Despite just beginning their careers, many American Gen Z investors (aged 18-28) are already evaluating their retirement prospects – and many feel uneasy about their financial futures. A new Advisor Authority study, powered by the Nationwide Retirement Institute, highlights the financial challenges of Gen Z investors and the unexpected spending behaviors and digital strategies they're using to navigate them.

More than two-in-five (44%) Gen Z investors say they feel behind in their retirement savings goals and are working to catch up. However, Gen Zers are leaning into spending despite long-term financial concerns, with nearly a fifth (17%) saying they are spending more on leisure expenses at this point in their life because they may never be able to retire.

As traditional retirement feels increasingly out of reach, Gen Z is beginning to challenge the very concept of retiring at age 65. Thirty-eight percent believe the standard retirement age of 65 is not relevant to them in today's economic environment, and approximately half (48%) now plan to work longer, citing remote work as a factor that makes it unnecessary for them to retire at that age. 

Gen Z's skepticism is rooted in current financial pressures. Four in ten (40%) feel worried about their ability to afford monthly bills over the next 12 months, and nearly half (46%) cited paying down loans and debts (i.e., student loans, credit cards, mortgages, car payments, etc.) as a top financial commitment in that same timeframe.

To further compound this generation's stress, 77% of Gen Zers are also concerned about a U.S. economic recession over the next 12 months. However, many aren't taking proactive steps to address that concern – four in ten (40%) currently do not have a strategy in place to help protect their assets against market risk, slightly up from 32% a year ago. Even more troubling, only a fifth (19%) of Gen Z investors say they understand how compounding interest works when investing over time, potentially limiting their ability to build long-term wealth.

"With recent market volatility, it's not surprising that Gen Z savers are somewhat pessimistic about their financial futures," said Kristi Martin Rodriguez, leader of the Nationwide Retirement Institute and financial services marketing for Nationwide. "For these young people, retirement may seem like a lifetime away and feel like a very steep mountain to climb. However, something they may not be considering is that they could potentially live decades longer in retirement than prior generations. As a mother of two Gen Z daughters, I've been stressing the importance of beginning to save right away so they can leverage their most powerful advantage: A long-term horizon that allows them to maximize the power of compounding interest."

A New Way of Saving and Investing

Gen Z is taking advantage of new, less traditional financial tools to save their hard-earned cash, no longer relying on legacy financial institutions to grow their money. As a generation raised on modern technology, nearly one in three (32%) Gen Z investors use digital wallets (e.g., Apple Pay or Google Pay) and 30% use peer payment platforms (e.g., Venmo or Zelle) to invest, save or store their money. Additionally, a surprising one in five (19%) say they invest, save or store their money in cryptocurrency or non-fungible tokens.

Gen Z Investors Delay Seeking Professional Guidance 

Despite concerns about both the current economic environment and their personal financial standing, many Gen Zers are holding off on seeking professional guidance. A third (33%) of Gen Z investors who don't pay to work with a financial professional indicated it is because they believe they are too young/early in their retirement planning journey to rationalize pursuing financial advice. Instead, they are turning to more accessible – though not always reliable – sources. A quarter (24%) of Gen Z investors who don't have a financial advisor indicated it is because they get any necessary financial advice from online financial influencers ("finfluencers") and social media platforms.

While digital content can be a good starting place when it comes to financial literacy, the absence of professional advice may leave gaps in understanding or strategy. That said, personalization is still a key motivator for this group. More than a third (34%) say an advisor who understands their financial goals at this stage in their life would make them more likely to work with a financial professional.

"It's great to see Gen Zers seeking out financial literacy from a variety of resources. Knowledge is power, and the more you learn about investing and saving, the better prepared you will be," Rodriguez said. "However, make sure you're working with trustworthy sources, including the most reliable source of all: a trusted financial professional.  For those who feel they don't have the means or assets to do so, many workplace retirement plans offer some great educational tools and resources as well as financial guidance that can be both affordable and impactful."

Financial Professionals Applaud Gen Z Financial Literacy 

Advisors who work with Gen Z clients see a generation that is both cautious and capable. A majority of these advisors (62%) believe that Gen Zers are more financially literate than previous generations.

Advisors have noted they are spending a significant portion of their time educating Gen Z clients on foundational financial topics. Specifically, 42% of advisors are counseling their Gen Z clients most frequently on investing for the first time (e.g., 401(k)s, IRAs and stocks). Additional topics advisors feel are most important for their Gen Z clients include: 

• The importance of starting retirement planning early (54%)

• Basic budgeting and building healthy spending habits (52%)

• Understanding the basics of investing and compounding growth (49%)

• Debt management and strategies for avoidance (49%)

These ongoing conversations suggest that, while Gen Z may feel overwhelmed, many are actively looking to build a solid financial foundation— and advisors see an opportunity to guide them toward long-term success.

"It's encouraging to see advisors focused on the right things with Gen Z clients. That includes helping them break the ice on saving and investing, while balancing that opportunity with other financial demands including debt and spending on today's needs," Rodriguez said. "However, to really connect with this generation of savers, advisors are going to need to lead with empathy. Make sure you are considering Gen Zers' unique financial situation and listening to understand. Help them recognize the longevity challenges they will likely face, provide them with education and knowledge to make smart financial decisions and arm them with a holistic financial plan that will help ensure they won't outlive their income in retirement."

The Nationwide Retirement Institute offers additional resources to help advisors facilitate conversations with clients.

For additional insights on this survey data, see our infographic.

Nationwide's tenth annual Advisor Authority study powered by the Nationwide Retirement Institute^® explores critical issues confronting advisors, financial professionals and individual investors—and the innovative techniques that they need to succeed in today's complex market.