Generation Z workers are dreaming big about their retirement years but failing to match those ambitions with practical financial planning, according to new research that reveals a significant gap between aspiration and action.
The Retirement Vision Gap
For today's youngest working generation, retirement represents freedom rather than slowing down. A comprehensive poll of 2,000 working adults commissioned by Skipton Building Society reveals that more than a quarter (27%) of Gen Z individuals plan to invest their pensions into experiences rather than possessions, while 16% dream of moving abroad during their retirement years.
Despite these clear aspirations, the research uncovered troubling gaps in financial awareness. A substantial third (33%) of Gen Z workers admit they have no idea how much they contribute to their pension each month, highlighting a disconnect between future dreams and present financial management.
Emotional Investment Versus Financial Priority
The emotional stakes are high for this generation, with nearly two-thirds (61%) stating they would be devastated if they couldn't achieve their dream retirement. However, pension saving remains a surprisingly low priority in their current financial planning.
Standard Life's Retirement Voice 2025 report indicates that only 13% of Gen Z consider pension saving a top financial goal, ranking below day-to-day finances, holiday savings, and property purchases. More than a third (35%) openly state they would rather "live for today than plan for tomorrow," while 23% admit they're not focused on retirement saving because they expect to inherit money or property.
Helen McGinty, head of financial advice distribution at Skipton Building Society, expressed concern about this worrying disconnect. "Young people clearly have big dreams for retirement - from travelling the globe to starting entirely new chapters of their lives," she says. "But right now, too many are walking blindly into the future."
The Auto-Enrolment Misconception
One significant factor contributing to Gen Z's under-preparation appears to be overconfidence in auto-enrolment systems. Nearly six in ten (59%) believe that being automatically enrolled into a workplace pension means they're saving enough for their future needs.
The reality paints a different picture. Standard Life modelling demonstrates that someone starting work on £25,000 and contributing the minimum eight percent from age 22 could accumulate a pension pot of approximately £210,000 by age 68. Increasing contributions to just ten percent could boost that total to £262,000 - an additional £52,000 largely generated through compound investment growth over time.
Mike Ambery, retirement savings director at Standard Life, warns that minimum contributions are unlikely to support the lifestyle Gen Z expects. "Our research shows Gen Z are ambitious about retirement, with many hoping to stop working at 60 and enjoy later life to the full," he explains. "However, there's a clear gap between those aspirations and current saving habits."
Investment Confidence Without Strategic Direction
Interestingly, Gen Z isn't avoiding investing altogether. In fact, they demonstrate greater comfort with investment vehicles than older generations - though not always in the most effective places for retirement planning.
Standard Life's research found that 25% of Gen Z have invested in stocks and shares, with another 25% venturing into cryptocurrency. Nearly half (48%) state they're comfortable taking financial risks for higher returns, compared to just 14% of Baby Boomers (those currently aged roughly 60-80).
Many younger investors also rely on digital sources for guidance, with 15% using AI tools and 22% turning to social media platforms for retirement advice. Ambery suggests the issue isn't investment appetite but strategic direction. "This appetite for higher-risk investing can be positive, but it needs to be balanced with long-term planning," he advises. "Pensions remain one of the most effective ways to build wealth over time, thanks to employer contributions, tax relief and the power of compound growth."
Early Retirement Expectations
Generation Z expects to retire earlier than any previous generation, targeting an average retirement age of 60 - significantly ahead of the state pension age, which is rising to 67 by 2028. Simultaneously, a quarter of surveyed individuals expect to spend more of their pension early in retirement.
Six in ten want to enjoy their retirement savings while they're still fit and active, while a third believe they won't need as much money as they grow older. McGinty emphasises the importance of realistic planning: "Understanding how long your retirement might last, and how your money will need to stretch across that time, is crucial. Without a clear picture, it's easy to underestimate how much you'll actually need to fund the lifestyle you're imagining."
For now, Generation Z continues to invest, though not always in the vehicles that will matter most for their long-term security. Unless more of their evident confidence finds its way into strategic pension planning, the retirement they envision may prove considerably more difficult to afford than they currently anticipate.
