.

Brad Barnett, director of financial aid at James Madison University in Harrisonburg, Va., teaches 12 core topics in financial literacy courses for undergraduates there. He is immediate past national chair of the National Association of Student Financial Aid Administrators.

The courses “all resonate in different ways,” he said. When it comes to retirement and choosing an employer, several things hit home with students, such as knowing whether an employer offers financial investment matches.

“Employer matches are free money, so make sure to invest at least up to the employer match, as that’s a 100 percent return on [your] money,” Barnett said.

He also focuses a lot on good financial behaviors and habits.  

“There is technical and organizational content within all of [the courses], but if you have a lot of financial knowledge and horrible behaviors/habits, well, the latter keeps you from getting what you really want out of life,” Barnett said. “That’s how you end up seeing people who make a solid income have nothing to show it, a lot of debt, and live a paycheck-to-paycheck lifestyle.”

BrightPlan, a financial wellness benefit provider in San Jose, Calif., surveyed 1,400 U.S.-based knowledge workers at companies with more than 1,000 employees in February and March 2023. Debt management services and access to a financial advisor were among the financial wellness benefits respondents wanted most.

Some large employers are listening and offering more help.

In July, Walmart introduced free virtual financial literacy courses for its customers, as well as its employees, through a partnership with Khan Academy. The program provides articles, videos and exercises on topics including investments and retirement; loans and debt; and consumer credit.

Free financial counseling was among the benefits Amazon rolled out in 2023. Employees and members of their families and households may access a three-minute consultation for each financial issue they want to discuss, SHRM Online reported. Amazon also provides a financial health resource that can be used for creating spending plans and discussing short- and long-term financial goals, among other things.

Financial illiteracy cost Americans an average of $1,506 in 2023, according to the National Financial Educators Council. The findings are from a survey conducted in December 2023 with 1,540 respondents, who estimated what a lack of knowledge about personal finances cost them.

“Employees are more likely to stay longer at their current job if their employer offers them financial wellness benefits,” Forbes reported last year. “The reality is that Americans have low levels of financial literacy across all generations, making it difficult to navigate employee benefit decisions.” 

Other SHRM Resources:

Generation Z Eyes Early Retirement, Wants Personalized 401(k) Advice, SHRM Online, Oct. 20, 2023