Millennials, Gen Z question saving money for a future that looks so bleak

Financial planning? Passé for millennial Gena Ozols. The 33-year-old’s retirement plans rest firmly in the skeletal hands of the Grim Reaper.

“Between the fact that Social Security is completely depleted and retirement accounts are so tied to stocks that are going to get screwed over, retirement for me is an absolute fantasy,” the Englewood resident said. “Not to be macabre, but I make the joke that my retirement plan is just to die. What else am I going to do?”

According to a 2022 Fidelity Investments study on the state of retirement planning, 55% of the more than 2,500 adults surveyed between the ages of 18 and 35 with at least one investment account said they put their retirement planning on hold during the pandemic. Forty-five percent said they don’t see a point in saving until things return to normal.

Disenchanted with outlooks on the future — worsening climate crises, unstable economy, precarious politics, pandemic woes, unaffordable housing — some millennials and Generation Z Coloradans are choosing to forego saving for an uncertain tomorrow and spend what they have while they can, according to Denver Post interviews.

But a local financial planner and a psychologist warn that while engaging in “financial ennui” — spending in the now and ignoring an anxiety-inducing world to come — may feel good at a time when not much else does, it could come at a cost.

“The biggest mistake I see people make is to give in to hopelessness,” said Brandon Wallace, a Denver financial adviser and fellow millennial. “Things might be difficult, but if you just pay some attention to your finances, you won’t retire to eat cat food. You’ll retire in a way where you won’t travel to Europe every year, but you won’t have to worry about where you live when you’re 75.”

Prioritizing happiness

Diddiery Santana, 20, knows she’ll have to worry about retirement at some point. But the first-generation Mexican American, who has spent most of her life working multiple jobs, including at her parent’s Aurora restaurant Tortisimas, is prioritizing her happiness.

The University of Colorado Denver student lives with her family in Parker and saved $5,000 from her job at a Life Time fitness club so she could spend the summer interning with the Madrid Film Institute in Spain.

Not used to taking time off work, Santana was initially awash with guilt at the idea of leaving her parents and spending money on something for her own enjoyment.

But the pandemic helped put the experience into perspective for her.

“I realized if I die tomorrow, where is the money going to go?” Santana said. “It’s going to go literally toward my funeral. Not exactly what I want. I have the money now and I’m going to do it. There’s no point in having an emergency fund if you don’t allow yourself to have opportunities to have emergencies.”

Santana’s parents’ work ethic has rubbed off on her. She’s paid her way through college loan-free, navigating financial aid by herself as the first person in her family to go to college.

When she was 16, Santana took a high school finance class at the urging of her parents so she could help them with their taxes.

“I don’t know anything about retirement, though,” Santana said. “My parents don’t, either. We’ve struggled a lot with money, and retirement has just never been in our sights. I don’t even think about retirement because I see that the future is not guaranteed.”

“Doesn’t look like we’re going to make it”

Santana and Ozols are exactly the kind of clients financial adviser Wallace, 38, would like to help — younger adults who could benefit from some empathetic guidance.

However, not only does the age group simply lack the funds compared to past generations, but they also lack the trust in the traditional systems that have promised financial security in exchange for hard work, he said.

“It’s hard to get a generation to want to save for the future when we are so convinced that there’s not going to be much of a future,” Wallace said. “This is a generation that has seen so many systems we were told to believe and trust in repeatedly fail and disappoint us… Houses are being listed at $1 million but they’re being purchased for $1.6 million in cash, and they might be underwater with climate change in 30 years and there’s this growing rise of authoritarianism all over the world.

“It’s hard to convince a 22-year-old to save when it doesn’t look like we’re going to make it.”

Generation Z ranges in age from 10 to 25 while millennials are between the ages of 26 and 41, according to Pew Research.

Millennials are well behind other generations at the same age when it comes to wealth accumulation, according to a 2021 analysis on millennials’ readiness for retirement by Boston College’s Center for Retirement research.

According to the center’s report, millennials face a world in which Social Security will provide less relative to pre-retirement earnings, 401(k) balances are “generally meager” and half the private sector workforce lacks employer-sponsored retirement plans.

The report places the blame for this equity gap on millennials’ student loan baggage.

The share of young adult households with any student debt doubled from 1998 to 2016, according to Pew Research. The median amount of student debt was almost 50% greater for millennials, at $19,000, than for their Generation X predecessors, who held around $12,800 of loan debt when they were younger, the research found.

“Millennials’ lack of wealth in their 30s relative to earlier cohorts should be a source of great concern, given that they will live longer than previous cohorts and will receive less support from Social Security,” the report reads.

Families headed by people born in the 1980s — older millennials — were about 34% below wealth expectations, a predicted level based on the wealth held by families in that generation and earlier generations at similar ages, according to a study published by the Federal Reserve Bank of St. Louis in 2018. An update of the study in 2021 found older millennials were faring better at 11% below wealth expectations. However, this update did not account for the pandemic’s impact on finances.

“What’s the point?”

While studies suggest millennials will live longer, Ozols said COVID-19 has proven to her that life is short.

“We could be gone tomorrow, and I would so much rather get avocado on my toast or go on that trip that I’ve always wanted to go on,” said Ozols, who just hit a six-figure income working in political consulting and has about $8,000 in retirement.

“It’s not going to be more money toward my savings, but what do my savings even matter?” she said. “I have given up on the idea of putting a savings together. Everything just keeps getting more expensive, we’ve got summers where we can’t even go outside because you can’t breathe the smoky air, I can’t outbid a bank to buy a house, and then there’s a car repair or a medical bill and the money is gone again. What’s the point?”

Ozols recognizes she has a good job and is making decent money, but without a dual income or family money, moving up seems out of reach.

For years, Ozols deprived herself of a dog, convinced she had to wait to be a homeowner with a more stable income and savings racked up.

“The last few years have really showed me that future I envisioned might not exist and a dog would make me really happy right now,” Ozols said.

Ozols recently pulled the trigger and welcomed furry friend Evie into her Englewood apartment.

“It does feel freeing to just accept that all these milestones you were expected to hit, you might not hit them and rather than building your life to try and hit these milestones, living the life that is just happiness for the moment is like a weight off of my shoulders,” Ozols said. “Any weight off of my shoulders right now is needed.”

Psychologist June Gruber studies well-being, emotions and happiness and is an associate professor of psychology and neuroscience at the University of Colorado Boulder.

Gruber and her team are raising funds to study how people are coping with the multipronged stressors of our world. Millennials and Gen Z, she said, have had to contend with greater uncertainties about the future in unprecedented ways.

“I think that has created a significant amount of uncertainty and a lot of emotional challenges,” Gruber said. “The uncertain and often bleak outlook that can present itself in the future really poses a challenge for millennials and has called on them to become more tolerant of distress and become more emotionally flexible to adapt to it.”

To cope, Gruber believes this cohort has started focusing more on the here and now and less on the future.

“This growing present-focus among millennials — is it more a distracted coping mechanism versus a way to truly be present with your anxiety and thoughts and feelings in the moment?” Gruber said. “In the short-run, distraction can help ease stress, but if we do this repeatedly, we end up avoiding what’s happening in our lives in this moment.”

Time to invest

In the doldrums of the pandemic, Dylan Gardner and his wife sprang for an upgraded Peloton exercise bike. They bought a brand new Tesla. They aspire to prioritize international travel.

Gardner, 30, is in residential land development while his wife Tiffany is finishing up her residency at Denver Health. The couple, who own a home in Aurora and rent the basement as an Airbnb property, bring in about $200,000 to $300,000 a year, combined.

Once the Gardners started making more money, they began investing in the stock market. But the past few years have caused Gardner to hesitate.

“The state of the world is definitely a hindrance to expecting immediate returns from investment, or even positive value on a long-term basis, which makes me pause before dropping large sums of money on a single stock,” Gardner said.

Gardner does still invest, but only through his employer’s 401k program.

“I’m less inclined to put money into the stock market — until it normalizes, whatever that means going forward — and more inclined to pay down my mortgage or car payments,” Gardner said. “As of late, my wife and I are putting more of a priority on traveling, buying nice material things and eating at nice restaurants. So in that regard, yes, we are allocating more money to shorter-term things that make our life better, in this current environment.”

Still, the Gardners hope to retire early — maybe even by 40 — and live off their investments and retirement savings. They described themselves as “nerdy” when it came to retirement savings.

Wallace, the financial adviser, says that’s a good thing.

The best advice Wallace can give someone is to see a financial planner if they have the ability to do so and let them help you set goals, budget and get you where you want to be money-wise in a feasible time frame.

If a planner is out of reach, Wallace suggested free resources like finance podcasts or social media influencers who share advice for the average person. He recommended TikTok user Madeline_Pendleton for accessible money advice.

“It comes down to lack of financial education given to us, a lack of trust in the institutions, lack of faith it will pay off and lack of access to resources to get your foot in the door,” Wallace said. “All these swirl together and create a situation where it is very, very, very difficult to get young people engaged in financial planning. I want to manage their money, but they need to have money first.”

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