[ad_1]
For young Americans entering the workforce between the global pandemic and a likely recession, financial uncertainty is quickly becoming a way of life.
Gen Z adults, believed to be born between 1997 and 2011 or 2012, are the most anxious, burned out and isolated generation. They’re also more likely to have unstable jobs, which has big implications for how Gen Z plans their finances.
About half of Gen Z say their paychecks are unstable, and many don’t think they’ll ever reach traditional personal finance milestones like a comfortable retirement or buying a house, according to a new study by consulting firm McKinsey. In interviews with 1,763 Americans ages 18 to 24 last spring as part of the American Opportunity Survey, the company found that most Gen Zs are mentally prepared for a lifetime of financial insecurity.
Nearly a quarter of Gen Z Americans say they won’t be able to set aside enough retirement savings, compared to a generational average of 16%. And a full 59% of Gen Z don’t expect to own a home at any point in their lives, nearly double the generational average.
The study’s authors note that the startling statistics can be explained by general youth trends in every era, but they also point to a much darker reality.
“A more pessimistic interpretation could be that young people expect their current job instability and financial insecurity to continue as their lives progress,” the study authors wrote. “Gen Z’s fear of never reaching traditional economic milestones may reflect greater pessimism and hopelessness than other generations have experienced.”
The bleak outlook of Gen Z
America’s youth would be forgiven for thinking the cards were somewhat stacked against them.
Burdened with a staggering $1.75 trillion in student debt, Generation Zers have entered a job market where telecommuting has quickly become the norm, contributing to a general sense of loneliness and isolation. More than eight in 10 Gen Z workers have never had an office job, and while many say they like it that way, several studies have also found that most Gen Z workers crave interaction in the office and prioritize other things over telecommuting, including flexibility and better pay.
The types of jobs most young Americans have don’t help them much either. More than half of Gen Z say they do “freelance work,” according to the McKinsey study, defined as working as contractors, freelancers or temps. A quarter of Gen Z also said they work multiple jobs.
As a result, 45% of Gen Z say they are not financially secure, compared to 40% of all respondents. Gen Z are also more likely to say their salaries don’t allow them a good quality of life.
Unable to make large purchases like homes, a growing number of young Americans are identifying as “perpetual renters.” They expect to rent rather than own, citing insufficient incomes, fear of going into debt and even concerns about the risks of climate change.
A lifetime of instability
More Americans — at all income levels — are now living paycheck to paycheck than before the pandemic. The nation’s personal savings rate is at its lowest since the 2008 recession, and Gen Z feels lonelier and more financially hopeless than ever.
Taken together, this means many young Americans are anxious. Nearly two-thirds of young Americans fear for the future of the country’s democracy and society, according to a recent Harvard University survey, and crises including climate change and the next pandemic have caused many young Americans to abandon saving altogether and focus on life right now.
Certainly, Gen Z’s attitude toward the future may just be part of being young, according to the McKinsey study. The authors point out that many Americans in their early 20s may simply not be at a point in their lives when they can envision buying a home or retiring, and that other generations may have felt similarly in their youth you are
But what is clear is that these traditional financial milestones are seen as increasingly unrealistic for many, with home sales falling and retirements increasingly delayed over the past few years. If these trends continue, the volatility and financial uncertainty that Gen Z has become accustomed to may become the norm.
Register for Features of Fortune email list so you don’t miss our biggest features, exclusive interviews and investigations.
[ad_2]
Source link