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Retirement planning is ‘an area all generations can improve’ on: Expert

Transamerica Center for Retirement Studies President Catherine Collinson speaks with Yahoo Finance Live about retirement planning in a post-COVID world, why everyone can improve on saving for retirement, and more.

Video Transcript


- On today's installment of "Retirement Ready," we take a look at how COVID-19 has changed people's views on work and retirement. A new report from the Transamerica Center for Retirement Studies. It shows how each generation is tackling the issues and the challenges brought on by the pandemic. Their President Catherine Collinson joins us now for this segment. And this is brought to you by Fidelity Investments. Catherine, this study begins-- OK, they're asking Americans if they're preparing adequately for retirement. Are they? And how is the pandemic affecting their efforts?

CATHERINE COLLINSON: OK, that's a really big question.

- Yes.

CATHERINE COLLINSON: So many Americans are not confident, or at least not yet confident, that they are preparing for a financially secure retirement. And we've been through a lot during the pandemic. The workforce has experienced so many disruptions. In fact, our survey found that almost one in three were unemployed at some point during the pandemic. What's extraordinary is they haven't lost sight of their future retirement, which is really extraordinary given the more time-sensitive issues that they were dealing with.

So what we're seeing with retirement and retirement expectations, people are looking forward to it. They're saving and planning. The big concern is if they're saving enough.

- Catherine, the study also breaks down how each generation views retirement and what they're doing to prepare for it. What are some of the things each generation's doing right, but maybe just as importantly, doing wrong?

CATHERINE COLLINSON: One of the big things that the generations are doing right is they're saving for retirement. That's huge. And as we look across generations and as a researcher, it's so exciting for me to see that younger generations, millennials and Gen Z, are starting at a much earlier age than their older counterparts. That is something they are doing absolutely right. An area where all generations can improve is in terms of planning, setting retirement savings goals-- many say they guessed how much they need to save-- and setting forth a written plan that can help them achieve those goals. So they're doing great on saving, but not so great on the planning side.

- Well, let me just get into that planning side a little bit more. And by the way, I was floored that Gen Z on average has $33,000 stashed away. You compare that to Gen Y, that's $50,000. My generation, Gen X, $87,000. Way ahead of the game. But how do they catch up a little bit and correct some of their other behavior that may not be in their best interest right now?

CATHERINE COLLINSON: OK, yes, so Gen Z is extraordinary. And our survey, I want to point out, are Gen Z who were employed at the time of the survey, so they had jobs. And they're 18 and older, so 18 to approximately age 25, when they would have taken the survey. So they're employed. They're saving for retirement. It's extraordinary that 67% are saving of those who are offered a plan. And that's something that they're doing extraordinarily well.

As you can see in the retirement accounts, they've built up those savings. However, their emergency savings have only saved $2,000, which is telling us they may be doing a better job at retirement than building up the rainy-day funds or emergency savings that they may need to tap into if a financial emergency pops up.