Gen Z Believes They Need £7.5M To Feel Financially Secure After Witnessing Parental Struggles

Gen Zers estimate they need nearly £7.5 million ($9.5 million) to feel financially secure—a figure likely shaped by witnessing their parents' struggles with retirement and in some cases returning to the workforce.

To achieve their vision of financial success, Gen Zers aim for a net worth nearly double that of Generation X. Their target stands at an astonishing £7,722,229 ($9,469,847), compared to Gen X's benchmark of £4,317,890 ($5,295,072).

The Million-Pound Dream

The definition of financial comfort appears to be climbing with every generation. Factors such as rising inflation, an unaffordable housing market, and an ever-widening wealth gap have made it clear to young adults that a substantial safety net is essential to navigate the economic challenges ahead.

This explains why Gen Zers believe they need almost twice as much as their parent's generation, Gen X, to achieve financial success. While Generation Xers believe a net worth of £4317890.26 ($5,295,072) signifies financial security, Gen Zers aim for £7722229.29 ($9,469,847), according to a survey of over 2,200 Americans conducted by financial services company Empower.

'Younger generations are doing the math and betting on needing more money to reach a future state of financial success,' Rebecca Rickert, head of communications at Empower, told Fortune. The bar for financial success continues to rise with each generation. This trend extends to income expectations.

Gen Zers also consider an ideal salary of £479321.71 ($587,797), more than three times the £147487.18 ($180,865) deemed ideal by Millennials. In contrast, Boomers believe an ideal income is only about half that of Millennials, at £81442.70 ($99,874).

A Generation Burdened By Financial Anxiety

As the youngest generation in the workforce, often facing lower salaries than their predecessors, Gen Z experiences heightened financial anxiety. This anxiety is further fueled by the precarious economic landscape they've grown up in.

'Gen Z is coming up in an era marked by major economic disruptions, from the pandemic to some of the highest inflation rates in decades, student loan debt and a challenging housing market,' Rickert explained.

Today's young adults face a more challenging landscape, finding traditional markers of success like a comfortable retirement, raising a family, and homeownership increasingly out of reach. This growing pessimism is reflected in a recent Pew Research Center study, which found that young adults are significantly less likely than older generations (adults aged 50 and older) to believe in the attainability of the American Dream.

Gen Xers Face Retirement Uncertainty

Despite aiming for a comfortable retirement with a net worth exceeding £4.08 million ($5 million), Gen Xers are grappling with the reality of longer lifespans, which could significantly strain their retirement savings.

According to Tiffani Potestam, head of distribution at Voya Investment Management, writing in Fortune, Many Gen Xers are struggling to save enough for retirement, facing a workforce that no longer offers the robust pension plans common for previous generations.

As a result, many Gen Xers are forced to extend their working lives, and some even return to the workforce after a brief retirement. A staggering 44% of Gen Xers surveyed by Natixis Investment Managers believe achieving a secure retirement will require nothing short of a miracle.

The Impact Of Economic Uncertainty On Young Adults

This situation raises a critical concern for young workers, highlighting the need for substantial financial security in their future. As Rickert explains, this realisation is likely influencing their career choices. Furthermore, a 'comparison effect' is evident, as Gen Zers closely observe the financial struggles of their parents and peers.

Despite facing significant financial hurdles, younger generations remain surprisingly optimistic about achieving their financial goals. A robust 71% of Gen Zers believe they will achieve financial success in their lifetime, surpassing the 70% of Millennials, 53% of Gen Xers, and only 45% of Baby Boomers who share the same confidence.