HR Leaders, Gen Z Employees Misaligned on Savings Priorities

There appears to be a disconnect between Gen Z employees and human resources leaders at their employers, according to a new study published by The Standard, as HR leaders tend to underestimate how much members of the youngest generation of workers are concerned about their financial future.

While 79% of Generation Z employees reported that saving is a top financial goal, only slightly more than half of managers and HR leaders responded that they believe Gen Zers consider saving a key priority, according to the survey.

The Standard in May 2024 surveyed 809 workplace managers who have Gen Z employees reporting to them. In 2023, the research firm also surveyed 500 HR decisionmakers focused on Gen Z workers (September 2023 through October 2023) and 1,250 full-time Gen Z workers (August 2023).

According to the results, HR leaders also tend to mistakenly focus on Gen Z’s debt. Only 37% of Gen Zers said they view paying off debt as a top goal, whereas managers and HR leaders reported that more than half of Gen Z employees regard paying off debt as a priority.

Amy Malagamba, assistant vice president of marketing at The Standard, says as HR leaders have been preparing for and imagining what benefits are needed for the next generation, there is a tendency to think that the newest generation will be an extension of the generation before—essentially, assuming Gen Z employees will have the same priorities as Millennials.

“What the research found was: Instead of matching up with the sensibilities of Millennials, Gen Z is matching much more closely to the sensibilities of Gen X,” Malagamba says.

As opposed to focusing most on paying off debt, Malagamba says Gen Z employees expressed more concerns with saving for retirement, flex time, remote work, student loan help and mental health support.

Just Getting Going

Data from the Federal Reserve Bank of New York also show that members of Gen Z owe less in credit card and student loan debt than other age groups. According to the Fed, Gen Zers are more likely to be maxed out on credit cards, but their median balance is lower than that of other cohorts. Median credit card balance was $760 for Gen Z workers, as of May, whereas median balances for Millennials and Gen X were $2,378 and $3,017, respectively.

Average student loan debt for Gen Z in 2023 was $14,380, according to the Education Data Initiative, whereas Millennials had an average of $32,800 in student debt and Gen Xers had an average of $44,290.

A recent report by the TIAA Institute also found that 84% of Gen Z workers are saving a portion of their income each month, and 57% said they stick to a budget. However, more than half are only using savings accounts to set money aside. About 17% of Gen Zers said they are investing in a retirement account.

For those not currently investing their savings, the largest portion (35%) said they “lack knowledge on where to start.” The TIAA Institute surveyed 1,010 Gen Zers (ages 18 to 24) in January and February. Not surprisingly, between the ages of 22 and 23, TIAA Institute observed a 10% jump in Gen Zers saving for retirement, which aligns with when most are graduating college and getting their first full-time jobs.

Bridging the Gap

The Standard argued in its report that bridging the disconnects between HR and young employees can help employers better identify the help that Gen Zers want.

Managers themselves hold conflicting views, as 74% said their companies do a good job of providing resources they need to effectively manage Gen Z employees, but more than half said they wish they had more training and support for managing Gen Z employees.

Educating employees about benefits is typically outside of a manager’s role, but The Standard found that 62% of managers reported Gen Z workers asking them questions about benefits. After surveying managers, 70% said their Gen Z employees care about benefits, and 65% said Gen Z employees actually use these benefits.

While supervisors may have closer relationships with Gen Z workers, they are less aware than HR leaders of Gen Zers’ desire for financial education and advice, The Standard found.

“Clearly managers aren’t financial advisers,” the report stated. “But more should probably know about their company’s resources so they can direct employees—including Gen Zers—to the financial education and advice they want.”

Malagamba says this might be a signal to HR leaders that more education about benefits is needed not only for younger employees, but also for managers, so that they are able to provide the right information to their workers.

The majority of Gen Z workers (80%) said financial education and advice are important to them, but only 46% said literacy tools are provided at their company. In addition, when it comes to selecting benefits, 54% of Gen Zers said the thought of dealing with health insurance makes them feel overwhelmed and anxious.

The Standard emphasized in its report the importance of designing financial education programs that target employees in terms of age and other demographics. Plan sponsors and HR leaders can also work with financial wellness vendors that specialize in educating workers on saving, budgeting, investing and debt management.

Plan sponsors should also ensure that the vendors they are working with are able to supply materials and training to help workers get the most out of the products and services they offer, the report stated.