NEW YORK, NY / ACCESSWIRE / November 22, 2023 / Credello: Spend now, worry about retirement later? Gen Z is embracing the "soft saving" trend, which consists of allocating a smaller portion of your income for future needs in order to have more spending freedom in the present.
Soft saving is pretty much the antithesis of the FIRE movement, which stands for Financial Independence, Retire Early, and involves making sometimes aggressive short-term sacrifices in favor of long-term financial freedom.
The appeal of soft saving lies in its focus on enjoying life now rather than postponing gratification for a distant future. It's about making sure that your lifestyle is enjoyable and includes the things that you value, from vacations to organic foods or an apartment that you feel comfortable in.
While this trend has its merits in promoting experiences and living in the moment, it also raises questions about its potential impact on retirement. Will Gen Z be a generation without retirement? Here's what you need to know.
Gen Z prioritizes experiences above all
Gen Z values experiences, adventures, and personal growth. From traveling and dining out to exploring hobbies and pursuing passions, Gen Zers are determined to make the most of every moment. In the current economic landscape, Generation Z is demonstrating a distinctive approach to spending, emphasizing experiences over long-term savings. Gen Z individuals are redefining financial priorities by diverting funds from traditional retirement accounts to embrace enriching experiences like travel, concerts, and shopping.
Recent statistics indicate a notable surge in travel-related expenditures, with an average increase of 20% in travel-related spending among Gen Z compared to previous generations. Concerts and events also command a significant portion of their budgets, with a 15% rise in spending on live entertainment. As this generation continues to reshape consumer habits, understanding and addressing their unique financial perspectives will be essential for future financial planning discussions. Gen Z does tend to be reliant on credit card rewards, especially with their holiday shopping and favorite concerts. According to a recent survey, 55% of Gen Z said that rewards and points are a top priority when signing up for a credit card.
The retirement dilemma
The question of whether soft saving will lead to a generation without retirement is a complex one. It depends on various factors, including individual financial discipline, opportunities for later wealth accumulation, and the potential for income growth over time.