Episode 38 – How Gen Z is prepping for retirement
Episode transcript:
[music intro]
Jenny
Welcome back to Fund Your Future with DRS. And we’re continuing our discussion about generational differences when it comes to finances. So, we’re talking with different DRS team members looking at how they’re preparing for retirement and what advice they have. Today, we have Jacob, who’s part of Generation Z. Welcome!
Jacob
Hey, thanks for having me. Happy to be here.
Jenny
Yeah. So, Generation Z is typically defined as those who were born between 1997 and 2012 or so. Yeah, if you do the math, it covers basically anyone who’s about 12 to 28 now. So like either in high school or kind of just entering the workforce. And I’m just doing the math a little bit.
This generation is either too young to remember 9/11 or was born right after it. And, I was in high school during 9/11, so this is kind of blowing my mind right now.
Jacob
Yeah, yeah. I was like one of the first, first few of Generation Z that both remembers 9/11 as well as the Nisqually earthquake.
Jenny
Oh, that’s crazy. Do you mind sharing how old you were?
Jacob
I was four, yeah, when that all happened. So? So definitely very, very young. Not a ton of memories, but enough is there.
Jenny
Yeah, yeah. So, what do you kind of feel defines Generation Z?
Jacob
My kind of more sentimental definition is the first generation that was truly raised online and nothing but online, with, you know, Gen X and the millennials before us, they were 25, 30, 35 when, you know, a very internet forward way of life came into the forefront. But with Gen Z, it’s been all internet, all the time.
I remember as just like a wee wee little kid, you know, having our own personal home computer and now being 26, just seeing every single thing in our office, being completely, you know, Internet of Things powered.
Jenny
Yeah, totally. So, we hear a lot of younger people who are really stressed about not being able to save for retirement because of student loans and high cost of living. And how are you kind of dealing with some of these challenges that you and your friends might be facing?
Jacob
We are taking some creative ways around it, to say the least. Housing is unfortunately very unobtainable for a lot of us. So, the biggest way we get creative is we just live with more people than ever before. I have a couple friends that are both software engineers in Portland, and they have a house 15 minutes outside of downtown Portland.
And, you know, they’re both making nearly six figures, and they have to live together at this house. I think there’s like four people living at that house now and they’re just able to afford it.
Jenny
Yeah. That’s so crazy to me. Yeah, like you said, even outside of Portland, it’s not even the downtown area.
Jacob
Yeah, I know even rent here in downtown Olympia is getting up there. I’ve got a few friends that work at other state agencies, and they’re saying it’s getting a little crazy for us trying to be able to balance student loan repayments, cost of living as well as you know, other outside things that they need to cover.
Jenny
Yeah. And your generation has been joining the workforce with a lot of financial uncertainty over the last few years between the pandemic and the recession. How do you feel like this has affected your thinking about finances?
Jacob
It’s definitely made me much more skeptical of a lot of riskier investments. I was working private side during the entire COVID pandemic. So 2020 through early 2022, and to see how just absolutely thrashed we were being as employees and to see, you know, I had a 401k at the time just to see this 401k completely ping pong in value over a year and a half, to watch it go from absolute tanked to absolute historic highs and then tanking again in just a year and a half was really frightening for me, just to see that my entire future rides on this right here. And that really frightened me.
Jenny
Yeah. So maybe do you have any techniques for prioritizing your spending and saving, or like how you’ve been budgeting and how things have been going since getting out of college?
Jacob
Yeah, for sure. Some of my biggest techniques I’ve been doing is trying to put money away before I even see it. Thankfully with, you know, some of the programs we have around here, deferred compensation — money just comes out of my paycheck and I don’t even have to think about it. I don’t even have to look at it.
That’s been super, super helpful for me. Otherwise, some of my other techniques have been trying to look for things that will last longer. You know, we live in a very like, “hey, I need this now.” You know, I could just go on Amazon and go buy some clothes for, you know, 20 bucks apiece and they’re going to last for a little bit or I can just, you know, go buy something vintage, go buy something used that will last even longer or something brand new that’s going to last, you know, even longer.
Jacob
It’s a bit more of an upfront investment. But I don’t have to buy new things every single year.
Jenny
Yeah, I think that’s a great way to think about it. And I know when I try to go on Amazon, I’m like, “oh, well, maybe I can… do I really need this, or maybe I can get something else” or I always try to cut my impulse spending. That’s what I tell people.
Jacob
It is a huge trap to fall into. Thankfully, my biggest thing I’ve done is if I ever want to buy anything on Amazon, I have to go buy it through someone else.
Jenny
Oh, nice. Yeah, I’ve heard that tip from several people.
Jacob
It works pretty well. It’s worked for me really well.
Jenny
Yeah. Nice. That’s more like the long term. And then what about maybe short term or a month-to-month basis.
Jacob
Oh, that is really tough. Unfortunately, it does mean cutting back on a lot of the more hobby things. A lot of the travel we have to cut out. I get out of the house and go on these longer trips, really only maybe once a year now. A lot of the hobbies that I was into as a kid, where I had family support to be able to do them, I can’t do those anymore, all by myself.
So have to drop some of those things. So really just focus on like, can I go do something for free for fun today? Can I just go out to the park, go out to the beach instead of, “hey, I’m going to take a road trip to Central California” or something.
Jenny
Yeah.
Jacob
So, really just trying to find better alternatives throughout the year to keep myself entertained.
Jenny
Nice. And then what about budgeting? I’m always curious because there’s like online apps. And do you do more of like the online app for budgeting or like more of an Excel sheet or what kind of method do you use?
Jacob
Ooh, I’ve never been great with those online applications. I’ve never been the biggest fan of it. I do a bit of a crazy method. I just keep a lot of this information in my head. I have my idea of how much my car payment is going to be, all of my insurance, all of my bills, and how much my rent is going to be month over month. And make sure that I have that every single time. That way, if anything was to go wrong, I’m not sitting high and dry without any funds.
Jenny
Okay, that’s very impressive. I was using Mint.com for a while and then they closed down. No, and there’s been all these other ones that have popped up, and I’ve been testing some of them out, but then, I don’t know, I’m kind of going back to the old spreadsheet.
Jacob
I think the spreadsheet is just a really solid method. I’m seeing a lot more ads online for apps like Rocket Money and whatnot, and they seem super flashy and nice, but just a good old Excel spreadsheet always does the trick.
Jenny
For sure. So obviously you’re well invested in this. Do you ever end up having conversations with other friends of yours about budgeting, or do you have those kind of money conversations, or do you like to share tips with friends?
Jacob
I do share some tips with friends. A lot of the more long term, tips and tricks, especially that I’ve picked up, here around the agency.
I have a huge amount of friends that all work inside the state. Different agencies like health care licensing. And I tell them as much as I know, like, please don’t withdrawal any of your money that you have sitting inside of your retirement account. Leave your DCP alone. Just let that thing grow over time. Stay vested. That way, when 65 rolls around, you’re able to live comfortably.
Jenny
Yeah. Now you can tell them to listen to the podcast.
Jacob
Exactly.
Jenny
Tell them “I was a guest on the podcast. You can come listen. It’s perfect for public employees.”
Jacob
It’s so good.
Jenny
Oh, that’s great. And then what are your financial goals? If you want to share some of those, maybe even short term. Long term?
Jacob
Yeah for sure. I’ve always joke that one of my short term goals is getting my car fully paid off. It’s not the craziest of financial goals, but having that car payment just gone every single month will free up so much. It’s going to help me so much. Long term wise, I want to try, you know, being able to have a much nicer place in a better area. Where I live right now, it’s very convenient for me, but it’s not great. The amenities where I live, not fantastic. So being able to have a comfortable place to live with the amenities I want, that’s long term. I don’t know what that looks like right now just because it’s still off in the future a little bit, but that is a goal for me.
Jenny
Nice. I think that’s a good point, though, is that you don’t necessarily have to know exactly what it looks like, but just kind of having the goal of what it could look like.
Jacob
Yeah, yeah. I’ve always lived by setting soft targets instead of hard targets.
Jenny
Yeah, I love that.
Jacob
So instead of saying “I will have this and it needs to look exactly like this and it needs to happen within five years” saying, “hey, I want it to look something like this within the next 15 years. And here are some of my targets that I want around it.” It really helps yourself not get disappointed when things like this don’t fully happen. So that way when only 85% of what you want comes true, you’re not disappointed about it. You’re still super happy.
Jenny
Yeah. That’s awesome. And then like kind of celebrating those small wins as well.
Jacob
Exactly.
Jenny
Yeah. I always loved the quote that says: “if you don’t know where you’re going, you’ll end up somewhere else.”
Jacob
Oh yeah!
Jenny
So, I always kind of like try to ascribe to that one. It’s like having some kind of goal is better than having no goals. Well, thank you so much, Jacob. We appreciate your insight and I hope this can help out some of our Gen Z listeners.
Jacob
Yeah, absolutely. Thanks for having me.
Jenny
Thanks.
[music outro]
Disclaimer
Thanks for listening. And now we’d love to hear from you. What topics would you like to hear about? What questions do you have for us? Send an email to drs.podcasts@drs.wa.gov that’s drs.podcasts@drs.wa.gov. The Department of Retirement Systems provides this podcast as a public service, but it’s neither a legal interpretation nor a statement of DRS policy. References to any specific product or entity do not constitute an endorsement or recommendation. The views expressed by guests are their own, and their appearance on the program does not imply an endorsement of them or any entity they represent. Views and opinions expressed by DRS employees are those of the employees and do not necessarily reflect the view of DRS or any of its officials.
