WEBVTT - Why are we Saving for Retirement, Again? #109 0:00:00.120 --> 0:00:02.759 Welcome to How the Money. I'm Joel and I'm Matt, 0:00:02.920 --> 0:00:05.120 and today we're asking the question why aren't we saving 0:00:05.160 --> 0:00:27.360 for retirement again? Joel. Not only are we going to 0:00:27.400 --> 0:00:30.560 be talking about again why we're saving for retirement, but 0:00:30.680 --> 0:00:32.240 at the end of the episode we're gonna launch into 0:00:32.400 --> 0:00:35.159 how like what steps you need to take to ensure 0:00:35.200 --> 0:00:37.640 that you're saving for retirement. And Joel, I know this 0:00:37.680 --> 0:00:39.760 is a topic you wanted to discuss and kind of 0:00:39.800 --> 0:00:42.199 cover again. I think for you in particular, this is 0:00:42.240 --> 0:00:44.639 something that seems to come naturally. I feel like it's 0:00:44.640 --> 0:00:46.800 a strength of yours that you have the ability to 0:00:47.040 --> 0:00:49.239 look kind of like further down the road maybe than 0:00:49.280 --> 0:00:52.880 most folks, and start making changes now that sort of 0:00:52.960 --> 0:00:54.680 leads you to where you want to go. Do you 0:00:54.680 --> 0:00:57.120 feel like that's true. Maybe it's actually in your d 0:00:57.200 --> 0:01:01.160 n A, maybe it's a Norwegian thing. It could be. 0:01:01.440 --> 0:01:03.000 I think it is kind of hard for me to 0:01:03.040 --> 0:01:06.360 pinpoint exactly why that's the case. I think it's a 0:01:06.360 --> 0:01:11.080 blend of personality and personal history, and so I think 0:01:11.120 --> 0:01:13.000 it's kind of baked in at this point that I 0:01:13.040 --> 0:01:16.040 think a lot about the future and what I want 0:01:16.080 --> 0:01:18.560 my life to look like. Ten, fifteen, twenty years from now. 0:01:18.840 --> 0:01:20.360 And I think in a lot of ways that's really helpful. 0:01:20.360 --> 0:01:23.039 It's really helpful when it comes to to saving up 0:01:23.080 --> 0:01:25.680 and to putting more of my money towards long term goals. 0:01:26.000 --> 0:01:28.120 But I will say sometimes it has its drawbacks to 0:01:28.520 --> 0:01:31.640 and it lends me to think about what's coming next 0:01:31.959 --> 0:01:34.199 a little bit more than I should, and a little 0:01:34.240 --> 0:01:37.319 bit less of enjoying what's currently happening, the good things 0:01:37.319 --> 0:01:40.119 that I'm currently surrounded by. So I've realized that, and 0:01:40.240 --> 0:01:42.880 I'm trying to do better about living in the moment 0:01:42.880 --> 0:01:46.319 and enjoying what's currently happening even while I am looking ahead. 0:01:46.560 --> 0:01:48.720 But I do think that this is an important topic 0:01:48.800 --> 0:01:50.600 for us to cover because I don't think it comes 0:01:50.680 --> 0:01:53.920 naturally for most folks, kind of like it does for me. 0:01:54.160 --> 0:01:56.960 I don't think it comes naturally to me. But over time, 0:01:57.000 --> 0:01:58.920 it is something that I've've worked at and it's it's 0:01:58.960 --> 0:02:01.320 more like a discipline, I guess, and it's something I've learned, 0:02:01.920 --> 0:02:04.080 you know, I've learned to implement in my life. So yeah, 0:02:04.160 --> 0:02:07.200 excited to talk about this with you today. Man, the 0:02:07.200 --> 0:02:09.760 girls are our wives. Got together today, got the girls together, 0:02:09.800 --> 0:02:11.760 and they all went to the zoo. Yeah. The zoo 0:02:12.000 --> 0:02:14.960 is pretty much the closest awesome thing that we can 0:02:15.040 --> 0:02:17.760 visit in our part of town, just because it is 0:02:17.840 --> 0:02:20.840 so nearby. We love being members there, and it's got 0:02:20.840 --> 0:02:23.000 the splash pad too. With it being summertime, it's it's 0:02:23.200 --> 0:02:24.920 nice to hit up that splash pad. Oh yeah, the 0:02:24.919 --> 0:02:27.320 girls are obsessed with the splash pad, especially in this heat. 0:02:27.600 --> 0:02:29.520 So yeah, I know they had a great time today, 0:02:29.800 --> 0:02:32.240 and it just made me want to take more advantage 0:02:32.440 --> 0:02:34.760 of the membership that we have to use it to 0:02:35.080 --> 0:02:37.880 its full extent because there are so many cool things 0:02:37.880 --> 0:02:39.800 happening at the zoo and every time we go there, 0:02:39.840 --> 0:02:41.640 we have a great time. So yeah, if you have 0:02:41.680 --> 0:02:43.640 a membership, like a membership to a zoo or an 0:02:43.639 --> 0:02:47.000 aquarium or or whatever you do as a family that's local, 0:02:47.400 --> 0:02:50.480 just remember to use it to take full advantage of 0:02:50.560 --> 0:02:52.600 the money that you've paid. Yeah, and if you're not 0:02:52.680 --> 0:02:55.000 taking advantage of it, I mean, that's something that's worth 0:02:55.120 --> 0:02:58.480 considering cutting from your life. Reassess if this is something 0:02:58.520 --> 0:03:03.000 that you actually enjoy doing, if it's worth the money. Otherwise, Man, 0:03:03.040 --> 0:03:04.840 that's just something you can you can cut from your life. 0:03:05.000 --> 0:03:07.959 Reduce your expenses and put more of that towards retirement, 0:03:08.200 --> 0:03:11.000 which is what we're talking about today. Yeah, because those 0:03:11.040 --> 0:03:14.640 memberships can be sixty seventy hundred bucks a year pretty easily. 0:03:14.919 --> 0:03:16.400 And if you've got two or three and a few 0:03:16.400 --> 0:03:18.200 of those stacked up, man, that's a that's a lot 0:03:18.240 --> 0:03:19.919 of money. It's a lot of change, that's for sure. 0:03:20.120 --> 0:03:22.000 All right, man, let's mention the beer that we're having 0:03:22.080 --> 0:03:24.680 on the show today. We're drinking Prairie Artist and Nails 0:03:24.760 --> 0:03:28.119 Christmas Mom. We're drink an awesome Prairie beer on Monday's episode. 0:03:28.400 --> 0:03:32.680 I love that we're drinking a Christmas beer in July Christmas. 0:03:33.880 --> 0:03:36.720 This is a take on their Imperial stouts, but this 0:03:36.800 --> 0:03:39.640 has additional spices and flavors in it. And this one 0:03:39.680 --> 0:03:42.600 was donated to the show by Jeff over at Monday 0:03:42.680 --> 0:03:45.880 Morning Pancakes. He's got a little personal finance blog going 0:03:45.920 --> 0:03:47.400 over there. They've got a lot going on in their 0:03:47.440 --> 0:03:48.920 life right now, but you can still find him on 0:03:48.920 --> 0:03:53.120 Twitter at Monday Pancakes. And so, Jeff, we really appreciate it. 0:03:53.160 --> 0:03:54.880 You sent this one to us a long time ago, 0:03:55.880 --> 0:03:58.120 and we've kind of been sitting on it for just 0:03:58.160 --> 0:04:01.320 an occasion. Yeah, perfect a to drink it. And Jeff's 0:04:01.360 --> 0:04:03.080 a great part of our our Facebook group as well, 0:04:03.120 --> 0:04:04.840 so Jeff, thanks for being a part of it and 0:04:04.840 --> 0:04:07.480 thanks for sending this beer. And Matt all right, onto 0:04:07.480 --> 0:04:10.560 the topic at hand. We're talking about why are we 0:04:10.600 --> 0:04:13.520 saving for retirement again? And it's a great question to ask. 0:04:13.560 --> 0:04:16.040 I think for for lots of us, including you and 0:04:16.080 --> 0:04:19.000 I'm att, retirement is is pretty far off. But we're 0:04:19.040 --> 0:04:22.320 told by all the quote unquote financial gurus that it's 0:04:22.360 --> 0:04:24.680 wise to save for the future. But but how far 0:04:24.720 --> 0:04:26.600 in the future are we saving for? And depending on 0:04:26.640 --> 0:04:28.000 what age you are as you're listening to this, whether 0:04:28.040 --> 0:04:32.159 you or fifty, getting to the why behind saving for 0:04:32.200 --> 0:04:36.119 retirement and saving four your seventy year old future self, well, 0:04:36.480 --> 0:04:38.880 it's an important question to ask. It all feels a 0:04:38.920 --> 0:04:41.320 bit far off at times, and it's hard to maintain 0:04:41.320 --> 0:04:43.200 a high savings rate in our fore own k I 0:04:43.400 --> 0:04:47.080 RA or other investment vehicles if we can't visualize why 0:04:47.120 --> 0:04:49.360 we're doing it. Yeah, well that gets us to our 0:04:49.400 --> 0:04:53.200 first point, right, picturing yourself at future milestones that can 0:04:53.240 --> 0:04:55.680 be really hard, and so you might need help. And 0:04:55.720 --> 0:04:57.520 I don't know if you've been living under a rock 0:04:57.560 --> 0:05:00.360 for the past several weeks. But there's this app called 0:05:00.480 --> 0:05:02.520 face App, and before that there was one called old 0:05:02.520 --> 0:05:05.680 if I. But these are apps that literally you can 0:05:05.680 --> 0:05:08.520 take a little selfie and they make you look older. 0:05:08.680 --> 0:05:11.279 They allow you to see how you actually might look 0:05:11.560 --> 0:05:13.440 when you're in your old age. And I know over 0:05:13.480 --> 0:05:15.080 the past couple of weeks there's been a lot of stink, 0:05:15.200 --> 0:05:18.279 right regarding the privacy terms, the terms of service regarding 0:05:18.320 --> 0:05:22.599 face app specifically, and if you don't feel comfortable with that, sure, 0:05:22.880 --> 0:05:25.080 you know you don't need to do that. But what 0:05:25.120 --> 0:05:27.840 we think can happen if you actually were to give 0:05:27.880 --> 0:05:31.120 that a shot and to make a true connection with 0:05:31.120 --> 0:05:33.599 how you might actually look in the future. I personally 0:05:33.600 --> 0:05:36.159 think it's worth it because there are changes that you 0:05:36.160 --> 0:05:40.040 can make regarding your behavior, specifically to your finances, because 0:05:40.040 --> 0:05:42.479 there are studies that show that there are changes that 0:05:42.480 --> 0:05:44.360 you are more likely to make in regards to your 0:05:44.400 --> 0:05:47.599 finances when it comes to saving for your retirement. Yeah, Matt, 0:05:47.600 --> 0:05:49.919 I've seen a ton of fake old people because of 0:05:49.920 --> 0:05:52.760 the face app on my Instagram feed, and most people 0:05:52.760 --> 0:05:55.080 are just doing it for fun, right, They're just for kicks. 0:05:55.080 --> 0:05:58.200 Moving around, they have no intention to save more for 0:05:58.240 --> 0:06:00.480 their future based on viewing their older self to the 0:06:00.520 --> 0:06:02.320 face app But I think if you do it with 0:06:02.400 --> 0:06:06.920 the intention of facing facts and looking at yourself as 0:06:06.960 --> 0:06:10.400 a much older person, it can help motivate you in 0:06:10.440 --> 0:06:12.120 the here and now. It can help you see the 0:06:12.200 --> 0:06:15.080 reality of what is to come. And for many many 0:06:15.080 --> 0:06:17.680 people they have found that to be a motivating factor 0:06:17.760 --> 0:06:21.200 to help them start saving more. There's something to visualizing 0:06:21.240 --> 0:06:25.200 it and sympathizing with the older version of yourself that 0:06:25.360 --> 0:06:26.840 can be that kick in the pants that you need 0:06:26.960 --> 0:06:30.800 in order to start saving and investing more for the future. Yeah, 0:06:30.839 --> 0:06:33.800 oftentimes we we need that connection. Right when it comes 0:06:33.800 --> 0:06:35.640 to the charity commercials that we see. There's a reason 0:06:35.680 --> 0:06:38.760 why they showed the puppies or you know, there's children 0:06:38.800 --> 0:06:42.080 on on the TV who needs your funds. It's proven 0:06:42.160 --> 0:06:44.880 that donors give more to a charity when they hear 0:06:44.920 --> 0:06:46.960 from a victim or when they can see that victim. 0:06:47.320 --> 0:06:49.920 Pulmonologists they smoke less than other doctors and the rest 0:06:49.960 --> 0:06:53.560 of the population because they see dirty lungs every single day. 0:06:53.640 --> 0:06:56.800 They've had that that dose of reality. When it comes 0:06:56.800 --> 0:06:59.080 to us and our future selves we we need that 0:06:59.120 --> 0:07:00.839 sort of dose of reality as well. We need that 0:07:00.920 --> 0:07:03.760 connection to our future selves. There's this thing called the 0:07:03.880 --> 0:07:07.320 end of history illusion, where we think that even though 0:07:07.360 --> 0:07:10.400 we've seen how we've changed in the past, right, Like 0:07:10.400 --> 0:07:11.920 we can look back at the last twenty years and 0:07:11.920 --> 0:07:14.280 see how we've changed as people, we still think that 0:07:14.320 --> 0:07:16.720 who we are today is who we're going to continue 0:07:16.720 --> 0:07:19.960 to be for the next twenty forty years whatever. It's 0:07:20.000 --> 0:07:22.880 just really interesting that we have a harder time, I guess, 0:07:22.920 --> 0:07:25.480 just looking into the future. And I guess it's not surprising, 0:07:25.560 --> 0:07:27.840 right we can look back at pictures and through the 0:07:27.840 --> 0:07:30.320 pictures were able to see the change that happens. But 0:07:30.480 --> 0:07:32.720 for whatever reason, we're not very creative when it comes 0:07:32.760 --> 0:07:36.080 to thinking ahead and looking forward. So because of that, 0:07:36.080 --> 0:07:38.360 that's one of the big benefits I see of these 0:07:38.400 --> 0:07:41.240 aging apps that make you look older. Yeah, And I 0:07:41.280 --> 0:07:43.160 think even if you don't want to go through the 0:07:43.160 --> 0:07:46.800 step of actually taking the picture and seeing yourself as 0:07:46.800 --> 0:07:49.880 a fake older person, just visualizing it and thinking about 0:07:49.880 --> 0:07:52.720 the reality, or maybe even just kind of writing a 0:07:52.840 --> 0:07:55.000 letter to your future self can kind of help that 0:07:55.040 --> 0:07:57.800 reality set in. And one study from Harvard found that 0:07:57.840 --> 0:08:00.280 the average person dedicating less than five percent of their 0:08:00.320 --> 0:08:03.800 income to retirement began to invest upwards of six and 0:08:03.840 --> 0:08:07.680 a half percent on average based on seeing that smartphone 0:08:07.720 --> 0:08:09.840 picture of their older self. And in the same study, 0:08:09.960 --> 0:08:12.480 subjects that were asked to allocate a thousand dollars of 0:08:12.520 --> 0:08:15.760 their money, well, only those who saw their own future 0:08:15.800 --> 0:08:19.440 selves were more likely to favor long term rewards over 0:08:19.480 --> 0:08:22.240 the short ones. So there really is something to seeing 0:08:22.280 --> 0:08:26.200 yourself in an older state or spending a lot of 0:08:26.240 --> 0:08:29.360 time truly thinking about what life will be like at 0:08:29.360 --> 0:08:32.080 that point. That is a helpful motivating factor that you 0:08:32.160 --> 0:08:34.480 might otherwise be lacking right now when it comes to 0:08:34.559 --> 0:08:37.559 saving for retirement. So yeah, visualizing, Joel, that's just an 0:08:37.559 --> 0:08:40.760 incredible tool. It's an incredible sort of approach in a 0:08:40.800 --> 0:08:43.960 way to think about the future. And so after the break, 0:08:43.960 --> 0:08:46.360 we're going to cover some more reasons why you should 0:08:46.400 --> 0:08:59.560 be saving for retirement. Alright, Matt, we're back, and the 0:08:59.600 --> 0:09:02.120 whole point of this episode is to talk about why 0:09:02.200 --> 0:09:05.520 we're saving for retirement. Right, So let's get into the y. Well, 0:09:05.559 --> 0:09:07.920 one day you are going to be old, hopefully, right, 0:09:08.000 --> 0:09:09.840 we hope you live in the old age, and that 0:09:09.920 --> 0:09:12.560 actually saving for retirement is really helpful to you in 0:09:12.600 --> 0:09:14.840 your old age that you have more than enough to 0:09:14.920 --> 0:09:17.760 live on. If you're not a visual person, well, maybe 0:09:17.880 --> 0:09:20.800 list out the specific personal financial goals that you want 0:09:20.840 --> 0:09:24.640 to accomplish by specific ages and begin to work towards 0:09:24.640 --> 0:09:27.120 those goals now. And a lot of folks may not 0:09:27.160 --> 0:09:30.080 actually have like specific goals like that, Joel, but even 0:09:30.120 --> 0:09:32.719 just the goal of being financially independent, which is your 0:09:32.720 --> 0:09:35.440 investments being able to support your cost of living without 0:09:35.520 --> 0:09:37.960 you having to work, and to figure that out quickly. 0:09:38.040 --> 0:09:40.400 We've talked about the multiply by twenty five rule, which 0:09:40.480 --> 0:09:44.480 is just take your annual expenses, multiply that by and 0:09:44.559 --> 0:09:47.320 that's basically your number. Just gives you a ballpark figure 0:09:47.440 --> 0:09:49.480 of the number that you need to have set aside 0:09:49.679 --> 0:09:52.160 in order to be financially independent. All right, So let's 0:09:52.200 --> 0:09:55.520 get into some of these specific reasons that you have 0:09:55.679 --> 0:09:58.800 to consider when it comes to why you're saving for retirement. 0:09:59.080 --> 0:10:01.679 And the first one is that nobody else is going 0:10:01.720 --> 0:10:04.120 to do it for you. There's a good chance that 0:10:04.240 --> 0:10:07.200 social security isn't gonna be enough for you to live 0:10:07.240 --> 0:10:10.160 the way you want in retirement. Pensions, for the most part, 0:10:10.160 --> 0:10:12.520 are a thing of the past. The burden has become 0:10:12.600 --> 0:10:15.760 more and more on us as individuals. Times have changed 0:10:15.840 --> 0:10:17.760 and the way we save for retirement has changed. And 0:10:17.800 --> 0:10:21.320 so don't think of social Security as this thing that 0:10:21.480 --> 0:10:23.760 is going to cover all your needs. That's just not 0:10:23.800 --> 0:10:25.679 going to be the case. And when it comes to 0:10:25.720 --> 0:10:28.200 your kids, right you you might want to live with 0:10:28.240 --> 0:10:30.080 your kids when you're older, but you don't want to 0:10:30.160 --> 0:10:32.200 have to live with them, right because you have to, 0:10:32.559 --> 0:10:36.120 and they also might not want you to live exactly um. 0:10:36.160 --> 0:10:38.280 And another reason that you need to be saving for 0:10:38.320 --> 0:10:42.680 retirement is because we're just living longer. The life expectancy 0:10:42.720 --> 0:10:44.720 in the US. I mean, we're looking at close to 0:10:44.880 --> 0:10:47.600 eighty these days, and by the time you're that old, 0:10:47.880 --> 0:10:50.400 who knows what kind of scientific or medical advances that 0:10:50.440 --> 0:10:53.120 will have, we might be living closer to ninety or 0:10:53.160 --> 0:10:55.880 even a hundred. So just making sure that we're prepared 0:10:56.000 --> 0:10:59.960 for our old age is incredibly important. Yeah, and having 0:11:00.280 --> 0:11:03.079 more money saved up for the future, saved up for retirement, 0:11:03.559 --> 0:11:07.040 it just makes you overall mentally healthier. Having that money 0:11:07.040 --> 0:11:10.679 saved up for your future decreases current anxiety and increases 0:11:11.080 --> 0:11:13.800 flexibility that you may have. It makes me. Think of 0:11:14.000 --> 0:11:16.520 an animal storing up food for winter, right, and how 0:11:16.559 --> 0:11:18.319 good does it feel when they've got a kind of 0:11:18.600 --> 0:11:20.920 all lined up and they're ready for that long hibernation. 0:11:21.200 --> 0:11:24.520 But man, if you that's a healthy looking ship monk, right, 0:11:24.600 --> 0:11:26.280 he's got a ton of acorn saved up in that tree. 0:11:26.320 --> 0:11:28.720 Did you see? It's the same for us, right that 0:11:28.840 --> 0:11:31.080 it just feels better when we have our ducks in 0:11:31.080 --> 0:11:33.520 a row and we are saving. It makes us feel 0:11:33.520 --> 0:11:37.040 better and it's better for our overall long term financial 0:11:37.120 --> 0:11:39.719 future chedule. And speaking of the future, our money is 0:11:39.760 --> 0:11:42.960 going to be worth less in the future due to inflation. 0:11:43.400 --> 0:11:45.920 And so when we uh invest our money in retirement, 0:11:45.920 --> 0:11:48.959 we're not just saving for the future. We're actually investing 0:11:48.960 --> 0:11:52.640 our money because our dollar today is actually going to 0:11:52.679 --> 0:11:54.880 buy less in the future, so we need it to grow. 0:11:55.000 --> 0:11:57.439 That's the whole point of investing. Yeah, we have to 0:11:57.480 --> 0:12:00.320 save for retirement or invest for retirement because as if 0:12:00.320 --> 0:12:02.920 we don't, inflation is going to eat us alive rights. Right, 0:12:03.040 --> 0:12:06.640 And we're also, by the way, not just saving for 0:12:06.760 --> 0:12:08.959 the far distant future. We're not just saving for that 0:12:09.360 --> 0:12:13.080 face app older version of ourselves, but we're also saving 0:12:13.080 --> 0:12:17.120 and investing and planning ahead for other near term possibilities. So, Matt, 0:12:17.160 --> 0:12:20.440 we talked a lot about investing for retirement, but creating 0:12:20.440 --> 0:12:22.600 more of a gap between what we save and what 0:12:22.640 --> 0:12:25.439 we spend helps us achieve other goals that are much 0:12:25.480 --> 0:12:28.840 closer than just the far off goal of retirement. Buying 0:12:28.840 --> 0:12:31.520 a home is an example of that. Maybe your partner 0:12:31.760 --> 0:12:35.000 or you want to stay home with your kids, maybe 0:12:35.000 --> 0:12:36.840 you want to go back to school or just change 0:12:36.960 --> 0:12:40.560 jobs or fields. The more you've grown that gap between 0:12:40.720 --> 0:12:43.120 what you save and what you spend, the more you've 0:12:43.200 --> 0:12:47.200 allocated towards saving for the future. It just gives you flexibility, 0:12:47.200 --> 0:12:49.480 It gives you options, and it also gives you a 0:12:49.559 --> 0:12:52.240 cheaper lifestyle that you have to fund. So saving for 0:12:52.280 --> 0:12:55.959 retirement is obviously super helpful for seventy year old you, 0:12:56.360 --> 0:12:58.240 But at the same time, it has real and immediate 0:12:58.240 --> 0:13:01.560 impacts for what your life looks like inn three, five, seven, 0:13:01.600 --> 0:13:03.840 ten years. It really does impact kind of your immediate 0:13:03.840 --> 0:13:05.959 future at the same time. So Joel, we've talked about 0:13:05.960 --> 0:13:07.800 the why right, the reasons that we should be saving 0:13:07.800 --> 0:13:10.880 for retirement. Next we're gonna talk about the how, the 0:13:11.000 --> 0:13:13.040 nuts and bolts we're gonna get to that right after this. 0:13:22.760 --> 0:13:24.520 All right, Matt, we're back and we just covered the 0:13:24.679 --> 0:13:27.680 y about saving for retirement, and of course that's the 0:13:27.800 --> 0:13:30.520 whole reason for this episode, but I think we should 0:13:30.520 --> 0:13:32.600 also talk about the how, because there are some nuts 0:13:32.600 --> 0:13:35.760 and bolts that are important to consider once we've realized 0:13:35.880 --> 0:13:38.200 the why that it is for our future self. But 0:13:38.280 --> 0:13:41.160 it's starting to save more now actually gives us really 0:13:41.200 --> 0:13:44.200 immediate benefits. At the same time, well, thinking about your 0:13:44.240 --> 0:13:47.800 time frame helps you determine where to invest so that 0:13:47.880 --> 0:13:50.520 you know how you can access those funds when the 0:13:50.600 --> 0:13:53.280 time comes. So let's talk about now the best places 0:13:53.320 --> 0:13:55.880 to park your money. The best places if you're looking 0:13:55.920 --> 0:13:58.000 at keeping your money stashed away for a longer period 0:13:58.040 --> 0:14:00.319 of time, is going to be a four one K 0:14:00.640 --> 0:14:03.880 with a match. If you have a work sponsored plan, 0:14:04.080 --> 0:14:06.720 it's almost always going to be the best option. There's 0:14:06.760 --> 0:14:11.160 ways to tap your retirement funds early without a penalty, 0:14:11.200 --> 0:14:13.520 but we would only recommend this if you are in 0:14:13.600 --> 0:14:16.880 an early retirement scenario, and if you are, like, congrats, 0:14:16.960 --> 0:14:21.080 that's fantastic, that's awesome. Otherwise, taking money from your retirement 0:14:21.080 --> 0:14:23.840 account early it's typically going to be a bad move. 0:14:24.280 --> 0:14:26.840 With with very few exceptions. Yeah. Man, it turns out 0:14:26.880 --> 0:14:30.280 that almost of Americans have access to a four owne 0:14:30.320 --> 0:14:34.840 K where they work, but only of Americans opt to 0:14:34.880 --> 0:14:37.760 participate OUCH. So like literally half the amount of people 0:14:37.880 --> 0:14:39.880 that have access to a four ol one K actually 0:14:39.920 --> 0:14:42.320 put money into it. And that's hard to stomach because 0:14:42.360 --> 0:14:44.960 it is typically the easiest account for people to take 0:14:45.000 --> 0:14:47.800 advantage of. Right, So, if your employer does offer a 0:14:47.800 --> 0:14:49.920 four OW one K and it particularly if they offer 0:14:49.960 --> 0:14:51.880 a match, then you're going to want to make sure 0:14:51.920 --> 0:14:55.600 you're contributing up to the full match amount. The great 0:14:55.600 --> 0:14:57.120 thing is, when you contribute to a four oh one K, 0:14:57.560 --> 0:15:00.320 the money almost feels invisible. You barely recognize us that 0:15:00.320 --> 0:15:02.360 that money has even gone because it comes straight out 0:15:02.360 --> 0:15:04.600 of your paycheck. Every two weeks or twice a month. However, 0:15:04.640 --> 0:15:06.520 you get paid. And we said that four O one 0:15:06.600 --> 0:15:10.040 ks are really great for long term investing, and that's 0:15:10.080 --> 0:15:12.760 totally true. If you consistently contribute to the four oh 0:15:12.760 --> 0:15:14.760 one K that you have access to through work, you'll 0:15:14.800 --> 0:15:18.840 be incredibly surprised at the results that you'll garner from 0:15:19.120 --> 0:15:22.760 decades of consistently investing inside of that vehicle. It just 0:15:22.960 --> 0:15:25.200 the effects are are massive and we can't even really 0:15:25.240 --> 0:15:27.320 overstate how big of a deal it is to start 0:15:27.360 --> 0:15:29.680 contributing to your four oh one K and in particular, 0:15:29.760 --> 0:15:32.360 if you do have access to a company match. Yeah, 0:15:32.400 --> 0:15:34.800 and they A few other vehicles that you can invest 0:15:34.880 --> 0:15:38.000 in over the long term but that also have great 0:15:38.120 --> 0:15:41.920 short term flexibility would be your roth Ira accounts, which 0:15:41.960 --> 0:15:44.360 is one of our favorites as well as an hs A. 0:15:44.800 --> 0:15:46.960 You can open a roth Ira account on your own, 0:15:47.280 --> 0:15:50.920 either through M one, Vanguard or Fidelity, and you can 0:15:51.000 --> 0:15:53.480 check and see if you qualify for an h s A. 0:15:53.800 --> 0:15:56.480 We would recommend checking out lively for them. You know, 0:15:56.520 --> 0:15:58.840 we've talked about the RATH and the hs A and 0:15:58.840 --> 0:16:01.360 the flexibility that they have. Of one of our favorite 0:16:01.400 --> 0:16:05.520 reasons for investing in these is the easy and early 0:16:05.560 --> 0:16:08.240 accessibility that you have to some of that money and 0:16:08.280 --> 0:16:11.400 so being able to tap into some of those contributions 0:16:11.480 --> 0:16:14.640 for you know, current investments or other life goals that 0:16:14.640 --> 0:16:16.600 you might have is one of the nice benefits to 0:16:16.640 --> 0:16:18.880 these accounts as well. Yeah, Matt, and we have to 0:16:18.880 --> 0:16:22.760 mention one of our favorite retirement savings vehicles, and that's 0:16:22.840 --> 0:16:26.680 investing in real estate, and in particular investing in actual 0:16:27.200 --> 0:16:30.520 single or multifamily housing close to where you live preferably, 0:16:30.960 --> 0:16:36.080 and real estate offers some great flexibility by providing current 0:16:36.120 --> 0:16:39.640 cash flow, good current tax benefits, while also giving you 0:16:39.720 --> 0:16:43.840 appreciation and increased cash flow over time. So yeah, real 0:16:43.920 --> 0:16:46.680 estate is great for so many reasons. But I love 0:16:46.680 --> 0:16:49.360 it because it's a vehicle that in my mind I 0:16:49.440 --> 0:16:52.280 consider as a saving tool for retirement, but I also 0:16:52.320 --> 0:16:55.280 see it providing income and stability for me, like right now. 0:16:55.640 --> 0:16:58.320 So it is such a great blend of future of 0:16:58.400 --> 0:17:01.240 saving for my eventual retire but it's also giving me 0:17:01.280 --> 0:17:04.119 something present day, which that's what I love about investing 0:17:04.160 --> 0:17:06.359 in real estate. Yeah, it's awesome because it's almost like 0:17:06.359 --> 0:17:08.960 a bridge that gets you from here and now to 0:17:09.359 --> 0:17:12.040 old Joel in retirement. Either way, though, you know what's 0:17:12.160 --> 0:17:15.800 key to a great retirement in building the future that 0:17:15.840 --> 0:17:18.440 you want. It starts with a good savings rate. And 0:17:18.680 --> 0:17:20.200 you may have heard this term before, but I mean 0:17:20.240 --> 0:17:23.480 your savings rate is just simply the percentage or it's 0:17:23.480 --> 0:17:26.320 a ratio of the money that you're saving divided by 0:17:26.480 --> 0:17:28.920 the money that you are earning. And so if you're 0:17:28.920 --> 0:17:31.760 just starting out, you may not have a savings rate. 0:17:32.080 --> 0:17:34.119 But you know that's something you want to get started, 0:17:34.200 --> 0:17:37.720 and it's a good goal to increase your contributions every 0:17:37.760 --> 0:17:40.639 six months or even every year. If you have a 0:17:40.640 --> 0:17:43.560 one percent increase, you're going to be able to massively 0:17:43.760 --> 0:17:46.480 increase the amount of money that you're putting away towards retirement. 0:17:46.640 --> 0:17:48.600 You might say, well, one percent, what does that matter? 0:17:48.680 --> 0:17:50.080 What does it? What does it matter if I increase 0:17:50.119 --> 0:17:52.920 my contributions by one percent? Well, the effects over time, 0:17:53.320 --> 0:17:56.120 especially if you're able to increase your contributions by one 0:17:56.160 --> 0:17:59.280 percent every six months or every year, that one percent 0:17:59.480 --> 0:18:02.560 becomes If you continue to make it a habit of 0:18:02.680 --> 0:18:05.399 increasing at that same rate, it ends up making a 0:18:05.400 --> 0:18:08.320 really big impact over a handful of years. And the 0:18:08.359 --> 0:18:11.000 reason right that a savings rate is important is because 0:18:11.040 --> 0:18:14.560 it goes beyond saving a specific dollar amount. You can 0:18:14.600 --> 0:18:16.719 have a raw IRA where you're maxing it out at 0:18:16.760 --> 0:18:19.600 six thousand dollars every year, and that's great, But what 0:18:19.640 --> 0:18:22.920 we want you to do is to identify a specific percentage. 0:18:23.119 --> 0:18:26.080 A percentage can be way more powerful because as you 0:18:26.240 --> 0:18:28.720 get a raise and you are increasing the amount of 0:18:28.720 --> 0:18:31.119 money that you're making, well, you're not just locked into 0:18:31.240 --> 0:18:34.000 thinking cool, I've got six thousand dollars set aside every year. 0:18:34.040 --> 0:18:36.399 That's going to be enough. When you've identified an actual 0:18:36.440 --> 0:18:39.320 savings rate, you can increase the amount that you're saving 0:18:39.400 --> 0:18:42.240 and setting aside every single year without sort of manually 0:18:42.280 --> 0:18:45.000 making the hard decision of Okay, now I'm going to 0:18:45.200 --> 0:18:48.639 increase the dollar amount because it naturally will increase as 0:18:48.720 --> 0:18:50.960 you say, get a raise. And you know what, man 0:18:50.960 --> 0:18:53.800 a raise is actually just a fantastic time to actually 0:18:53.840 --> 0:18:56.680 increase your savings rate as well, because not only will 0:18:56.720 --> 0:18:59.359 you be saving more, but you will also be experiencing 0:18:59.400 --> 0:19:01.760 some of the the sort of fun that you get 0:19:01.880 --> 0:19:04.159 when you would get a raise. Right. Our goal is 0:19:04.160 --> 0:19:06.359 that you're not going to just take that raise and 0:19:06.400 --> 0:19:08.639 then just blow it and and to just consume it. 0:19:08.880 --> 0:19:11.159 We think it's really important to celebrate those winds. But 0:19:11.200 --> 0:19:14.240 at the same time, and those are some fantastic opportunities 0:19:14.240 --> 0:19:16.399 and times when you can kind of ratchet up that 0:19:16.480 --> 0:19:18.680 savings rate even more. Yeah, And as you do that, 0:19:18.840 --> 0:19:21.160 the more you save, you're putting your money to work. 0:19:21.359 --> 0:19:25.040 And there's power in that. There's power in tax advantaged 0:19:25.160 --> 0:19:28.800