Nearly 50 Percent of Gen Z Receive Monetary Assistance From Family: BofA Survey

Food purchased from the Dollar Tree store within a $20 budget include milk, frozen vegetables, dried fruit, wheat bread, pasta sauce, dry pasta, frozen noodles, mayonnaise, a frozen lobster egg roll, cheese, and lunch meat. Jenn Harris/Los Angeles Times/TNS

A large number of Gen Zers aged 18 to 27 are dependent on relatives to meet their financial needs, with many cutting down daily expenses to deal with rising living costs, according to a recent survey by the Bank of America (BofA).

Among Generation Z Americans, 46 percent are reliant on financial assistance from their parents or other family members, BofA said in a July 10 statement. Many respondents said they were “not on track to buy a home (50 percent), save for retirement (46 percent), or start investing (40 percent) within the next five years.” More than half of the respondents were found not to be paying for their own housing. Among those who met the housing costs on their own, two out of 10 stated that more than half their paychecks went into meeting these expenses.

Housing costs have surged over the past years, with the cost of a median-priced single-family home rising by more than 18 percent since 2021. To afford such a home, people now have to spend more than a quarter of their incomes. Meanwhile, prices of groceries such as bread, sugar, eggs, ham, and coffee have all risen by double-digit percentages.

Under these inflationary circumstances, the prospects of new jobs are also shrinking, with employers announcing the lowest number of hires in the first half of this year since 2016.

To deal with rising expenses, a majority of Gen Zers are implementing lifestyle changes, according to BofA. This includes cutting down on dining out, avoiding attending events with friends, and shopping at affordable grocery stores.

The survey suggested that Gen Z may be drawing “firmer financial boundaries” than previous generations when it comes to getting pressured into overspending by their friends. More than a third said they felt comfortable turning down social opportunities while admitting they could not afford such an expense.

“Though faced with obstacles driven by the cost of living, younger Americans are showing discipline and foresight in their saving and spending patterns,” BofA Retail Banking President Holly O’Neill stated.

“It is critical that we continue to empower Gen Z to work toward achieving financial health and meeting their long-term goals.”

Financial Planning

In addition to becoming more disciplined in spending activities, Gen Zers are also beginning financial planning earlier than previous generations, according to a report by Corebridge Financial.

The survey found that 73 percent of Gen Zers reported getting serious about their finances before the age of 25.

In contrast, most millennials only started seriously planning their finances before hitting 35 years of age. Almost half of baby boomers kicked off their plans after they turned 35.

“The best time to start planting the seeds for financial success is as early as possible, so it is great to see younger people getting a head start on financial planning,” said Terri Fiedler, president of Retirement Services at Corebridge Financial.

“Establishing a foundation of financial awareness, literacy, and skills early on can have huge impacts on individuals, families and society as a whole.”

Retirement Plans of Gen Z and Gen X

Gen Zers are also taking more initiative regarding their retirement. A BlackRock report states that almost 70 percent of Gen Zers “are either currently invested in a target date fund or planning to do so soon.”

The majority of Gen Zers said they were on track to retire with the lifestyle they want, the highest among all generations. They were followed by millennials, Boomers, and Gen X (born during 1965–80).

Gen Xers, now in their 40s and 50s, are approaching a key period in their retirement planning. An Allianz report found that people in this demographic were “less confident than ever about their finances and more worried about retirement than boomers or millennials.”

A key area of concern among Gen Zers is that they may not have saved enough for retirement. A majority of them stated they wished to have saved more.

“Saving more overall is foundational to retirement,” said L. Kelly LaVigne, vice president of Consumer Insights, Allianz Life.

“However, Gen X may need to take this a step further and remember that a retirement strategy isn’t just about one big final number in the bank.

“Once you retire, you are going to need to draw from those assets for income. A sound retirement income strategy will help [you] use your assets efficiently and include contingencies for risks that can cause you to spend down savings faster than anticipated. You need to ensure the money lasts.”