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Move Over Millennials, Gen Z Slated to Be the Next Retirement Disruptors

Practice Management

While Millennials remain the largest cohort in the workforce and bring their own unique perspectives and expectations, the so-called Zoomer Generation born between 1997 to 2012 is beginning to enter the workforce and is already starting to have an impact on the retirement industry.  

This is according to the Principal Financial Group’s Future of Retirement Survey of more than 250 plan sponsors and 200 financial professionals on what they believe will be the leading disruptors to the retirement industry by 2030. The survey findings identify five key disrupters changing the retirement landscape: Gen Z habits and expectations; an aging workforce; personalized investments and advice; financial wellbeing; and the retirement savings and access gaps.  

Gen Z Expectations


As one of five key disrupters, the findings show that 76% of plan sponsors agree that the expectations of Millennial and Gen Z investors will be the driving change in retirement markets by 2030. In particular, the preference that Gen Z has to conduct most financial business online is viewed by both financial professionals (55%) and plan sponsors (47%) as the top disruptor from this generation. According to the respondents, this is because they: 

  • prefer to conduct their financial business online;
  • adopt fintech tools and digital applications more easily;
  • are more receptive to financial services from tech companies versus traditional financial companies;
  • believe in a diverse and flexible workplace and desire more non-traditional benefits;
  • are highly sensitive to business sustainability and interest in ESG investment options; and
  • expect companies to “know them” and provide offerings to be personalized to their needs.

“Being digital natives, they will most likely seek out and demand online tools and education to help them save,” the report remarks. Additionally, members of Gen Z apparently have no expectation of receiving Social Security, and thus, understand that saving for retirement is “their own responsibility,” it notes.  

Aging Workforce


As to an aging workforce and competing generational needs, Principal notes that employers are often choosing retirement plans to help meet the needs of five generations of Americans. Notably, more of Gen Z will enter the labor market in the next 5-7 years, while the number of people aged 75 and older in the workforce is expected to grow by nearly 97% by 2030. 

To support an aging workforce, three out of four plan sponsors and financial professionals agree that by 2030 participants will be able to take a phased approach to retirement. This could become a benefit event in which participants begin taking recurring withdrawals from their retirement account without penalties, the findings note. 

“Choosing to retire is no longer a single-step life decision,” notes Chris Littlefield, president of Retirement and Income Solutions at Principal. “Many individuals approaching 60-65 years of age need or prefer a phased retirement, working part-time to get relief from the 40-hour work week without fear of outliving their nest eggs.”

Personalization and Wellness 


Similarly, another growing expectation to better serve participants is an ability to provide individualized advice. More than 70% of both plan sponsors and financial professionals agree that personalized investment portfolios and managed account services will be common offerings within defined contribution plans by 2030.

To offer more holistic and personal guidance, 78% of plan sponsors and 77% of financial professionals also agreed there will be a shift from improving the enrollment process for employees to improving the retirement process, which can include services such as advice, retirement planning and creating retirement income.

Financial wellness programs are also expected to emerge as an additional plan resource to further personalize the participant experience by 2030, with 85% of plan sponsors and 90% of financial professionals agreeing that plan sponsors will increase the adoption of them.

Outside of retirement savings programs, Principal found that plan sponsors believe the top five financial wellness benefits that should be offered include:

  • helping participants establish a budget and financial plan;
  • retirement income planning;
  • credit card and debt counseling;
  • healthcare planning for early retirees; and 
  • investment education.

Savings and Access


Regarding the retirement savings gap, the report observes that one reason for it is the lack of access to employer-sponsored plans. Citing Bureau of Labor Statistics (BLS) data, the report notes that 31% of private industry workers are not offered retirement benefits through their employer, adding that this group typically consists of those working for small businesses, gig or part-time workers and contractors. 

In noting that while it’s still too early to tell whether the new SECURE 2.0 and the original SECURE Act will have any impact on the savings gap, survey respondents agree that by 2030 more workers will have access to a workplace retirement plan. According to the findings, 82% of financial professionals feel that retirement plans in the micro and small markets will likely grow, and 74% expect to see an increased growth of MEPs and PEPs. 

The online survey was conducted from Oct. 25–Nov. 14, 2022, focused specifically on the views plans sponsors and financial professionals have on the future of the retirement industry.