Gen Z Naive About Retirement

It has yet to be seen if the teens and young adults of Generation Z have learned from growing up in households that struggled through the recession.

Although younger Americans believe they will not be able to rely on Social Security when they retire, few are in any rush to start preparing for retirement, according to TD Ameritrade. Furthermore, a large number seem to expect to rely on inheritance even though their parents believe differently.

The new survey by TD also revealed that Generation X and Generation Y have learned from the mistakes of their elders. Those two generations started saving for retirement nearly a decade earlier than baby boomers. They’re also more likely to be making regular, automatic contributions to their retirement savings: 59% of Gen X and 56% of Gen Y, compared to only 46% of non-retired boomers.

"For even the most sophisticated investor, retirement planning can be a tough concept to grasp," Carrie Braxdale, managing director of investor services, said in a statement. "Gen X and Y have accepted the reality of the past few years, and rather than being discouraged, they are using what they've witnessed to their advantage by saving earlier and regularly. The hope is that tomorrow's investors, Gen Z, follow suit as they near retirement."

While younger Americans start saving for retirement, on average, in the mid- to late-20s, only 8% of Gen Z (ages 13 to 22) reported they are currently saving for retirement. However, 35% believed they will have to save that money for themselves since they believe they won’t be able to rely on Social Security.

They don’t seem in too much of a rush to start saving, however. While 71% of their parents reported that you can never start saving too early for retirement, only 43% of Gen Z agreed. Meanwhile, 39% of that younger generation expects to live off inheritance, while only 16% of their parents believed that would be true for their Gen Z children.

Discussions held between parents and Gen Z children seem to revolve around saving in general (82%) or saving for college (67%) rather than preparing for retirement (38%).

"The good news is that Gen Z is starting off with a good understanding of the importance of saving," Braxdale said. "But that doesn't mean they should wait to become more educated on proper long-term savings habits. We encourage parents to talk to kids specifically about retirement savings to ensure they understand the importance of getting a head start and taking advantage of the power of compounding."