How Trump’s OBBBA is affecting Gen Z retirement

Gen Z is already struggling to stay afloat amidst a turbulent economic climate, and now, President Trump’s new act may be changing everything they knew about retirement.

The Trump administration’s One Big Beautiful Bill Act (OBBBA), which focuses primarily on tax cuts and spending reform, was signed into law on July 4, 2025. The act also included a Senior Bonus Deduction, which will offer certain older employees reduced taxable income and tax free Social Security. And while those stipulations don’t specifically apply to younger talent in the immediate, Gen Z will be indirectly impacted in the long-term.   

“There are still a lot of unknowns [about the act] that we’re all still trying to figure out,” says Stephanie Hughes, CEO of Wiss Family Office. “But we know that Gen Z finds the current system confusing, and they’re right to think that. There’s so much information out there and we’ve made it so complicated when they just want simplicity.”

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Younger employees are not only exempt from the proposed tax breaks, but those new retirement benefits will be funded through cuts to Medicare, Medicaid or Social Security funds,  further stunting younger generations’ ability to finance and save. As a result, with fewer benefits available to them, healthcare expenses potentially on the rise and Social Security expected to run out in the next ten years, young talent will have to be more disciplined and intentional about their own retirement than ever before.

“Their priorities will have to be reframed,” Hugues says. “With these new systems, their individual responsibility will be emphasized and they’ll have to do a lot of the planning themselves, which should empower them to take control over their finances earlier on.”  

However, they currently have a long way to go: Only 20% of Gen Z is actively saving for retirement, according to a recent report from insurance company TIAA, with 35% of that demographic saying it’s because they don’t know where to begin. Another significant obstacle is the rising cost of living, as more than half of the average Gen Zer’s monthly budget is spent on housing and other daily expenses.

Next steps for benefit leaders

There are currently many strategies benefit leaders could be implementing proactively to ensure young employees are set up for future success, despite political headwinds. Hughes encourages benefit leaders to consider opting into the auto-enrollment feature of their retirement plans if they’re not already, especially if they have a large demographic of young talent. And if they choose to opt out of it, that choice should be communicated to employees transparently. 

Increasing financial literacy efforts, as well as investing in other educational resources and tools could also be beneficial, including offering access to a financial planner or providing apps and dashboards that help them manage their finances.    

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“Gen Z is very important to the future of our economy,” Hughes says. “We have an $85 trillion transfer of wealth that is currently underway —  the biggest transfer of wealth in history — and that wealth needs to be properly invested or preserved so that it doesn’t completely evaporate.” 

Regardless of all the potential outcomes of OBBBA in the coming years and even decades, Hughes’ outlook on retirement for those starting out remains relatively positive. Compared to the generations before them, Gen Z is more determined to retire and willing to save more and earlier than their older colleagues. From now on, Gen Z will just need to be more aware of their benefits, a potentially unexpected silver lining that could lead to healthier long-term habits. 

“Gen Z is a generation that wants information accessible and made simple,” she says. “Whether it’s because auto-enrollment is taken away or because the framework has changed, Gen Z will have to educate themselves if they want that clarity and simplicity around retirement.”