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Understanding the Financial Challenges of Generation Z
Generation Z, defined as individuals born between 1997 and 2012, is often referred to as digital natives due to their lifelong exposure to the internet. As of 2025, they are between the ages of 13 and 28. Despite being more financially conscious than previous generations, many Gen Zers face significant doubts about their ability to retire comfortably. This uncertainty has led many to consider working beyond traditional retirement age and taking on multiple jobs to secure their financial future.
The Rise of Side Hustles Among Gen Z
A growing number of Gen Zers are turning to side hustles as a way to manage their finances and build a more stable future. According to a Lending Tree survey, over 55% of Gen Z individuals have side hustles, with 48% planning to keep them permanently. These side gigs can include a wide range of activities such as pet-sitting, babysitting, tutoring, driving for rideshare companies, selling handmade items online, or even freelancing remotely.
The motivations behind these side hustles vary. While some are driven by the need to cover immediate expenses, others are motivated by a desire to be their own boss or pursue personal passions. A survey by Intuit highlighted that many Gen Zers are drawn to side hustles because they offer flexibility and autonomy.
Financial Stress and Retirement Concerns
Despite their efforts, Gen Zers face numerous financial challenges. A February 2025 survey by Western & Southern Financial Group found that nearly half of non-retired Americans, including Gen Zers, were not optimistic about retiring comfortably. Many Gen Zers feel overwhelmed by rising inflation, high student debt, unaffordable housing costs, and limited financial literacy. These factors contribute to a sense of insecurity about their future.
According to a TIAA report, only 20% of Gen Zers have started saving for retirement. Many of them spend a significant portion of their income on housing alone, leaving little room for savings. For those who do save, 66% use 401(k)s, and those just entering the workforce have increased their savings by 10%.
Building a Secure Retirement Through Side Hustles
Gen Zers recognize that side hustles can play a crucial role in building a secure retirement. By generating additional income, they can address immediate financial needs while also setting aside money for the future. This extra income can be used to pay off debt, cover monthly bills, or invest in retirement accounts.
Financial advisors suggest that Gen Zers should aim to save incrementally. For example, Fidelity Investments recommends saving at least one time your income by age 30, three times by age 40, six times by age 50, and eight times by age 60. These milestones can help ensure a more comfortable retirement.
Exploring Alternative Savings Strategies
In addition to traditional retirement accounts, Gen Zers may benefit from exploring alternative savings strategies. Living with parents or roommates can significantly reduce living costs, allowing for more aggressive retirement savings. Other options include cutting down on recurring expenses, such as subscription-based services, and investing in ways that align with personal values.
For those interested in ethical investing, there are growing opportunities to support environmental or social causes through investments. However, the availability of such options may be limited, requiring careful research and consideration.
Planning for the Future
While the path to retirement may seem daunting for Gen Zers, there are several steps they can take to improve their financial outlook. Auto-investing can help automate savings and reduce the temptation to spend. Taxable investment accounts and Roth IRAs can also be useful tools for building wealth, especially for those with higher incomes.
Postponing retirement until age 70 can also provide long-term benefits. Delaying Social Security claims can increase benefits by up to 1% each month after reaching full retirement age. However, it’s important to note that benefits stop increasing after age 70.
Final Thoughts
With approximately 40 years until retirement, Gen Zers have ample time to plan and adapt. By combining side hustles with smart financial planning and investing, they can work toward a more secure and comfortable retirement. Consulting with a financial professional can also provide valuable guidance and support in navigating the complexities of retirement planning.
