Kristi Rodriguez, SVP for the Nationwide Retirement Institute, attends Yahoo Finance Live to discuss how GenZ and Millennials can boost their retirement planning.
KARINA MITCHELL: Well, it may seem a long way off, but time flies by. And our closest expert says it’s never too late to start planning retirement, even for Millennials and Generation Z. Here’s Kristi Rodriguez, senior vice president of the Nationwide Retirement Institute, what to do now to help yourself prepare for the future. Kristi, thank you very much for your time today. So what are the key questions that these younger generations should be thinking about right now?
KRISTI RODRIGUEZ: Yes, great question. If I can think about it, there are really three things this younger generation should be thinking about right now. The first question we say is, find your why. Do you know what is important to you? How do you imagine your life not only today but also in the future? And I think if there is one thing COVID has taught us, it is some kind of future thinking.
The second thing that we really get our younger investors to think about is to start saving now. The most precious thing you have is time and availability to save. One of the questions I often ask my younger children, both Generation Z, is figuring out the future decisions that will affect the future. So I think about all of the things you do today that will have an impact in the future.
And we know that because we got survey data at Nationwide Retirement Plans. And we have 2.5 million subscribers in our retirement plan. And we saw that the median age was 31 when they started saving. It’s really late. So the earlier you can start, even if it is smaller steps, is very important to make sure that you collect and use this game.
And one of the other things I want to address is that one of the things we’re seeing is actually a trend among Gen Z and millennials to use social media as a resource. And what we’re saying is make sure they are credible resources that you have. And really, the best opportunity that you can save is to hire a financial professional.
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So, again, if you think about these three things and then come back to saving again early, it is never too young, to your earlier point, to think about what your future looks like and what it will be in retirement You imagine getting there. And it’s really not an all-or-nothing approach. You can invest now and meet your current needs that you have right now. Again, taking smaller steps is definitely key when thinking long term.
EMILY MCCORMICK: Kristi, this is Emily. Goldman Sachs Asset Management released a survey earlier this month that found that 25% of Generation Z respondents said they would retire before the age of 55. Is this realistic for most people? And how should someone planning such early retirement think about their positioning and investments today?
KRISTI RODRIGUEZ: Yeah, that’s a great question. And I think the bigger question we’re going to have is what will retirement be like if these younger people decide to retire at 55? Will they return and do other careers that we are likely to see with the gig economy? And again, it goes back to the salient point I mentioned, this point number two. The most important thing young people have right now is time.
So the sooner you can make some of these financial decisions to invest and really amass that fortune and allow you to work with a larger employer to meet those savings, the most in-depth way you can approach it is. And again, it really comes down to what is your bigger plan? What does retirement look like? Does it look like a part-time job again? Does it look like traveling?
And those are the things that we really encourage. When you know that younger people say I don’t want to be tied to a job or a career all my life, or retire much earlier than their parents and grandparents, you really have to plan carefully and carefully, what does that look like and how would you like to live in the future? And all of that will determine how they need to manage their finances not just for this moment, but as they continue to have conversations and get involved.
KARINA MITCHELL: Well Kristi one of the biggest things when I talk to young people you know my kids don’t know what tomorrow is so forget about saving up for next week or month. I don’t know if they can do it or not. But one of the things they say is that we pay into social security. It may not be there for us. So this is something that they kind of have to take into account.
The other thing they are up against is huge student loans, right? There is no evidence that the president is turning down these loans for everyone. So it is – it costs a large part of their savings and their money. How do you balance then? What methodology or percentage, how do you assign? How Much Do You Pay for Loans? How much do you put in your 401 (k)?
KRISTI RODRIGUEZ: First of all, I commend you for this conversation with your children. I think that is profound. And I think that’s the really important point where we find that a lot of Gen Zs and Millennials are using social media. And we know by an overwhelming majority – I believe more than a third in a recent poll we saw. So we’re saying that each plan will be different. For this reason, I strongly recommend using reputable apps that may be out there, as well as working with financial experts. There is no such thing as a magical way of looking at it, you should look at this percentage.
It’s really about your investment and also about your desire to save. So this is where we strongly encourage younger people to start these dialogues. And when I think of the parents in the audience, and again I was talking about two children, bring your children into your conversations with your financial advisor. Let them be exposed.
You have these conversations as if we were thinking about our fitness goals early in the year. Your financial goals should be at stake. And what do you ultimately want to achieve? Because I think with that goal in mind for these young people, they can develop these strategies and expand them to support them wherever they want to go now or in the next three to five years.
KARINA MITCHELL: You know, that old adage “pick up on a rainy day” is very true. And I wish I had believed that and started saving a lot sooner than I did. We’ll have to leave it there. Kristi Rodriguez, Senior Vice President, Nationwide Retirement Institute, thank you for your time today.