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Retirement expert details '3 things that this younger generation should start thinking about'

Nationwide Retirement Institute SVP Kristi Rodriguez joins Yahoo Finance Live to discuss how GenZ and millennials can jumpstart their retirement planning.

Video Transcript

KARINA MITCHELL: Well, it may seem like a long way off, but time flies. And our next expert says it's never too late to start planning for retirement, even for millennials and Gen Z. Here with what they should be doing now to prepare for the future is Kristi Rodriguez, Nationwide Retirement Institute senior vice president. Kristi, thank you so much for your time today. So what are the key questions that even these younger generations should be thinking about right now?

KRISTI RODRIGUEZ: Yeah, great question. So if I can think about, there's really three things that this younger generation should start thinking about now. The first question we say is to ask, is find your why. You know, what is important to you? How do you envision your life, not only today, but how do you envision that in the future? And I think if one thing COVID taught us is to have kind of that future thinking in mind.

The second thing that we really encourage our younger investors to think about is 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, who are both Gen Z, is, calculate the future decisions that you're making that's going to have an impact going forward. So I'm like, think about all the things that you're doing today that will have a future impact.

And we know this because at Nationwide Retirement Plans, we were able to look at survey data. And we have 2.5 million participants in our retirement plan. And we saw the average age was 31 that they were beginning to save. That is, like, really late. So the earlier you can start, even if it's smaller increments, is so very important to ensure that you're accumulating and taking advantage of that match.

And then one of the other aspects that I would bring up as well is that one that we're seeing is a trend really among Gen Zers and millennials is utilizing social media as a resource. And what we say is make sure that they're credible resources that you have. And really, the best opportunity that you have to save is utilizing a financial professional.

So, again, when you think about those three things and then add it on, again, going back to saving early, it is never too young, to your earlier point, to start thinking about what does your retirement future look like and how do you envision getting there. And it's really not an all or nothing approach. You can invest now and meet your current demands that you currently have. So again, smaller increments are definitely key when you're thinking about that long-term.

EMILY MCCORMICK: Kristi, this is Emily here. Goldman Sachs Asset Management was out with a poll earlier this month showing a full 25% of Gen-Z respondents said they plan to retire before the age of 55. Is this realistic for most people? And how should someone who wants to plan for this kind of earlier retirement be thinking about their positioning and their investments today?

KRISTI RODRIGUEZ: Yeah, that's a great question. And I think the bigger one we're going to have is what does retirement look like when these younger folks decide to retire at 55? Will they go back and do other careers that we're going to probably naturally see with the gig economy? And again, it goes back to that salient point that I mentioned, that point number two. The most important thing that young people have right now is time.

And so the earlier that you can make some of those financial decisions to invest and to really accumulate that wealth and to allow if you're working with a larger employer to match that savings, is going to be the most profound way that you can approach it. And again, it's all about, really, what is your larger plan? What does retirement look like? Again, does it look like having a part-time job? Does it look like traveling?

And so these are the things that we really encourage. Knowing that younger people are saying, I don't want to be bound necessarily to a job or a career for my entire lifespan or retire a lot earlier than their parents and their grandparents, you really have to be thoughtful and diligent, that planning of what does that look like and how do you want to live going forward. And all of that will dictate how they need to manage their finances not only for that moment, but as they continue to have conversations and engage.

KARINA MITCHELL: Well, Kristi, one of the biggest things that when I speak to young people, you know, first of all, my kids don't know what tomorrow is, so forget about saving for next week or next month. I don't know if they're capable of doing it or not. But one of the things that they do say is that, you know, we're paying into Social Security. It may not be there for us. So that's something that they sort of need to take into account.

The other thing that they're dealing with is huge student loans, right? There is no sign of the president sort of waving off these loans for everyone. So it is-- that takes a big chunk out of their savings and their money. So how do you, then, balance? What sort of methodology or percentage wise, how do you allocate? How much do you pay for loans? How much do you put into your 401(k)?

KRISTI RODRIGUEZ: First of all, I commend you for having that conversation with your children. I think that is profound. And I think that's when it comes down to really that important point that we're finding that a lot of Gen Z's and millennials are utilizing social media. And we know overwhelmingly-- I think over a third now in a recent survey that we saw. And so what we say is everyone's plan will look different. And that's why I strongly encourage using reputable kind of apps that may be out there, as well as engaging with the financial professional. There's kind of no magic way of looking at, you should look at this percentage.

It's really about what is going to be your investment and also your savings appetite. So again, that is the place where we strongly encourage, you know, younger people to start having those dialogues. And when I think about parents in the audience, and again, I spoke about having two children, bring your children along in your conversations with your financial advisor. Allow them to get exposed.

You have those conversations very much like we are getting right at the beginning of the year to think about our fitness goals. Your financial goals should be right there at stake. And what is that you're ultimately trying to accomplish? Because I think having that goal in mind for that young person will allow them to create those strategies and allow them to augment them to support wherever they may design to go within now or within the next three to five years.

KARINA MITCHELL: You know, that old adage, "save for a rainy day," is very true. And I wish I had believed that and started saving a lot sooner than I did. We will have to leave it there. Kristi Rodriguez, Nationwide Retirement Institute senior vice president, thank you for your time today.