Studies show that Gen Z is focusing less on aggressively saving for early retirement and more on enjoying life in the present. This “soft saving” trend prioritizes quality of life and living in the moment over amassing savings.
While resistance against hustle culture is good for mental health, not taking advantage of saving young could lead to serious consequences later in life.
We agree that Gen Z faces tough economic challenges like lower wages and higher costs that make it difficult to save significantly. The high cost of living is seen as a major barrier to financial success by over half of Gen Z. Compared to previous generations, Gen Z also has lower retirement expectations and doubts they’ll have enough savings.
But rather than cutting back, the majority of Gen Z say they’d prefer a better lifestyle over extra savings. Many seem more interested in spending money on experiences than building up emergency funds or retirement savings. This attitude concerns some financial advisors.
However, Gen Z shouldn’t ignore the power of compound interest and starting retirement savings early. Putting aside even small amounts in your 20s can grow significantly over decades due to compounding returns.
Even $25 a week from age 25 to 65 at a 10% return will leave a Gen-zer with over $600,000.
While the soft saving trend reflects Gen Z’s economic realities and desires for work-life balance, it completely neglects retirement and emergency savings; carrying major risks for when something goes wrong.
Gen Z should look to balance their current quality of life with setting aside something for the future. Building healthy lifelong financial habits like budgeting and saving regularly pays off.
While Gen Z is deprioritizing aggressive early retirement saving due to economic pressures and lifestyle preferences, they shouldn’t underestimate the value of starting modest, consistent retirement contributions early to leverage compound growth. With balanced financial priorities, Gen Z can achieve a comfortable lifestyle now and financial security later.
Instead of giving up on the idea of the ever retiring we encourage Gen Z to entertain the idea of SlowFI. Lifestyle design that allows for freedom now, and later.
Coast FIRE is one of the more interesting versions of FIRE, aka Financial Independence, Retire Early. With Coast FIRE, you build a portfolio early in life that can grow enough to fund your retirement, then live your life – or coast – until the big day arrives. That’s where this FIRE flavor gets its name.
Like the other FIRE versions, Lean FIRE relies heavily on the safe withdrawal rate and building an extensive portfolio. But the main difference is that this version of FIR has a much stronger emphasis on frugality. Lean FIRE works incredibly well for people who can live on less than the average person does.
If you’ve been spending much time reading personal finance blogs, you’re probably aware of something called the FIRE movement. FIRE, in this case, is a moniker for Financial Independence, Retire Early. There are different FIRE versions, but Fat FIRE is like early retirement on steroids. That is, it’s full-blown FIRE and not one of the watered-down variations.
Financial independence is a shared desire of millions of people. There’s even a moniker for it – F.I.R.E., which stands for financial independence, retire early. But how does one achieve FI? After all, it’s just a theory unless you have a plan in place to get there. Let’s find out.
About Ashley Barnett
Ashley Barnett was born with a passion for personal finance. Even as a kid she would read anything she could find about money. When personal finance blogs started popping up on the internet she jumped on board, starting a personal finance blog in 2008.
In 2013, she pivoted to freelance editing where she spends her days trying to create the best personal finance content on the internet.
She lives in Phoenix with her husband and two children and you can usually find her sitting in her backyard re-reading Harry Potter for the millionth time.