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For Gen Zers just entering the workforce, retirement may seem too far away to be a concern.
Or, it may seem difficult and anxiety-inducing, especially as Gen Z juggles student loan debt, high costs of living, and a tough job market. And with a rising national debt, many younger workers are increasingly worried that they won't have access to the same resources that boomers have today, such as Social Security and Medicare.
Only 15% of Gen Z put a set percentage of their paycheck into a savings account every month. And, only 20% contribute to a 401(k) or retirement account, according to Bank of America.
However, when it comes to saving for retirement, there's no such thing as starting too early. In fact, the biggest advantage Gen Z has is time.
Business Insider asked four wealth advisors for their best tips and tricks on how Gen Z can maximize their retirement savings, starting now.
For Crowell and other experts, the biggest piece of retirement advice is deceptively simple: start early.
"With even just a modest allocation to investments, your money has the potential to double every 7 to 10 years," Crowell said. That means for a 20-something Gen Zer just starting their career, their money has the potential to double at least four times.
Take advantage of your workplace retirement plan, such as a 401(k), where you can contribute a portion of your salary to an account. Employers often match employee contributions up to a certain percentage, typically between 3% and 6%.
When investing for the long term, Crowell recommends putting your money into higher-yielding assets such as stocks to ensure that inflation doesn't erode your savings. The S&P 500 has posted an annualized return of 13% in the last decade, well above inflation.
Basic budgeting strategies, such as keeping housing costs at 30% or lower of your total paycheck, can also create a strong foundation for retirement savings, Crowell said. But don't panic if rent takes up a larger proportion of your take-home pay and prevents you from saving as much as you'd like.
"Their peak earning potential is in the future somewhere years from now, and they're finding just the cost of living to be very expensive," Crowell said of Gen Zers.
No amount of savings is too small. "It's less important how much you save out of your paycheck than it is just to get started. You can always dial it up in the future," Crowell added.
There are other ways to save for retirement outside a traditional 401(k), Yoshioka pointed out. Self-employed people can utilize a Simplified Employee Pension (SEP) IRA to save for retirement and enjoy tax-deductible contributions.
A Roth IRA, which allows you to contribute after-tax dollars for retirement, is also a great choice, Yoshioka said. Once placed inside a Roth IRA, contributions and earnings grow tax-free and can typically be withdrawn tax-free in retirement.
For those who like to pick individual stocks and funds, opening a brokerage account and building your own portfolio is another way to invest your savings. But for those who do trade stocks, Yoshioka flags that there are capital gains taxes levied on the profits of an investment.
When it comes to retirement savings, keeping the big picture in mind is critical. There will undoubtedly be boom and bust cycles in the stock market, but stay invested, Yoshioka said. During the Great Financial Crisis, some people pulled their money out of the market to protect their assets and never put it back in.
"When you don't get back in, you have your cash, but inflation eats away at it, and you miss out on a lot of growth in equity markets," Yoshioka said.
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.
Now, more than ever, a successful retirement depends heavily on personal savings, Weeks said.
Historically, retirement income has come from what has been dubbed the "three-legged stool" of Social Security, pensions, and personal savings. But today, Weeks points out that less than 15% of individuals in the private sector will have access to a pension, and the future of Social Security is looking uncertain -- meaning that the burden of adequate retirement is increasingly falling on the individual.
According to Weeks, target-date funds can be a helpful tool for saving for retirement. Many company 401(k) plans offer them, and they automatically rebalance their portfolio composition to minimize risk as you approach retirement. A target date fund typically has a higher allocation to riskier assets such as stocks early on and increases its exposure to less volatile fixed income holdings as time goes on.
It's important to approach saving for retirement with the right mindset. "Start saving early and treat the retirement contributions just like a monthly living expense," Weeks said.
Building basic budgeting habits is key to retirement success, in Morey's view.
There's no one-size-fits-all way to budget, but one popular strategy that Morey recommends is the 50/30/20 rule -- meaning that 50% of after-tax income goes to essential costs, 30% to discretionary spending, and 20% to savings or other financial goals such as retirement or buying a house.
But before saving for retirement, Morey suggests first building up a basic savings fund for emergencies by putting money in the bank or a high-yield savings account. Once you have enough money saved to cover a few months of essential living expenses, then it's time to start thinking about contributing to a 401(k) or another retirement plan.
Morey also recommends automating payments as much as possible. Credit card payments, rent payments, savings, and 401(k) contributions can all be automated to reduce extra hassle and promote healthy financial habits.
And if possible, avoid credit card debt.
"If I'm paying 20% interest on my credit card, I'm paying 20% more for everything," Morey said. That can rapidly eat into your ability to save. If you do have credit card debt, make sure you know what interest rates you're paying and have a plan to start paying it down.
"It's hard to change those habits or create them later on, and it's harder to catch up on savings later on as well," Morey said.