For many, the idea of retirement is a distant, almost mythical concept. But for a growing number of young people, particularly those born in the late 1990s and early 2000s – Generation Z – the prospect of a comfortable retirement feels increasingly out of reach. A confluence of factors, from precarious employment and the rising cost of living to a lack of trust in financial institutions and concerns about the future of state support, is leading many to question whether they’ll ever be able to stop working. This shift in perspective is reshaping how an entire generation approaches financial planning, and it has significant implications for the future of pension schemes and social security.
Mehjabin, a 23-year-old supply teacher in London, embodies this uncertainty. Working through an agency, her income fluctuates, sometimes reaching around £650 a week during busy periods, but often falling to just a few days’ work. “It’s hard to get a permanent job, and due to the fact that I don’t have anything stable right now, it’s hard to reach my financial goals,” she explains. “It feels really concerning thinking about the future. I don’t think retirement may even be possible… even saving small amounts of money is becoming impossible.” Her experience isn’t isolated.
Recent research from People’s Pension, a large UK workplace pension scheme, reveals that 12% of Gen Z believe pensions are pointless, because they don’t foresee retirement as a viable option. A third of those surveyed felt the financial services industry fails to adequately communicate the benefits of saving for retirement, while a fifth found pensions to be a boring and irrelevant topic. This disconnect highlights a critical challenge: how to engage a generation facing unique economic pressures and a fundamentally different outlook on work and life.
The Weight of Present-Day Concerns
The immediate pressures of the cost-of-living crisis are undoubtedly a major factor. When The Guardian asked readers about their pension savings, many cited the struggle to meet basic needs. Alex, 28, from Cumbria, exemplifies this struggle. He and his husband earn a combined £1,500 a month, a figure constrained by caring responsibilities that limit their earning potential.
“By the time essentials and driving lessons are paid for, we have about £260 for things like clothing, travel, entertainment etc,” Alex says. “Anything left goes into savings. We rarely go out, and buy most things secondhand. We even cut our own hair.” He previously participated in a workplace pension but opted out, prioritizing immediate financial security. “We need to make sure One can access those savings, as you just don’t realize what’s going to happen,” he explains. “It’s hard to think about something like retirement when we’re just trying to make it through in the present.”
This sentiment reflects a broader generational divide. Alex notes a disconnect between his financial priorities and those of his parents, who initially struggled to understand why he stopped contributing to a pension in his late 20s. “I had to sit my dad down and break down my finances in full for him to understand that we don’t have much left after housing costs, bills – which rise year on year – and essentials,” he says. “He was genuinely shocked, and now understands why younger people have difficulty looking into the future.”
Erosion of Trust and Future Uncertainty
Beyond immediate financial pressures, a lack of trust in traditional financial systems and concerns about the long-term viability of state support are also contributing to Gen Z’s skepticism towards pensions. A 2025 report by the Pensions Policy Institute found that Gen Z has less faith in financial institutions than older generations. The report revealed that 73% expect the state pension to be reduced, with 25% anticipating a significant cut, and 46% believing it won’t exist by the time they retire.
This pessimism isn’t unfounded. The state pension age has been repeatedly raised in recent decades, and ongoing demographic shifts – an aging population and a declining birth rate – are placing increasing strain on social security systems globally. The long-term sustainability of these systems is a legitimate concern for younger generations who will be responsible for funding them.
The Appeal of Immediate Access
Given these anxieties, it’s perhaps unsurprising that many Gen Z individuals are prioritizing readily accessible savings over long-term pension investments. The flexibility of instant-access savings accounts, even with lower interest rates, offers a sense of control and security in an uncertain world. This approach allows them to address unexpected expenses and navigate the unpredictable nature of the modern job market.
Kirsty Ross, the director of proposition at People’s Pension, acknowledges the impact of economic uncertainty. “When there’s economic unease and uncertainty, things can experience out of our control, especially when it comes to finances,” she says. “Our research shows one in 10 young adults worry they won’t ever retire comfortably, or even at all. That level of concern reflects the pressure many feel under.”
The Long-Term Cost of Delay
Despite the understandable anxieties, financial experts emphasize the importance of starting to save for retirement as early as possible. “They remain one of the most tax-efficient ways to save for retirement,” says Damien Fahy, founder of the personal finance advice website Money to the Masses. He illustrates the power of compounding: “If you start at 20 and save £100 a month, assuming 7% growth, you could have about £260,000 by age 60. If you wait until 30 to start that same £100, you’re looking at roughly £120,000. Waiting a decade literally costs you half your potential pension pot.”
Helen Morrissey of investment platform Hargreaves Lansdown highlights the advantage of a longer investment horizon. “The benefit of being young is that you have a longer time horizon over which to invest, so even small contributions can make a difference,” she says. “Making resolutions to boost contributions every time you get a pay increase can also be a good way of boosting how much goes in over time. Using things like online calculators are a great way to see how much you might end up with, and you can model the impact of boosting contributions if needed.”
navigating the complexities of retirement planning requires a nuanced approach. While the concerns of Gen Z are valid and reflect the realities of a changing economic landscape, delaying saving altogether carries significant risks. Finding a balance between addressing immediate needs and planning for the future is crucial.
Disclaimer: This article provides general information on financial planning and retirement savings. We see not financial advice. Consult with a qualified financial advisor for personalized guidance based on your individual circumstances.
The Department for Work and Pensions is expected to publish updated projections on the state pension’s long-term sustainability in late 2026. This report will likely be a key point of discussion for Gen Z and policymakers alike. We encourage readers to share their thoughts and experiences on this vital topic in the comments below.
