For young Americans entering the workforce between a global pandemic and a probable recessionfinancial uncertainty is quickly becoming a way of life.
Members of Generation Z, those born between 1997 and 2011 or 2012— constitute the most anxious, burnedand isolated generation ago. They are also more likely to have unstable jobs, which has big implications for how Gen Zers plan their finances.
According to a new study by consulting firm McKinsey. In interviews with 1,763 Americans between the ages of 18 and 24 last spring as part of its US Opportunity Survey, the company found that most Gen Zers are mentally preparing for a state of uncertainty. permanent financial.
Nearly a quarter of Gen Z Americans say they won’t be able to set aside enough retirement savings, compared to a generation-over-generation average of 16%. And a whopping 59% of Gen Zers don’t expect to own a home at any point in their lives, nearly double the intergenerational average.
The survey authors noted that the startling statistics could be explained as common youth trends in any era, but also pointed to a much grimmer reality.
“A more pessimistic interpretation might be that young people expect their current job instability and financial insecurity to continue as their lives progress,” the survey authors wrote. “Gen Z’s fear of never reaching traditional economic milestones may reflect greater pessimism and desperation than other generations have experienced.”
The sad prospects of Gen Z
American youth would be forgiven for thinking that the cards have been somewhat stacked against them.
Struggling with a narcotic $1.75 trillion in student debtGen Zers entered a job market where remote work was quickly becoming the norm, contributing to a general feeling of loneliness and isolation. More than eight out of 10 Gen Z workers have never had a job in an office, and although many say they like it, various studies also found that most Gen Zers crave interactions in the office and prioritize other things over remote work, including flexibility and better pay.
The types of jobs that most young Americans hold don’t do much to help ground them either. According to the McKinsey survey, more than half of Gen Zers report doing “self-employment,” defined as contractors, freelancers, or temporary jobs. A quarter of Gen Zers also said they work multiple jobs at once.
For this reason, 45% of Gen Zers say they are not financially secure, compared to 40% of all respondents. Gen Zers were also more likely to say that their salaries did not allow them a good quality of life.
Unable to make big purchases like houses, a growing number of young Americans have identified themselves as “tenants forever.” They expect to rent permanently rather than own property, citing their insufficient incomefear of get into debtand even concerns about climate change risks.
A life of instability
More Americans – of all income levels – are now living paycheck to paycheck than before the pandemic. The country’s personal savings rate is the the lowest since the 2008 recession, and Gen Z is feeling lonelier and more financially desperate than ever.
Taken together, this means that 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 study surveyand crises, including climate change and the next pandemic, have driven many young Americans to give up saving completely and focus on living in the moment.
Certainly, Gen Z’s attitude toward the future may well be youthful, according to the McKinsey survey. The authors pointed out that many Americans in their early 20s may simply not be at a point in their lives when they can consider buying a home or retiring, and that other generations may have -being felt the same in their youth.
But what is clear is that these traditional financial steps are seen as increasingly unrealistic for many, with decline in home sales and increasingly delayed retirement during the last years. If these trends continue, the instability and financial insecurity that Gen Z is now accustomed to could become the norm.
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