If one thing can be said about Generation Z, it’s that we are jokingly pessimistic.
From jokes about mental health issues to memes about the possibility of World War III, Gen Z is both famous and infamous for casually dark jokes about serious topics, especially on the internet.
But our humor is often a reflection of deep-seated anxieties about our place in the world. Gen Zers’ joking nature is a defense mechanism, allowing us to express and process our concerns without being overwhelmed by them.
The current economic state of the nation is not immune to this sort of humor. Jokes about market crashes and the rise of recession trends make light of the fear that we will not be able to afford the same lives as previous generations had.
University of Minnesota economics professor Christopher Phelan said some of Gen Z’s economic anxiety can be attributed to the fact that people, on average, are having children later in their lives, setting a new expectation for the kind of lives we expect to lead.
“If you have your kids when you’re 30 and reach your peak earning years when you’re 46, then your kids remember your parents at a pretty high earning time of their lives,” Phelan said. “If you have your kids when you’re 22, then the kids might remember times when the parents weren’t well off.”
Even though our perspectives may be skewed by these shifting demographics, Gen Z still faces very real economic issues when planning for the future. One of the most pressing of these issues is when or if they will be able to retire.
Economist and University associate professor Colleen Manchester said there was a transition in many fields 40 years ago from defined benefit plans, like pensions, to defined contribution programs like 401(k) plans. This led to issues for people currently trying to retire, who started using 401(k) plans when there was less societal understanding of their long-term use.
“With a pension, there was a kind of full retirement age, like a focal age based on the formula of the pension,” Manchester said. “It used to be like, age 66 was when you qualified for full benefits. If you have a defined contribution plan, there’s no focal age for retiring.”
University fourth-year Jordan Nguyen said she believes financial advice from various sources is important, as the retirement age will be higher once Gen Z gets older.
“The age of retirement is probably going to be, like, 70 by the time we get there, because you’re going to have to work longer,” Nguyen said.
Facing a labor market where people are working longer and Social Security benefits are being reserved for later in life, it’s no wonder that Gen Zers are skeptical of their retirement prospects. This skepticism has led to surveyed Gen Z workers starting to save for retirement earlier than generations before them.
Changes in types of retirement funds, an increase in contribution percentages and greater overall understanding of defined contribution programs have given younger people a better retirement outlook versus older generations without pensions, according to Manchester. However, she said the increased personal responsibility of 401(k) plans still poses challenges.
“You only kinda get a chance to save for retirement one time, you only go through this life cycle one time, so there’s a lot of opportunities for learning,” Manchester said. “So it’s kind of an area that’s ripe with potential challenges, either through inertia or just a lack of understanding of the core economic principles of saving.”
Fourth-year Michael Carlson said while he feels more secure in his financial future thanks to being proactive about his investments, he still understands the insecurity others feel about topics like retirement.
“You have to be educated on the topic of investing, and I think a lot of people my age are not,” Carlson said. “But also, along those lines, investing doesn’t guarantee you’re gonna have a good retirement, because what if the market crashes before you retire?”
Another major source of economic anxiety is housing prices, which have increased tremendously over the past few decades. The average price of a house in 2023 was around five times the average annual salary, up from around three times in 1990.
“If you do an analysis of our grandparents buying the same houses, they paid way less proportionally if you take out inflation and whatnot,” Carlson said. “So the cost of living is definitely an issue.”
Nguyen said she noticed more and more stories of how homelessness is increasing amongst other generations, leaving her wondering about Gen Z’s housing outlook.
“I fully intend on living at my parents’ house for as long as possible to save up that money,” Nguyen said. “But if you didn’t have that sort of luxury, I genuinely don’t know how you would afford a house at a young age.”
But how did housing prices start down such a concerning path?
Phelan said the solution to rising housing costs is to allow for more housing to be built. But public policy has lagged on this and other issues like health insurance, due to the prioritization of older generations instead of younger ones.
“Every time Congress or the political system has a chance to choose between the interests of the young and the interests of the old, they always choose the interests of the old,” Phelan said.
We certainly have our work cut out for us, but it’s important to remember that times have changed and will continue to change. Living standards are much better now than they were 50 years ago, and while it may seem that some issues are insurmountable right now, the future is unpredictable.
So, instead of worrying about the overall state of the economy, let’s focus on individual issues we can address now. Start to save money for retirement as early as you can. Contact your representatives and ask them how they plan to address climbing housing prices.
If we weaponize our anxiety together, we can become a force to be reckoned with in the creation of our own future.
After all, financial security is far from just a joke, so let’s not treat it that way.
