Generation Z (Generation Z): Definition, Years of Birth, and Demographics (2023)

What is Generation Z (Gen Z)?

Gen Z is the label that many demographic researchers give to the current generation of young people. According to the Pew Research Center, Generation Z is made up of people born between 1997 and 2012. The oldest of this generation are reaching the age of 25, and many are now leaving college, getting married, and starting a family. They follow on the heels ofmillennia(born between 1981 and 1996). As a result of the COVID-19 pandemic, members of Generation Z face a more uncertain future than many previous generations.

Understanding Generation Z

Generation Z is the most racially and ethnically diverse generation of Americans to date. According to the Pew Research Center, non-Hispanic whites in Generation Z have a very small majority of 52%. Hispanics make up 25% of Gen Z, while Black Gen Z makes up 14% and 6% are Asian. The remaining 5% are another race or two or more races. The majority of Gen Z members are not immigrants: only 6% were born outside of the United States.

Although previous generations have embraced social issues, Generation Z is more social than previous generations. According to the Annie E. Casey Foundation, Gen Zers focus on seven key social issues: healthcare, mental health, higher education, economic security, civic engagement, racial justice, and the environment.

Lots of Gen Zerssoon they will no longer be able to stay on their parents' health insurance, and are concerned about how to pay for their own coverage. This problem is compounded by the increase in the number of Gen Zers seeking mental health treatment: 37%, according to the American Psychological Association.

Gen Zers also make education a priority. More than half (57%) of 18-21 year olds were enrolled in a two- or four-year college. Members of Generation Z are also more likely to finish high school.

Members of Generation Z are fighting in record numbers for social change, racial justice, and environmental protection. Some have raised their profile nationally, like X (formerly Emma) Gonzalez, a survivor of the 2018 Marjory Stoneman Douglas High School shooting who, along with other survivors, helped organize the March for Our Lives movement.According to the Pew Research Center, about 70% of Gen Z believe that the government needs to take a more active stance to solve problems.

Generation Z vs Millennials, Generation X and Baby Boomers

The 21st Annual Transamerica Workers Retirement Survey was consideredHow Gen Z sees their financesand pension prospects compared tomillennia,Generation X, Ybaby boomers. Key findings include:

• Nearly six in 10 Gen Z workers (59%) said their employment situation has been negatively affected, mainly due to reduced work hours.as a result of the pandemic, which is significantly higher than Millennials (51%), Gen Xers (39%), and Baby Boomers (30%).
• Baby Boomers, Gen Xers, and Millennials are significantly more likely to cite saving for retirement as a financial priority (75%, 65%, 53%, and 33%, respectively). But of course many are closer to it, or already there for many boomers.
• Accumulation of emergency savings takes precedencefor 50% of Generation X, 46% of Millennials, 42% of Generation Z and 36% of Baby Boomers.
  

The financial situation of Generation Z

According to the results of the Transamerica survey, Generation Z currently has little to no financial security. Gen Z workers are more likely than previous generations to say they are just getting by to earn a living (50%) and pay off student loans (35%). Plus, they have just $2,000 in emergency savings, while 30% have dipped into their retirement accounts. Additionally, about a third of Gen Zers have reduced their daily expenses due to pandemic-related financial strains.

retirement forecast

While the Gen Zers are currently on shaky ground financially, they have solid plans for retirement. In fact, 70% save for retirement.employer sponsored plans, as a401 (k)or a similar plan and/or outside of work according to the Transamerica survey. Gen Zers also started saving for retirement at age 19, long before millennials (25 years).Generation X(30) y baby boomers (35).

According to the survey, Gen Z estimates that they will need $500,000 when they retire to feel financially secure. Yet only 32% have a backup plan in case retirement hits unexpectedly.

Besides theInvestopedia Financial Education Survey 2022found that younger generations are incorporating cryptocurrency into their retirement plans, so understanding cryptocurrency can be extremely important for children.

Financial planning for Gen Z

Since Gen Zers are just entering the workforce, many don't have a lot of experience with it.financial planning. You may be familiar with employer-sponsored plans, but many don't know much about investment products outside of work, such as bank accounts (savings andmoney market),Individual Retirement Accounts (IRA), YCertificates of Deposit (CD). In fact, according to the Transamerica survey, only 9% have a “very good” understanding ofasset allocationPrinciples relating to retirement provision.

If you belong to Generation Z, follow these four steps to pave the way to a strong financial future.

1. Get a complete financial plan

Don't wait until you are well into your career to seek financial advice for your financial future. If you have a steady job and are already saving for retirement through an employer-sponsored plan, now is the time to seek advice on how to maximize your savings. Learn morebudget-haygreat apps for that– and working to build oneemergency fundto help you through tough times and prevent you from ending up in credit card debt if, for example, your car breaks down.

2. Manage your debt

Even for Gen Zers in their 25s (meaning the older ones), buying a home may still be a few years away.But it's not too early to get a handle on your finances, which will help you get a mortgage when the time comes. Good credit and low debt will help both your current life (hiring managers sometimes check this) and your future ability to get anything from a car loan to a mortgage. alternate solutionControl your student debtand keep credit card debt to a minimum. LearnDebt to Income Ratio (DTI)— a number that will ultimately help you get a mortgage (mortgage lenders want your DTI to be 43% or less to qualify for a pro chase home loan), but one that can help you take control of yours right now to obtaining financing.

Paying off credit cards can give your DTI a big boost, as can paying off loans in installments, like a car loan or student loans. If you are having trouble paying your debt: acertified credit counselorcan help you develop an action plan.

3. Get a head start on college expenses

As tuition rates continue to rise, it's important to look for themWays to pay for collegethat will not drown you in debt. Although four-year colleges are considered the primary path to earning a college degree, there are other, more affordable options that may lower college costs. Taking courses online, attending a community college or community college, or opting for a technical school, offer pathways to graduate education that cost less than traditional four-year schools, or make the first part of a college education be cheaper.

Taking time off work full time and saving for tuition is another way to pay for college. You can also request thefederal work studyProgram that allows you to work part-time while attending school, either part-time or full-time.

Finding scholarships and scholarships is another way to pay for college. Don't rely solely on your school's tax office to find potential scholarships or grants. There are several search engines available to help you find scholarships you may qualify for to help pay for college tuition and costs. These include Fastweb, Mometrix, StudentScholarships.org, Unigo, and Scholly.

4. Get a financial picture of parents

As you get older and begin to take control of your own finances, talk to your parents about building a secure financial foundation. They can help answer any questions you may have about building your savings, managing your credit card use, establishing good credit, and understanding employer-sponsored retirement accounts and benefits.

If your parents don't have a strong financial history, find a local banker or financial advisor to discuss your financial problems and goals. And expand your financial knowledgelearn independently.

The final result

The oldest members of Generation Z are starting to move into their post-education years, which brings with it a host of new financial considerations.This also includes the retirement forecast., find ways to finance your college education, and set the stage for a strong financial future, including buying a home. A solid financial plan can help you reach your financial goals and provide financial security in old age.