Experts Share Top Strategies for Gen Z to Kick-start Retirement Savings

Why Gen Z Should Start Planning for Retirement

For Generation Z, the concept of retirement may seem distant, however, starting to save for retirement now is crucial. By investing early and creating a solid financial habit, Gen Zers can ensure a secure retirement. This article shares top strategies from financial experts to jump-start your retirement savings.

Advantages of Starting Early

Andrew Crowell, vice chairman of wealth management at D.A. Davidson, emphasizes the importance of starting to save for retirement early. Investing even a small amount can potentially double your money every 7 to 10 years. Therefore, a young Gen Zer just starting their career has the potential to double their money at least four times.

Understanding Workplace Retirement Plans

Workplace retirement plans, such as 401(k), can be a great place to start saving for retirement. Many employers match employee contributions up to a certain percentage, typically between 3% and 6%. It’s beneficial to take advantage of such matches and contribute a portion of your salary to these accounts.

The Threat of Inflation

When investing for the long term, it’s crucial to be aware of the potential for inflation to diminish your savings. Therefore, investing your money in higher-yielding assets such as stocks can safeguard against inflation.

Implementing Effective Budgeting Strategies

Effective budgeting strategies, such as keeping housing costs at 30% or less of your total paycheck, can provide a solid foundation for retirement savings. Beginning with small savings can also make a significant difference in the long run.

Exploring Alternative Retirement Plans

Ayako Yoshioka, senior portfolio manager at Wealth Enhancement Group, points out that there are other ways to save for retirement outside a traditional 401(k). A Roth IRA, for instance, allows you to contribute after-tax dollars for retirement, making it a great option for many.

The Importance of Staying Invested

For Gen Zers who haven’t lived through many economic cycles, it’s important not to panic-sell in the short term. Equity markets typically bounce back within a year, which is simply a blip in a retirement portfolio that could span 50 to 60 years.

Personal Savings: A Key to Successful Retirement

Ashley Weeks, wealth strategist at TD Bank, emphasizes that now, more than ever, a successful retirement depends heavily on personal savings. It’s essential to start saving early and treat retirement contributions like a monthly living expense.

Building Basic Budgeting Habits

Alanna Morey, private wealth advisor at Ameriprise, believes building basic budgeting habits is key to retirement success. Automating payments as much as possible, including credit card payments, rent payments, and 401(k) contributions, can promote healthy financial habits and make the process of saving for retirement more manageable.