Younger workers most willing to forgo a raise
for better benefits, flexible work arrangements
The youngest members of the workforce say they face the most
obstacles to saving for a comfortable retirement, yet their
timeline to ‘logging off’ for good is the most ambitious, according
to Charles Schwab’s annual nationwide survey of 401(k) plan
participants. Gen Z workers (21 – 26 years old) want to retire at
age 61, but 99% say they are facing obstacles to saving for a
comfortable retirement, a nine percent increase over last year and
higher compared to 88% of Millennials, 91% of Gen X and 86% of
Boomers. Inflation (54%), keeping up with monthly expenses (35%),
and paying for unexpected expenses (31%) are among Gen Z’s top
obstacles. Gen Z is also the most likely to say financial stress
has impacted their ability to do their job (26%), followed closely
by Millennials (22%), while Gen X (15%) and Boomers (10%) report a
much lower impact.
“Younger workers are still finding their financial footing in an
economic environment that is challenging for everyone. They are
just starting out, so it’s no surprise that they may feel greater
financial pressure, especially with such an ambitious timeline to
retirement,” said Brian Bender, Head of Schwab Workplace Financial
Services. “However, saving for retirement and paying the bills
doesn’t need to be an ‘either/or’ situation. You can work toward
multiple financial goals at once. This is especially important for
younger workers to remember as student loan payments resume and
become yet another monthly expense for many.”
Despite the financial challenges that younger workers are
facing, they are more willing than older workers to forgo a salary
raise for better benefits or more flexible work arrangements, such
as a hybrid or remote setting or more flexible hours.
Willingness to Forgo Salary Raise For…
Better Benefits
More Flexible Work
Arrangement
Gen Z
86%
76%
Millennials
74%
67%
Gen X
60%
49%
Boomers
50%
29%
Managing financial stress
More than half of all workers say that their employer did
something in the past year that helped them manage their financial
stress. Gen Z (71%) is the most likely to say that their employer
took steps to help in the form of increased pay (31%), increased
401(k) match (25%), increased current employee benefits (23%),
additional bonus (19%), decreased hours for better work-life
balance (17%), and new employee benefits (15%).
“It’s great that employers are already playing such a big role
in helping workers manage financial stress,” said Marci Stewart,
Director of Communications Consulting and Participant Education at
Schwab Workplace Financial Services. “Employers should continue to
focus on areas that are challenging workers the most when it comes
to financial wellness and retirement saving. That can go a long way
toward helping to boost retention and slow job hopping among
younger workers.”
Gen Z - The Advice Generation
More than any other generation, Gen Z workers think their
financial situation warrants advice from a professional (Gen Z
(62%) vs. Millennials (56%), Gen X (56%), and Boomers (52%)).
Specifically, they would like more personalized 401(k) advice as
almost half are not sure what investments to choose for their
401(k). Gen Z is also much more likely than older workers to want
more help managing their current expenses to save more for
retirement (Gen Z (41%) vs. Millennials (31%), Gen X (26%), and
Boomers (14%)).
I would like personalized
investment advice for my 401(k)
I don’t know what investments
to choose for my 401(k)
Gen Z
83%
Gen Z
48%
Millennials
78%
Millennials
38%
Gen X
75%
Gen X
36%
Boomers
62%
Boomers
28%
Gen Z is already tapping into several sources for advice more
proactively than their older peers – 98% say they are currently
seeking financial advice from at least one source, compared to 81%
of Millennials, 82% of Gen X, and 85% of Boomers. Over half (52%)
are asking family and friends for advice. They are also accessing
advice through their 401(k) plan provider (37%), employer (31%),
financial advisor (30%), and social media (28%).
The survey also found Gen Z (75%) and Millennials (66%) are
comfortable asking AI tools for help with financial planning, but
adoption is still very low across generations (Gen Z (9%),
Millennials (8%), Gen X (3%) and Boomers (2%)). Gen Z and
Millennials are more likely to follow recommendations from a human
financial professional than a computer, but they are more open to
both types of advice overall than their older peers.
I am likely to follow
recommendations from a human financial professional
I am likely to follow
computer-generated recommendations
Gen Z
97%
Gen Z
87%
Millennials
97%
Millennials
85%
Gen X
95%
Gen X
74%
Boomers
93%
Boomers
61%
“It’s encouraging that younger workers are so open to different
sources of human and digital advice, and that they are actively
seeking it out,” said Stewart. “When workers engage, that’s when a
professional can really help them with decision-making and
financial next steps. We know having a plan in place boosts
employee confidence and can lead to better outcomes.”
About the survey
This online survey of 1,000 U.S. 401(k) plan participants was
conducted by Logica Research between April 19 and May 2, 2023.
Survey respondents were actively employed by companies with at
least 25 employees, were 401(k) plan participants and were 21-70
years old. Survey respondents include participants served by
approximately 15 different retirement plan providers. All data is
self-reported by study participants and is not verified or
validated. In order to analyze Gen Z results against other
generations, an additional 100 plan participants aged 21 to 26
completed the survey. Detailed results can be found here.
About Charles Schwab
At Charles Schwab, we believe in the power of investing to help
individuals create a better tomorrow. We have a history of
challenging the status quo in our industry, innovating in ways that
benefit investors and the advisors and employers who serve them,
and championing our clients’ goals with passion and integrity.
More information is available at aboutschwab.com. Follow us on
Twitter, Facebook, YouTube, and LinkedIn.
Disclosures
Workplace Financial Services is a business enterprise which
offers products and services through Schwab Retirement Plan
Services, Inc.; Schwab Stock Plan Services; and Designated
Brokerage Services. Schwab Retirement Plan Services, Inc., provides
recordkeeping and related services with respect to retirement
plans. Schwab Stock Plan Services is a division of Charles Schwab
& Co., Inc. providing equity compensation plan services and
brokerage solutions for corporate clients. Schwab Designated
Brokerage Services (DBS), a division of Charles Schwab & Co.,
Inc., provides technology solutions for corporate clients with
regulatory requirements to monitor employee security transactions.
Schwab Retirement Plan Services, Inc., and Charles Schwab &
Co., Inc. (“Schwab”) (member SIPC, www.sipc.org), are separate but
affiliated entities, and each is a subsidiary of The Charles Schwab
Corporation.
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Mike Peterson Charles Schwab 330-908-4334
mike.peterson@schwab.com
Carly Taylor The Neibart Group 973-618-6993
SchwabRPS@neibartgroup.com
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