Actionable insights for employers and advisors

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We talked with Stewart Willis, president and lead high net worth financial advisor at Asset Preservation Wealth & Tax. With over 16 years of experience helping individuals and families build wealth and plan for the future, Stewart understands how younger generations are approaching retirement with a focus on financial independence, flexibility, and non-traditional strategies. Here are some actionable insights on redefining retirement for younger generations.

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Q: How are millennials and Gen Z redefining what retirement means in today’s world?

A: Millennials and Gen Z are moving away from traditional retirement expectations, such as retiring fully at 65, as they face the decline of pensions and an uncertain future for Social Security. With increased longevity, these generations are likely to adopt a phased retirement approach—balancing part-time work and leisure—to stay engaged and financially secure. Their focus on financial independence reflects a shift away from dependence on historical programs, recognizing the need to actively plan and take control of their retirement savings early.

Q: What are some of the key trends and strategies that will be shaping the future of retirement planning?

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A: One major trend shaping retirement planning is the increasing availability of tax-efficient options in workplace retirement accounts, like Roth 401(k)s. Unlike traditional 401(k)s, Roth 401(k)s allow you to contribute post-tax dollars, meaning you pay taxes upfront, but your investments grow tax-free and withdrawals in retirement are not taxed. This strategy helps avoid not only taxes on withdrawals but also potential penalties on Social Security and Medicare that can occur if your taxable income in retirement is too high.

The removal of income limits for Roth 401(k) contributions is a game changer, especially for high-income earners who previously couldn’t access Roth IRAs due to phase-out rules. Forward-thinking savers are recognizing the long-term benefits of these accounts and using them to create more tax-efficient retirement plans, reducing financial stress decades down the road. This trend highlights a shift toward proactive, strategic planning rather than relying on traditional tax-deferred accounts.

Q: How are millennials and Gen Z balancing savings with experiences?

A: For millennials and Gen Z, balancing savings with experiences is a challenge exacerbated by economic pressures like housing affordability and the gig economy. While they value financial independence, many are drawn to high-risk investments, such as cryptocurrency, in pursuit of quick returns rather than long-term savings. This mindset, coupled with spending on experiences, often delays their focus on consistent saving. Financial literacy and starting early, however, can help them strike a better balance without sacrificing quality of life later.

Q: What’s the role of ESG investments in retirement portfolios?

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The role of ESG (environmental, social, and governance) investments in retirement portfolios is becoming increasingly controversial. While some proponents, like BlackRock, have championed ESG strategies, others are questioning their effectiveness. “The math just doesn’t work,” and many fiduciaries are pulling ESG investments due to concerns about performance and transparency.

There’s also an ethical dimension: investors often aren’t fully aware of what ESG investments support, which could conflict with their personal values. “Your money is your First Amendment right—your voice—so it should align with your beliefs.” For ESG to have a role in retirement portfolios, it’s crucial that investors are informed and intentionally choose these strategies rather than having them included automatically. The pushback against ESG reflects a broader shift toward transparency and individualized investment choices in retirement planning.

Q: How are younger generations approaching retirement?

A: Younger generations are getting creative when it comes to retirement. Gen Z, for example, is diving into things like options trading or crypto, which can be exciting but also risky if they’re not careful. They’re definitely not following the traditional “work until 65, then retire” path. What’s encouraging, though, is that some are starting to think about financial independence earlier, especially when they’ve been exposed to things like estate planning or internships in finance. The challenge is helping them avoid pitfalls like gambling or unrealistic expectations for quick wealth, so they can build a solid foundation for the future.

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