Why This Personal Finance Expert Believes Gen Z Is Thinking About Retirement ‘All Wrong’

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The FIRE movement is great for encouraging saving and investing, but it can lead to what some might call an “obsession” with money. Read on to learn why. 

When most people hear the term “retirement,” they often think of their golden years — their final destination after a lifetime of hard work. But for Gen Z, this traditional concept of retirement may not be realistic or even desirable. Many young people are instead prioritizing early retirement through the Financial Independence, Retire Early (FIRE) movement. However, some, like Erin Lowry, author of the Broke Millennial series, believe that Gen Z is thinking about retirement all wrong. Here’s why.

What is the FIRE movement?

The FIRE movement encourages individuals to save at least 50% of their income so they are able to retire in their 30s or 40s. The idea is to live frugally and invest wisely so that you can eventually reach a point where you have enough money saved to retire early. The FIRE movement has rapidly gained popularity over the past few years, and according to a survey by Credit Karma, more than a third of Gen Z (born between 1996 and 2010) are looking forward to retiring early.

37% of Gen Zers say they’re part of the FIRE movement

Gen Z have just started entering the workforce, and the majority of them are still in school. A significant percentage of Gen Z are hoping for early retirement but haven’t even entered the workforce yet. According to Lowry, this is a common circumstance among those who are young and at the beginning of their careers.

At this point in their lives, the future looks bright with boundless opportunities, and it’s not unreasonable to hope for a substantial salary. Embarking on a career as a polyworker (those who have multiple full-time or part-time jobs) or an influencer may even seem entirely achievable.

Gen Z debt levels have surged

Despite the movement’s aim to create financial freedom, debt levels among Gen Z have surged by 24.3% from $16,043 to $25,851 between 2020 and 2022. This is a concerning trend given that many of them are not yet in the workforce and may not have a clear understanding of the challenges and financial obligations that come with adulthood.

Although Gen Z hasn’t fallen into credit card debt like previous generations, the Buy Now, Pay Later (BNPL) programs made available during the pandemic have created a dangerous temptation that many have found themselves victim to.

Mental health and the definition of retirement

Lowry has been skeptical of the FIRE movement since its inception. In particular she has noticed the lack of emphasis on two important elements: mental health and the definition of retirement.

For many individuals pursuing FIRE, the desire to leave work may stem from underlying mental health issues, such as stress, burnout, depression or anxiety that are exacerbated by work. Simply walking away from work may not be the right solution.

In addition, retirement may seem like the end of a career, but it can also mark the beginning of a new path. It’s not uncommon for individuals to retire from one job and quickly pivot into something else that, for example, better aligns with their passions and interests.

Others may choose to retire from one job and take on another line of work even if it doesn’t pay well. Add to the mix the complication of a spouse who continues to work, and retirement can become a complex issue. Ultimately, the takeaway is that defining retirement is becoming more subjective than generic, as people continue to explore new ways to transition to their next chapter.

What you should do instead

There is no denying that saving and investing aggressively for your future is a wise move. However, it is important not to overlook the value of investing in relationships and personal growth. Some individuals who adhere strictly to the FIRE movement may be sacrificing important aspects of their lives in the pursuit of financial security.

They may be missing out on opportunities for personal development or neglecting important relationships. Pursuing a high-paying career at the expense of one’s personal growth can lead to a lack of fulfillment and a sense of emptiness. To avoid this, it is important to strike a balance between saving money for the future and investing in personal growth and relationships.

In addition, rather than abandoning work altogether, Gen Z should focus on working on their mental health concerns or prioritizing healthy work-life boundaries to achieve a successful early retirement. Taking care of oneself in all aspects of life is the key to a fulfilling and enjoyable future.

One way to achieve financial freedom and security is by building a sustainable career and life that aligns with your values and passions. By living below your means, you can create a bright future that allows for joy and contentment, not just in retirement, but at any age. Ultimately, true fulfillment can only be achieved by living in the present and pursuing a life that brings happiness, purpose, and satisfaction.

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