While most investors looking to retire are focusing on saving as much money as they can to ensure a secure retirement, those between 18 and 25, or members of Generation Z, have different priorities, according to a new study.

Northwestern Mutual’s 2022 Planning and Progress Study polled members of Generation Z and other demographics and found that their retirement goals might differ, and also that GenZers want to retire at 59.

The study found that about 64% of those polled from Generation Z said personal fulfillment was more important to them than money in planning for retirement. These priorities appear to differ from other demographics, according to Christian Mitchell, executive vice president and chief customer officer at Northwestern Mutual.

“They're thinking about their long-term financial life differently than previous generations,” he said. “They’re looking at retirement as the opportunity to maybe have a third or fourth career or do something in nonprofit or follow a passion project.”

In addition, many expect to retire younger than other generations. Their plan is to retire at 59, according to the study. In comparison, the average age that all U.S adults expect to retire is 64 with baby boomers do not expect to retire until 71.

Advisors have to modify their thinking and their approach when it comes to working with members of Generation Z, according to Mitchell. Advisors can no longer establish hard guideposts for clients such as retiring at a specific age or having a certain amount of money saved up at targeted times.

“Advisors need to modify their thinking because most people have different philosophies,” Mitchell said. “I think where we're going is advisors really need to help clients think through multiple scenarios.”

To do that, advisors should address these clients’ concerns including what early, mid, and late retirement looks like as well as testing to ensure those retirement plans work in various market conditions, Mitchell said.

“Advisors can really come to clients and have much more multifaceted discussions around how retirement is really going to look and what are the degrees of freedom a client has or doesn't have … if they think about what they want to do past age 60,” he said.

The latest data is part of Milwaukee-based Northwestern’s 2022 Planning and Progress Study. The Harris Poll conducted the research on behalf of Northwestern online last February. The study involved multiple demographics so as to provide a comparison for the results discovered pertaining to Generation Z, according to the firm. The most recent data was released last month.

While members of Generation Z expressed confidence in their ability to save for retirement, they took a more realistic approach to their own financial and mental health. The study found that of those surveyed, 75% of Generation Z believe that their financial planning needs improvement. 

As for their mental health, 44% of Gen Z believe that their mental health was is weak as opposed to the 26% of all U.S. adults. Baby boomers had the lowest number of those who though their mental health was weak at 13% while it was 31% for both millennials and members of Generation X. 

The study itself did not delve deeper into this area. Mitchell speculated that one reason this generation was hit particularly hard was due to the social limitations that came during the lockdowns of the pandemic. 

“They were really the most vulnerable to mental health [because] they were at that stage of life where your friend group and ... those social interactions are so important,” Mitchell said. “They’re no longer living at home [and] so they really saw much more of a kind of social atrophy.”

To address the mental health concerns and improve those areas Gen Z investors believe is lacking, advisors must reach out to their clients on a more personal basis, Mitchell said. 

“It’s about getting to know those in Generation Z and forming that bond and understanding what their hopes and fears are long term,” he said. “I really think those to be the most rich and nuanced discussions about someone's financial life there are.”

The Northwestern study found that Generation Z, more than any other demographic, is the most willing to work with advisors, however it is still a low number at 29%. While they trust advisors, there is an opportunity for advisors to seize on this opportunity.

The study found that Generation Z is on the right path to their financial future with 70% saying they built on their savings during the pandemic compared to 60% of all U.S. adults with Generation X being the lowest at 50%.

Some of those savings can be attributed to the lockdown and lack of social opportunities during the pandemic. Mitchell said it would be curious to see if those good financial habits born out of the pandemic remain afterward.

Members of Generation Z are confident in their ability to save for retirement, which Mitchell said demonstrates a level of hubris on their part. That confidence has also led to their decisions on where and how to invest their money.

“I think they certainly trust themselves so they have a lot of confidence in their ability to navigate their financial life and their careers [and] those that work with a financial advisor end up trusting that financial advisor,” he said. “There is still some skepticism about large financial institutions in this generation and I think that's evidenced by a lot of the crypto activity amongst Gen Zers.”