HR 101: How to help Gen Z workers get a head start on their retirement

Gen Z employees may be so excited about starting their first job that they’re quick to overlook helpful benefits beyond their starting salary. 

A recent survey by Betterment at Work, a financial wellness benefits provider, revealed that Gen Z employees are the least likely to take advantage of benefits like retirement plans, student loan repayment programs or financial adviser services. Twenty-six percent of Gen Z employees utilize these benefits, compared to 32% of millennials and 38% of Gen X. 

Yet these offerings aren’t just afterthoughts — rather, they can make or break an employee’s financial reality, both today and decades down the road, says Edward Gottfried, director of product at Betterment at Work. 

“The real danger of thinking about a job offer as best and final is that there are a lot of variables that you need to take into account when considering what makes a compensation package attractive or not,” Gottfried says. “Beyond compensation that comes in the form of a salary, what are the other benefits an employer provides that make sense for you?” 

Read more: Millennials shouldn’t count on full Social Security benefits. Here’s how retirement advisers can help

For Gen Z in particular, taking advantage of a 401(k) as soon as possible can get employees saving early and taking full advantage of compound interest. Yet Gen Z workers are often more focused on how their salary will cover their basic expenses like rent, and may overlook the bigger picture. 

“Even though you may be entering into your first job, thanks to the magic of compound interest, every dollar that you save in those first few years in the workforce for retirement has the opportunity to really multiply over the decades,” Gottfried says. “It's really important to think about that as another component of your salary, and not only ensure that you can meet your expenses while doing so, but take into account that this is a really important habit you need to start building.” 

Read more: Employees are skipping meals out to save more for retirement

Gottfried says Gen Z employees often see their first job as just a transitional position that can get them into a better role down the line, and often don’t bother to invest in a retirement plan or take advantage of other workplace offerings. The Betterment at Work survey found that a quarter of Gen Z employees are actively searching for a new role, and 36% are considering quitting their current job. 

But while a young employee’s workplace may change, the habits they build now will stick with them even as they move on. 

“There is a habit-building element to this now that you're entering into a regular paycheck. You want to be building out financial habits and a set it and forget it mindset,” Gottfried says. “The problem with thinking, I'll get to this in my next job, is that invariably you'll find another reason to delay. The only person who's going to suffer as a result of those delays is you.” 

Beyond retirement, Gen Z workers should also be exploring benefits like student loan repayment and an emergency savings plan program. Betterment for Work found that almost half of Gen Z workers do not have an emergency fund, and as such, this generation feels the most stressed about their financial situation. 

Read more: Financial literacy matters to Gen Z — and they want employers to help them

Employers can help guide Gen Z through the benefits enrollment process by personalizing the experience, as opposed to expecting them to sort through their options on their own, Gottfried says. Sending email reminders, setting up a virtual benefit fair with counseling sessions, and reaching out after they’ve been onboarded can help motivate employees to utilize what’s available. 

“The benefits package that an employer offers is really only as good as the employees who take advantage of it,” he says. “It really is incumbent on the employer to make sure that employees are not only aware of the full range of offerings that their company provides to them, but also are participating.” 

That one-on-one experience can also help Gen Z make an emotional connection between their benefits and their life today, as well as their goals for the future. Providing a financial adviser can help young employees set up strategies that will help them throughout their lives.  

“Offering really robust financial wellness benefits that fall into those long-term, medium-term and near-term financial needs should be coupled with helping employees think about how to treat each paycheck in terms of these different buckets of money,” Gottfried says. “Money is really personal and can be very emotional for employees, and a certified financial planner can make sure that all of the variables that are unique to that employee are taken into account and that they have a plan that helps them.” 

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