The retirement gap’s a real danger for Gen Z savers
Under-40s engage with their money in multiple ways, but preparing for life after work is still and issue, writes Anna Meikle
Britain’s under-40s have never had more ways to engage with their money. They check banking apps daily, invest from their phones and are constantly exposed to social media, podcasts and online platforms that make suggestions on how to get the most from your money. Yet despite this growing financial awareness, many are still heading towards an uncomfortable retirement. Scottish Widows’ latest Retirement Report suggests 29 per cent of Scots are not on track to achieve even a minimum retirement lifestyle.
Auto-enrolment solved one problem; it got people saving for the longer term. But it may have created another; the belief that retirement planning can safely be left on autopilot. The reality is for many this will not be enough.
The problem is not a lack of interest. This generation is already engaging with money differently. Gen Z is investing earlier and at materially higher rate than previous generations. Yet there is an interesting contradiction. This same group that regularly checks their banking app pays far less attention to their retirement needs, potentially missing out on the compounding benefits of long-term investing.
By 55, that compounding window has largely closed and the gap to meet retirement needs is difficult to reverse. Further, if traditional pension providers continue to prioritise customers that are close to retirement, they may find that the relationship, data and trust have already gone elsewhere. Fintech challengers have been building strong relationships with younger customers through everyday digital and omni-channel financial experiences for years and are now extending their products into long-term savings and pensions, representing a threat to the industry.
To capture this generation, traditional providers need to rethink both proposition and engagement to make long-term savings feel as relevant, motivating and as accessible as the financial products people already use every day.
The younger generations face a difficult balancing act, being asked to save for the future while navigating persistent cost-of-living pressures and greater financial uncertainty. The answer is not simply to tell them to save more. Instead, engagement should be built around an ecosystem that considers the life moments that matter, such as starting a new job, receiving a pay rise, planning for a home, starting a family or receiving inheritance. These signals already exist but are often not acted upon. Applied well, they can trigger timely nudges and simple next-best actions that make saving for the longer term feel achievable rather than overwhelming.
The digital experience must also take a leap forward. Younger customers increasingly expect intuitive, personalised interactions and the ability to get answers in the same natural way they do through platforms such as ChatGPT.
The challenge for providers, employers and policymakers is to make planning for the future feel like part of everyday financial wellbeing. If younger Scots start to engage with longer term financial planning in the same way they engage with their day-to-day finances, they will be better placed to make informed decisions today and enjoy greater financial security tomorrow. Otherwise, we risk creating a generation that is more financially aware than any before it, yet less financially secure when it matters most.
Anna Meikle, Accenture Song co-lead for Scotland
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