That doesn’t mean Gen Z is financially reckless – they’re just redefining what financial independence looks like. Surveys show a clear shift in priorities: Nearly three in four Gen Z respondents said they’d rather have a better quality of life now than extra money sitting in the bank, according to Intuit’s Prosperity Index study. A similar proportion said the current economic climate makes them hesitant to even set long-term goals. And two in three aren’t sure they’ll ever have enough money to retire anyway.
With such dim confidence in the traditional retirement dream, it’s no surprise many are questioning the value of extreme saving.
A mix of economic reality and cultural attitude shifts is driving Gen Z’s softer approach. Many came of age during the pandemic and then plunged straight into an era of high inflation and housing shortages. According to Investopedia, skyrocketing rents, student debt, and the rising cost of living have squeezed young people’s budgets to the point that saving 50% of their income (as FIRE adherents might) is simply unrealistic. Housing alone now eats up nearly half of Gen Z’s monthly income on average.
“More than 4 in 10 young Americans under 30 say they’re ‘barely getting by’ financially, while only 16% say they’re doing well,” a recent Harvard Institute of Politics poll found – a sobering statistic that underscores why the promise of early retirement can feel out of reach.
In fact, Americans overall are saving less today than in decades past. Government data shows the U.S. personal saving rate has fallen to around 3–5% in late 2023, roughly half the historical average. Part of that drop is due to post-pandemic “revenge spending”: after two years of lockdowns when people couldn’t travel or socialize, many – especially young adults – are now spending more to make up for lost time, observes Ryan Viktorin, a vice president at Fidelity Investments.
Another factor is simply stubborn inflation, which makes everyday expenses pricier and leaves less slack in paychecks for savings. In this environment, Gen Z sees extreme saving as both impractical and, perhaps, not worth the mental strain.
There’s also a values shift at play. Older millennials may have glorified the hustle – whether it was working 60-hour weeks or monetizing every hobby – but many younger people are pushing back against that burnout culture.
“Instead of manically saving for a future that’s not promised, Gen Zers are investing their money into their personal growth and mental well-being,” says Castro.
Global turmoil has reinforced this carpe diem mindset: nearly half of Gen Z say recent world events make them want to “live for today” instead of focusing solely on the future. After witnessing a global pandemic and economic upheaval early in their adult lives, many are keenly aware that life can take unexpected turns.
As one generational expert noted, this cohort “entered an unstable economy, and faced skyrocketing costs – all while being told they’re not resilient enough. What Gen Z needs isn’t another lecture, but genuine recognition of their struggles,” says John Della Volpe, director of polling at Harvard’s Institute of Politics.
In other words, preaching the old “just save more, work harder” mantra is likely to fall on deaf ears. Gen Z is painfully aware of the challenges they face, and they’re responding by redefining success on their own terms.
Soft saving in practice
Practically speaking, soft saving means striking a balance between financial responsibility and enjoying the present. Gen Z “soft savers” still pay themselves first – in fact, over 80% of Gen Z report setting aside a portion of each paycheck – but they might only save what’s left after covering the lifestyle they want, rather than vice versa.
Traditional retirement saving is often a lower priority. Only about 20% of Gen Z is actively saving for retirement in their 20s, a recent TIAA Institute study found, whereas previous generations might have started maxing their 401(k)s as soon as they entered the workforce.
Instead, many young adults are focusing on building an emergency fund or saving modestly for flexible goals (like career changes or starting a small business) while funneling the bulk of their money into experiences and personal interests. Leisure, travel, hobbies, and wellness have a prominent place in their budgets, even if that means a slower path to homeownership or retirement.
Notably, 66% of Gen Z say they view money primarily as a way to support their interests and passions, rather than simply a nest egg. They’re channeling funds into things that matter to them now – whether that’s concert tickets, mental health services, or ethical and sustainable products that align with their values – and trusting that with time and consistent (if smaller) savings, the future will still come together.
Financial planners are taking note of this shift. Some even see wisdom in it, up to a point. “Soft saving isn’t a bad financial move at all – as long as it’s executed responsibly,” advises Castro.
The key, experts say, is moderation. Gen Z may not be gung-ho about retiring early, but completely ignoring the future is risky. The power of compound interest means even small investments made early can significantly grow over time. Skipping out entirely on retirement contributions in one’s 20s could leave young people playing catch-up in their 40s and 50s.
The emerging advice for the soft-saving generation is to find a happy medium: set up automatic contributions to a rainy-day fund or retirement account (even if it’s a small amount), then live your life. Many Gen Zers are doing just that.
“It’s really about finding what prosperity means to you,” Castro says, noting that everyone’s life goals are different. That personalized approach to finances resonates with a generation that prizes authenticity and mental health.
A redefined path to financial freedom
The rise of soft saving doesn’t mean Gen Z has abandoned the notion of financial independence – they’re just redefining it beyond the traditional retire-at-65 template. For many, the goal is not a gold watch and a condo in Florida, but rather having enough financial stability to enjoy life’s moments, pursue passions, and maintain peace of mind along the way. They seek freedom from anxiety about money as much as freedom from work.
As a result, financial independence for Gen Z might arrive in smaller milestones: paying off a high-interest debt, affording to take a mental-health sabbatical, funding a career switch or creative project – not simply accumulating a big 401(k).
Some in the financial industry suspect that as Gen Z ages into their 30s, their habits will evolve (after all, millennials eventually became one of the most savings-conscious generations, despite their slow start). But for now, this generation is making a statement: life is happening now, not just after retirement. Soft saving is the embodiment of that belief. It’s a rejection of the all-or-nothing mentality of FIRE and hustle culture, in favor of a more balanced pursuit of financial security.
Gen Z is essentially saying they want to enjoy the journey, not just the destination. And in an era of uncertainty, that philosophy is proving contagious – even older millennials and Gen X are taking notes as the definition of “financial independence” expands to include living independently well before you stop working.
Whether soft saving will leave Gen Z better or worse off in the long run is still an open question. For the moment, though, they are undeniably reshaping the narrative around money and success. In place of feverish saving and early retirement dreams, a new ethos is taking root: save some, spend some, and make sure to live fully along the way. It’s financial independence, Gen Z-style – one where freedom means having control over your life now, not just locking away freedom for later.
