The Inheritance Gap: Why Millennials Feel More Behind on Retirement Than Gen Z
Nearly half of Americans who haven't retired yet doubt they'll ever be able to fully retire, according to a recent Thrivent survey.
While high living costs and limited savings are major concerns, many millennials point to another challenge: Not expecting an inheritance. And millennials are more likely than Gen Z workers to say a lack of inheritance contributes to feeling behind on retirement planning.
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As retirement approaches for many in this generation, the absence of a financial backstop is becoming a growing source of anxiety. Here's why millennials are feeling the pressure more acutely than Gen Z, and what retirement experts say workers can do to stay on track, regardless of whether an inheritance is part of the picture.
Why Millennials Are More Worried About Retiring Without an Inheritance
One reason millennials without an anticipated inheritance may be more worried about retirement than Gen Zers in the same situation comes down to where they are in life.
"Many millennials are in a stage of life where they’re balancing major financial responsibilities such as housing costs, raising families or caring for aging parents while simultaneously trying to save for retirement," said Jason Rogoff, financial advisor at Thrivent. "Without an expected inheritance, they may feel more pressure to fund their long-term goals on their own."
By contrast, Gen Z workers are generally earlier in the retirement planning process and are often focused on immediate financial priorities rather than the role an inheritance could play decades from now.
"As millennials move closer to peak earning and saving years, questions about how they'll fund retirement may feel more immediate," Rogoff said.
Rising Living Costs and Stagnant Wages Are Adding to Retirement Worries
A lack of inheritance isn't the only reason Americans feel behind.
The survey found that 53% of non-retirees cite the high cost of living as a reason they feel behind on retirement planning, while 47% say they aren't earning enough to save. For workers who don't expect an inheritance, those challenges can feel even more daunting.
"When someone doesn't expect an inheritance, they may have less of a perceived financial safety net," Rogoff said. "Combined with higher living costs and limited ability to regularly save, that can make retirement goals feel less attainable. A lack of inherited wealth can also mean fewer resources available to help absorb financial setbacks or accelerate retirement savings later in life."
Still, Rogoff cautioned against viewing retirement success as dependent on receiving a financial windfall.
"Consistently saving what you can and making steady progress over time can help build momentum, regardless of whether an inheritance is part of the picture," Rogoff said.
Current Financial Needs Are Taking Priority Over Long-Term Savings
Although it's a smart idea to be saving for retirement as early as possible, many workers say this isn't their priority. The survey found that 64% of non-retirees are more focused on current financial needs than retirement planning. While understandable, experts warn that delaying retirement savings can make it harder to reach long-term goals.
"Time is one of the most valuable assets you have when planning for retirement," Rogoff said. "If you're not expecting an inheritance, your retirement will likely depend on the savings and investment decisions you make throughout your working years."
Starting early gives your money more time to grow, makes it easier to build consistent saving habits and can reduce the pressure to make up for lost time later.
"Even if current financial needs take priority today, small steps toward planning and saving for retirement can make a meaningful difference," Rogoff said.
What Workers Can Do Now If They Don't Expect an Inheritance
The good news is that workers don't need to rely on a future inheritance to improve their retirement outlook. Among non-retirees who feel ahead on retirement planning, 60% credit starting to save early. And these positive feelings are warranted.
"Starting to save early helps put time on your side," Rogoff said. "Even modest contributions can accumulate meaningfully over the long term, giving people greater control over their retirement outcomes. It also creates flexibility and more options later in life, regardless of whether an inheritance is part of the equation."
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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