Key actions for Millennials and Gen Z to take now for a good retirement

Young Australians have time on their side to better plan and execute their investments.

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Superannuation is the primary vehicle for retirement savings for most Australian workers, but new research shows a generational divide in its perceived importance.  

A survey by financial advisory and accounting company Findex reveals 40% of baby boomers consider superannuation a key wealth-building investment compared to 22% of Millennials and 13% of Gen Z.

The youngsters see bank savings as a more compelling investment, with 38% of Gen Z and 20% of Millennials ranking savings as the most important type of investment for lifetime wealth-building.

In a statement, Findex commented:

While it is fair to say that this is a natural reflection of differing life stages, as a long-term investment, even small early-top ups to superannuation are more likely to deliver greater benefits in retirement.  

Ultimately, this gap underscores the varying approaches to long-term financial planning and the need for heightened awareness among younger Australians.

Millennials and Gen Z have a super advantage

The survey findings are particularly interesting given Millennials and Gen Zs are the first generations that will have received superannuation contributions from their employers over their entire working lives.

This means they enjoy a default advantage over the older generations, as they will have received more superannuation monies by the time their retirement age of 67 years rolls around.

The baby boomers were born between 1946 and 1965 and Gen X was born between 1966 and 1980. Millennials were born between 1981 and 1995 and Gen Z was born between 1996 and 2010.

Superannuation was introduced in Australia in 1992. The mandatory contribution rate for employers has risen from 3% in 1992 (or 4% for employers with an annual payroll above $1 million) to 11% today.

Most superannuation funds are primarily invested in ASX shares and international equities.

In 2023, Chant West figures show that the standard 'growth' superannuation fund comprised of 61% to 80% growth assets, like shares, delivered a median return of 9.9%.

Time on their side to build retirement savings

Time is considered a key component to investing success, especially when simple strategies like compounding are adopted.

The trick is to start investing as early as possible in life and invest more money as often as you can.

Findex co-CEO Tony Roussos said:

The current level of superannuation literacy presents a clear opportunity for Australians to proactively take charge of their financial future – especially Millennials and Gen Zs who will have had super contributions throughout their careers and also have the benefit of a longer runway towards retirement.

Roussos encouraged Millennials and Gen Z Australians to, "Take advantage of the time you have on hand by exploring ways to build your balance so that your super works hard for you in retirement."

Key actions to ensure a secure retirement

Findex recommends the following key investment actions for Millennials and Gen Z Australians to take now to ensure a good retirement in the future.


Findex recommends the following actions for Millennials to retire well:

Balancing homeownership and super savings

Investigate 'rentvesting' as an alternative to traditional homeownership, allowing you to invest in property while maintaining flexibility and your superannuation contributions.

Career progression and super contributions

As income increases, take advantage of growth strategies, and periodically review and increase superannuation contributions to ensure they align with your retirement goals.

Family planning and superannuation

Plan for potential career breaks for family reasons. Consider strategies like spousal contributions or government co-contributions to maintain super growth during these periods.  

Gen Z  

Findex recommends the following actions for Gen Zs to retire well:

Assess your risk appetite and investment diversification

Exploring options within superannuation that align with a longer investment timeline can enhance growth. Superannuation typically defaults to 'balanced' options, so younger generations might benefit from 'growth' strategies, aiming to optimise fund performance over time.  

Early engagement with superannuation to build retirement savings

Start contributing to super as early as possible. Even modest contributions can grow significantly over time due to the power of compounding interest.  

Financial literacy and digital tools

Leverage digital platforms like Young Money from the Findex Community Fund for financial education, and apps to help with budgeting and investment tracking. Understanding the basics of superannuation, investment strategies, and tax advantages is crucial.  

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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