Schwab 401(k) Study Finds Younger Workers Stressed About Money but Optimistic About Improving Financial Habits

Stress about finances has had an outsized impact on the ability of Gen Z and Millennials to do their jobs during the pandemic, according to the annual nationwide survey of 401(k) plan participants from Schwab Retirement Plan Services. Almost half of Gen Z workers (44%) and 38% of Millennials reported that financial stress impacted their ability to do their jobs this past year, compared to 24% of all workers. About one third of these younger 401(k) plan participants already predict that their retirement will be delayed because of COVID-19, compared to one fifth of their older Gen X co-workers, who still have a decade or more before retirement at age 65.

“Gen Z workers are just starting their careers at a time of upheaval at home and in the workplace – from new health and safety challenges to the rapid expansion of virtual offices and dramatic swings in our economy and markets,” said Catherine Golladay, head of Schwab Workplace Financial Services. “It’s a stressful environment, and young people are looking to their employers for support. The labor market is tight, and companies have an opportunity to attract and retain talent by providing tools and resources that help workers manage their money.”

Employers who handle COVID-19 well can build employee loyalty. About one quarter of Gen Z workers and one third of Millennials say their loyalty to their employer has increased because of how their employer managed COVID-19.

Gen Z Participants: Grappling with current challenges, uncertain about retirement, but open to advice

As they face stress about finances and retirement, Gen Z workers are looking for help to manage their financial lives today and to plan for their futures.

Almost two thirds (62%) of Gen Z participants in the survey say their financial situation warrants advice from a professional. Compared to older generations, Gen Z is more willing to follow computer-generated advice and human advice. One third of Gen Z participants say they are very likely to follow computer-generated advice versus one quarter of other generations, and 60% of Gen Z participants are very likely to follow financial advice from a human compared to 54% of other generations.

One in three Gen Z participants (30%) want help managing their current expenses so that they can save more money for retirement (vs. 22% for all other participants) and 29% want help managing their debt (vs. 15% for all others). They are also interested in their general financial wellness, and about half welcome online assessment tools that can give them an overall financial picture and action plan.