Even though many young adults are just starting to enter the workforce, it’s never too early to start planning for retirement, according to one expert.
Kristi Rodriguez, a senior vice president at Nationwide Retirement Institute, offered three tips to Gen Z and millennials to prepare for their eventual retirement.
First, “find your why,” said Rodriguez, advising young adults to examine their motivations to save for retirement. “How do you envision your life not only today, but how do you envision it in the future?”
Next, start saving for retirement as soon as possible. Rodriguez noted that the average age that Nationwide participants started saving for retirement was 31, which she characterized as “really late.”
“The most precious thing you have is time and availability to save,” Rodriguez said. “The earlier you can start, even if it’s smaller increments, is so very important to make sure you’re accumulating and taking advantage of that match.”
This is even more important for those younger investors who want to retire early before 55. Rodriguez. Said that investing early and making maximum contributions to retirement plans is “the most profound way to approach” the goal of early retirement.
Those dreaming of early retirement should also consider what their retirement will look like and save and invest according to their specific retirement goals, like traveling or continuing to work part-time as a gig worker.
“What is your larger plan?” Rodriguez said, and plan for that.
Last, she noted that many young adults find information for retirement and other personal finance planning through social media, but she cautioned them to use credible sources and to lean on more traditional resources.
“The best opportunity you have to save is utilizing a financial professional,” said Rodriguez.
This is especially true when young adults are balancing other financial obligations like paying off student debt and remain worried about whether Social Security will be around when they retire.
“Everyone’s plan will look different,” she said.
For parents, Rodriguez shared a tip: It’s never too soon to teach their children about money.
She recommended that parents bring their children along when they consult with their financial planners, and when they talk about New Year’s resolutions with their children, they should include their financial goals.
“Have those conversations,” Rodriguez said. “Very much like we're getting ready at the beginning of the year to think about fitness goals, those financial goals should be right there.”
Ella is the personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago.