The Time to Reach Gen Z Is Now

Food for thought: If a person who is 15 years old were to start saving $50 a week and stay the course through age 65, they would very likely generate enough assets to cover projected health care costs through retirement. 

Experts convened Thursday for a Lincoln Financial Group webcast offered an interesting take on results from the firm’s recent “M.O.O.D. of America Study,” focusing on Generation Z, roughly defined as those Americans under age 15.

“This was the first time we have looked at Gen Z, the generation younger than Millennials,” explained Jamie Ohl, president, Retirement Plan Services, Lincoln Financial Group. “What clearly stood out after we spoke with this group was that they are more optimistic than any other generation. Nine in 10 feel optimistic about their financial futures, compared with 43% Millennials. Believe it or not many of them are already actively saving.”

According to the M.O.O.D. survey, 60% of Gen Z already has an active savings account, a significantly higher percentage than the older generations had at this stage in life. “The average age was 13 when those in Gen Z who are already saving opened their first personal bank account, which is even more impressive,” Ohl said.

Neale Godfrey, chairman and president of the Children’s Financial Network, which advocates for early age financial education, spoke about the survey data alongside Ohl. She highlighted the fact that this generation, while impressively optimistic, also has its own concerns in thinking about the financial future. They came of age during the Great Recession and the immediate aftermath of the Great Recession, and like Millennials (and all the other generations) the event has had significant implications for their work and wage prospects.

“In addition, many of them will have student debt in significant amounts, and they need help with that,” Godfrey said. “But they can’t use student debt or lower wages as an excuse. If you can take $50 every two weeks, or even every week, and start saving that for 50 years, you can generate at least half a million dollars with anything like a decent return. We need people to start having this conversation right now.”

NEXT: The challenge of student debt

The Lincoln panel also featured Keith Weigelt, professor of strategy at The Wharton School of the University of Pennsylvania. When considering the survey results, he suggested one of the most promising ways to promote long-term financial wellness in this generation is by “getting them to appreciate the double nature of compound interest.”

“Compound interest represents a huge opportunity for building wealth, but in a sense it also makes it impossible to catch up if you wait too long to start saving,” he explained. “This generation, as they first enter the work force and start earning real money, they must appreciate that the sooner you start to save, the better off you are. It’s that simple.”

Ohl suggested targeting Gen Z where they are is the natural way forward: “We know these kids are attached to a mobile device, and we need to teach them to invest in a way they are comfortable with and interested in. FinTech solutions naturally come to mind. They are going to demand mobile education and mobile investing. That’s what is going to be desirable for them.”

Explaining her organization’s role in advocating for earlier financial education, Godfrey observed that less than half of the U.S. states have any formal financial literacy education standards.

“This is unacceptable given that Generation Z is going to be 100% reliant on 401(k) plans, even more than Millennials are,” she said. “They simply do not have a pension in their future, so they need to make sure compounding is working for them as soon as possible. That means, start saving $25 or $50 bucks a week now at age 15, and by 65 you’ll have a lot of what you need.”

She encouraged financial services providers to consider the inherent opportunity that comes along with general financial education: “Providers can do a lot of good by donating their time and going into schools and teaching kids some basic curriculum. That’s going to be tough to achieve—we all know that our school days are very full right now. So we need to first demonstrate to educators and legislators the value and importance of financial education. It’s our duty to make this argument successfully.”