1
00:00:02,600 --> 00:00:05,359
Speaker 1: Do I have any questions about retirement?

2
00:00:08,800 --> 00:00:11,400
Speaker 2: Aging is natural, getting old is a choice.

3
00:00:11,400 --> 00:00:15,000
Speaker 3: The new retirement is not retiring. No, I need you're

4
00:00:15,040 --> 00:00:18,200
Speaker 3: billion dollars when you're in your twenties and thirties. Retirement

5
00:00:18,280 --> 00:00:20,400
Speaker 3: seems like an abstract concept.

6
00:00:20,840 --> 00:00:24,959
Speaker 1: My biggest concerns with retirement right now is just starting

7
00:00:25,280 --> 00:00:26,080
Speaker 1: from zero.

8
00:00:26,840 --> 00:00:29,159
Speaker 3: Not to mention, the idea of saving large sums of

9
00:00:29,200 --> 00:00:32,559
Speaker 3: money early in your career feels impossible when you're just

10
00:00:32,640 --> 00:00:33,640
Speaker 3: trying to pay rent.

11
00:00:34,400 --> 00:00:37,800
Speaker 1: But I just don't think I know enough different terms,

12
00:00:37,880 --> 00:00:39,640
Speaker 1: the different types of accounts you can have.

13
00:00:40,280 --> 00:00:43,239
Speaker 3: For most of us who don't have an extensive education

14
00:00:43,360 --> 00:00:46,920
Speaker 3: in financial planning, were launched into adulthood without really any

15
00:00:46,960 --> 00:00:49,879
Speaker 3: information or guide around how to get started.

16
00:00:50,520 --> 00:00:53,000
Speaker 1: You know, I keep hearing that social Security just isn't

17
00:00:53,080 --> 00:00:53,880
Speaker 1: kind of be a thing.

18
00:00:54,320 --> 00:00:57,480
Speaker 3: In fact, according to twenty twenty US sets of data,

19
00:00:57,600 --> 00:01:00,480
Speaker 3: only forty nine point five percent of the life eils

20
00:01:00,720 --> 00:01:04,440
Speaker 3: held some sort of retirement account. That's just barely half

21
00:01:05,319 --> 00:01:09,600
Speaker 3: given the current economy, given inflation, so many different things

22
00:01:09,600 --> 00:01:13,440
Speaker 3: that we are up against. What's even more telling, eighty

23
00:01:13,480 --> 00:01:16,560
Speaker 3: percent of US adults wished that they were required to

24
00:01:16,600 --> 00:01:20,160
Speaker 3: complete a semester or even a year long course focused

25
00:01:20,200 --> 00:01:22,480
Speaker 3: on personal finance education during high school?

26
00:01:23,240 --> 00:01:26,040
Speaker 1: How much money should I be aiming to have saved?

27
00:01:26,640 --> 00:01:29,560
Speaker 3: Honestly, that would have been great. And I don't understand

28
00:01:29,560 --> 00:01:31,240
Speaker 3: why they don't teach us this type of thing in

29
00:01:31,319 --> 00:01:33,959
Speaker 3: high school or even as a required gen ed course

30
00:01:34,000 --> 00:01:37,960
Speaker 3: in college. I'm not really sure what a roth ira is.

31
00:01:39,120 --> 00:01:41,960
Speaker 3: And it's not just planning for retirement. There's all sorts

32
00:01:42,000 --> 00:01:43,880
Speaker 3: of stuff that we have to figure out on our

33
00:01:43,920 --> 00:01:45,840
Speaker 3: own once we're thrust into adulthood.

34
00:01:46,720 --> 00:01:49,520
Speaker 1: What else should we be doing?

35
00:01:49,880 --> 00:01:52,800
Speaker 3: But today I say no more, no more living in

36
00:01:52,840 --> 00:01:56,640
Speaker 3: anxiety over what the future looks like. Today, we are

37
00:01:56,840 --> 00:01:59,720
Speaker 3: all taking charge of our lives and learning all the

38
00:01:59,760 --> 00:02:03,520
Speaker 3: sea rits and lessons needed to be perfectly functioning and

39
00:02:03,600 --> 00:02:07,080
Speaker 3: responsible adults. And we're also going to finally figure out

40
00:02:07,160 --> 00:02:09,519
Speaker 3: what the hell ira actually means.

41
00:02:10,360 --> 00:02:10,560
Speaker 1: Hi.

42
00:02:10,720 --> 00:02:13,959
Speaker 3: I'm Molly Soosha, and I'm a podcast producer and a

43
00:02:14,000 --> 00:02:16,400
Speaker 3: mediocre millennial who's trying to do the best you can

44
00:02:16,480 --> 00:02:18,800
Speaker 3: to figure out how to be a more responsible adult

45
00:02:18,840 --> 00:02:21,280
Speaker 3: and better human one day at a time. Along with

46
00:02:21,320 --> 00:02:23,799
Speaker 3: my trustee co producer and colleague Matt Stillo.

47
00:02:23,720 --> 00:02:26,320
Speaker 1: Hey there, fellow works in progress we're.

48
00:02:26,120 --> 00:02:28,320
Speaker 3: Going to learn about all the things we wish they

49
00:02:28,360 --> 00:02:30,200
Speaker 3: would have taught us in school that might have been

50
00:02:30,240 --> 00:02:32,120
Speaker 3: way more useful to our everyday lives.

51
00:02:32,720 --> 00:02:34,800
Speaker 1: I don't want you leaving that money on the table

52
00:02:35,040 --> 00:02:36,880
Speaker 1: just because nobody could be bothered to.

53
00:02:36,880 --> 00:02:49,680
Speaker 3: Explain, So start taking notes. Because this is hello everyone,

54
00:02:49,960 --> 00:02:53,400
Speaker 3: and welcome to the very first episode of Grown Up

55
00:02:53,440 --> 00:02:56,600
Speaker 3: Stuff how to Adult, a show we've created to help

56
00:02:56,680 --> 00:02:59,919
Speaker 3: you figure out the stuff you're supposed to know once

57
00:03:00,160 --> 00:03:03,880
Speaker 3: you become a quote unquote grown up. Throughout this first season,

58
00:03:03,960 --> 00:03:05,640
Speaker 3: we're going to talk to some experts who are going

59
00:03:05,680 --> 00:03:08,760
Speaker 3: to help guide us through things like finding and leasing

60
00:03:08,760 --> 00:03:12,359
Speaker 3: an apartment, buying a house, carcare one oh one, how

61
00:03:12,400 --> 00:03:14,360
Speaker 3: to apply and get approved for a credit card, and

62
00:03:14,400 --> 00:03:17,480
Speaker 3: why you need one. But today we're going to be

63
00:03:17,480 --> 00:03:20,040
Speaker 3: talking specifically about the basics of how to plan for

64
00:03:20,120 --> 00:03:23,960
Speaker 3: retirement and when you should start. But before we get

65
00:03:24,040 --> 00:03:27,520
Speaker 3: too far into it, Matt Yes smiling, what do you

66
00:03:27,720 --> 00:03:29,520
Speaker 3: know about retirement plans?

67
00:03:30,000 --> 00:03:32,840
Speaker 1: Well? I do know that if I could answer that question,

68
00:03:33,000 --> 00:03:37,240
Speaker 1: we wouldn't be making this podcast. But here's what I

69
00:03:37,320 --> 00:03:40,040
Speaker 1: can tell you. I know that I want to retire.

70
00:03:40,760 --> 00:03:42,880
Speaker 1: I know that I've been lucky enough to work with

71
00:03:42,920 --> 00:03:46,360
Speaker 1: a few companies that offer four oh one K plans. Actually,

72
00:03:46,360 --> 00:03:49,320
Speaker 1: our current employer offers a matching program with our four

73
00:03:49,360 --> 00:03:51,520
Speaker 1: oh one K, which you know is basically just them

74
00:03:51,560 --> 00:03:54,360
Speaker 1: offering us free money to help us retire, right, So

75
00:03:54,520 --> 00:03:57,960
Speaker 1: I'm definitely taking advantage of that. But other than that,

76
00:03:58,000 --> 00:04:02,000
Speaker 1: I'm thirty three. I would like to retire at a

77
00:04:02,000 --> 00:04:04,720
Speaker 1: respectable age. But am I on track to do that?

78
00:04:05,000 --> 00:04:07,840
Speaker 1: And if not, how can I course correct? Those are

79
00:04:07,880 --> 00:04:09,560
Speaker 1: things that I am hoping to find out today.

80
00:04:09,960 --> 00:04:12,440
Speaker 3: You sound like you have your shit together way more

81
00:04:12,560 --> 00:04:13,119
Speaker 3: than I do.

82
00:04:13,440 --> 00:04:16,440
Speaker 1: I doubt that very much, but fill me in. I mean,

83
00:04:16,440 --> 00:04:17,640
Speaker 1: where are you at with retirement?

84
00:04:17,880 --> 00:04:20,240
Speaker 3: I remember the first time I got a job, my

85
00:04:20,360 --> 00:04:24,200
Speaker 3: dad started talking to me immediately about saving for retirement

86
00:04:24,200 --> 00:04:26,200
Speaker 3: and all the different retirement plans I needed to have.

87
00:04:27,000 --> 00:04:29,200
Speaker 3: But when you start off in media, you do not

88
00:04:29,440 --> 00:04:31,000
Speaker 3: make a whole lot of money. And I was living

89
00:04:31,000 --> 00:04:32,200
Speaker 3: in New York City.

90
00:04:32,080 --> 00:04:36,280
Speaker 4: And stuff be expensive, just trying to pay that rent,

91
00:04:36,360 --> 00:04:40,120
Speaker 4: and so, God love my dad, I just started to

92
00:04:40,200 --> 00:04:41,880
Speaker 4: zone out every time he talked about it, which was

93
00:04:41,880 --> 00:04:44,480
Speaker 4: probably not the best because he's just trying to help

94
00:04:45,000 --> 00:04:47,760
Speaker 4: and make sure I'm covered for my future.

95
00:04:48,480 --> 00:04:51,760
Speaker 1: Okay, well, no zoning out today, because we are joined

96
00:04:51,760 --> 00:04:54,800
Speaker 1: by a special guest who thankfully knows a heck of

97
00:04:54,800 --> 00:04:56,560
Speaker 1: a lot more about retirement than we do.

98
00:04:57,360 --> 00:05:02,960
Speaker 2: I'm Jonah Batista, and i'm Asset and Wealth Management Senior Manager.

99
00:05:03,800 --> 00:05:07,080
Speaker 3: Jonah works for one of the leading international accounting firms,

100
00:05:07,120 --> 00:05:09,839
Speaker 3: and essentially it's his job to ensure that the financial

101
00:05:09,920 --> 00:05:12,080
Speaker 3: statements of his clients are accurate.

102
00:05:12,640 --> 00:05:15,919
Speaker 2: I'm kind of like a referee. When management of a

103
00:05:15,960 --> 00:05:20,280
Speaker 2: company says we have a bajillion dollars. My job is

104
00:05:20,320 --> 00:05:25,400
Speaker 2: to audit those financial statements and give assurance to readers

105
00:05:25,400 --> 00:05:28,360
Speaker 2: of those financial statements that what they're reading is complete

106
00:05:28,400 --> 00:05:29,160
Speaker 2: and accurate.

107
00:05:30,040 --> 00:05:32,320
Speaker 3: But what makes Yonah even more apps to help us

108
00:05:32,360 --> 00:05:35,400
Speaker 3: understand financial planning for retirement is that most of his

109
00:05:35,560 --> 00:05:39,240
Speaker 3: clients are in the wealth management sector, so oftentimes their

110
00:05:39,240 --> 00:05:42,680
Speaker 3: companies are firms that people seek out to set up

111
00:05:42,720 --> 00:05:45,800
Speaker 3: funds for retirement. I wanted to start with the basics

112
00:05:45,800 --> 00:05:48,919
Speaker 3: and understand what Jonah sees as the biggest struggles or

113
00:05:48,920 --> 00:05:52,320
Speaker 3: misconceptions around retirement planning and figure out how much we

114
00:05:52,400 --> 00:05:59,640
Speaker 3: actually need saved a way before we retire. How do

115
00:05:59,720 --> 00:06:04,280
Speaker 3: you think about retirement plans from your line of work.

116
00:06:05,040 --> 00:06:09,040
Speaker 2: When I come across friends, family, just anyone who's generally

117
00:06:09,200 --> 00:06:13,000
Speaker 2: interested in personal finance, I always try to stress the

118
00:06:13,080 --> 00:06:17,640
Speaker 2: importance of planning for retirement. And the main reason the

119
00:06:17,680 --> 00:06:22,880
Speaker 2: punchline is no one is going to loan you money

120
00:06:23,240 --> 00:06:26,839
Speaker 2: for retirement because they know they'll never get that money back,

121
00:06:27,760 --> 00:06:29,479
Speaker 2: right like you can get a loan for a car,

122
00:06:29,640 --> 00:06:36,080
Speaker 2: a house, school, home improvements, you name it. But it's

123
00:06:36,120 --> 00:06:41,160
Speaker 2: a scary thing to think and acknowledge that no one's

124
00:06:41,200 --> 00:06:44,240
Speaker 2: going to fund your retirement. The government will give you

125
00:06:44,240 --> 00:06:46,599
Speaker 2: Social Security, but at the end of the day, it's

126
00:06:46,640 --> 00:06:48,360
Speaker 2: not going to cover your expenses.

127
00:06:49,040 --> 00:06:51,039
Speaker 3: What do you think are some of the biggest points

128
00:06:51,040 --> 00:06:53,560
Speaker 3: of confusion that you notice either talking to your friends

129
00:06:53,640 --> 00:06:56,839
Speaker 3: or your family about retirement and retirement planning.

130
00:06:57,800 --> 00:07:05,120
Speaker 2: There's confusion and or misunderstanding of how important time is

131
00:07:06,080 --> 00:07:10,000
Speaker 2: in the accumulation of wealth. If you have a million

132
00:07:10,080 --> 00:07:13,200
Speaker 2: dollars and you start investing when you're in your twenties

133
00:07:14,240 --> 00:07:16,920
Speaker 2: and you're not gonna need this money until you're retired,

134
00:07:17,000 --> 00:07:20,600
Speaker 2: you're gonna have a ton of money. And you would say, well,

135
00:07:20,600 --> 00:07:23,240
Speaker 2: that's easy. You started with a million dollars, So everyone

136
00:07:23,320 --> 00:07:26,640
Speaker 2: kind of is just like, well, the biggest input to

137
00:07:26,760 --> 00:07:29,160
Speaker 2: having a successful retirement is having a lot of money

138
00:07:29,200 --> 00:07:33,560
Speaker 2: to begin with, and that's not true. What is true

139
00:07:33,880 --> 00:07:37,320
Speaker 2: is the amount of time you give yourself to invest

140
00:07:37,560 --> 00:07:41,960
Speaker 2: for retirement. For example, if you saved one hundred to

141
00:07:41,960 --> 00:07:45,200
Speaker 2: two hundred dollars a month when you were like twenty two,

142
00:07:45,400 --> 00:07:47,280
Speaker 2: and you just do that all the way up until

143
00:07:47,320 --> 00:07:51,920
Speaker 2: you retire, you would have millions of dollars in retirement.

144
00:07:52,840 --> 00:07:55,600
Speaker 2: To get that same amount of money, if you start

145
00:07:55,640 --> 00:07:59,760
Speaker 2: that at forty five, you need to be saving maybe

146
00:08:00,160 --> 00:08:02,360
Speaker 2: to one thousand dollars or more a month.

147
00:08:02,920 --> 00:08:03,160
Speaker 3: Wow.

148
00:08:03,360 --> 00:08:08,400
Speaker 2: So time is a big misunderstood input to retirement, even

149
00:08:08,440 --> 00:08:11,880
Speaker 2: if it's a little bit of money, Just start right

150
00:08:12,400 --> 00:08:16,000
Speaker 2: to the extent you can do that. Don't put that

151
00:08:16,080 --> 00:08:18,840
Speaker 2: on until you're in your forties or even later. In

152
00:08:18,840 --> 00:08:22,760
Speaker 2: some people's cases, it becomes a snowball that's very, very

153
00:08:22,800 --> 00:08:25,400
Speaker 2: hard to get on top of if you're waiting too long.

154
00:08:26,360 --> 00:08:29,280
Speaker 3: So let's break it down to the most basic level

155
00:08:29,320 --> 00:08:33,079
Speaker 3: of things, like what is a retirement account and how

156
00:08:33,160 --> 00:08:36,480
Speaker 3: is it different from a traditional savings account that we

157
00:08:36,559 --> 00:08:38,240
Speaker 3: might all already have at a bank.

158
00:08:38,720 --> 00:08:42,120
Speaker 2: There's different kinds of retirement accounts. But the general thing

159
00:08:42,200 --> 00:08:46,800
Speaker 2: with these retirement accounts is they have tax advantages. So

160
00:08:47,360 --> 00:08:51,959
Speaker 2: for example, you can draw on these accounts once you

161
00:08:52,040 --> 00:08:55,319
Speaker 2: hit a certain age and not pay any taxes or

162
00:08:55,440 --> 00:08:59,319
Speaker 2: pay lower taxes than what you would have to pay

163
00:08:59,720 --> 00:09:02,880
Speaker 2: when and you are investing through a regular brokerage account.

164
00:09:03,360 --> 00:09:07,160
Speaker 2: So for example, a lot of people have companies sponsored

165
00:09:07,160 --> 00:09:10,240
Speaker 2: four oh one K accounts. That's a type of retirement account.

166
00:09:10,920 --> 00:09:14,000
Speaker 2: You could have an individual retirement account and IRA, you

167
00:09:14,040 --> 00:09:18,959
Speaker 2: could have a roth IRA. There are various different retirement accounts,

168
00:09:19,000 --> 00:09:22,760
Speaker 2: but the punchline on those is there are tax advantages

169
00:09:23,120 --> 00:09:25,960
Speaker 2: that you want to take advantage of, and so you

170
00:09:26,000 --> 00:09:28,559
Speaker 2: want to maximize the potential of those types of accounts.

171
00:09:29,480 --> 00:09:33,600
Speaker 3: Wroth IRA to me sounds so similar to what a

172
00:09:33,640 --> 00:09:36,080
Speaker 3: lot of traditional savings accounts are, right, Like, we take

173
00:09:36,520 --> 00:09:39,440
Speaker 3: money that we've already been taxed on, so it's ours.

174
00:09:39,760 --> 00:09:42,160
Speaker 3: So what is truly the difference between our wroth ira

175
00:09:42,480 --> 00:09:45,400
Speaker 3: and say your savings account at your bank.

176
00:09:46,280 --> 00:09:48,920
Speaker 2: So when you go to a bank, you open up

177
00:09:49,520 --> 00:09:53,240
Speaker 2: a checking account or a savings account, right, that's really

178
00:09:53,440 --> 00:09:55,960
Speaker 2: just to park your money. So you're not going to

179
00:09:56,000 --> 00:10:00,120
Speaker 2: really earn anything significant by parking your money there. So

180
00:10:00,160 --> 00:10:02,679
Speaker 2: then the next type of account is a taxable account,

181
00:10:03,080 --> 00:10:04,880
Speaker 2: also known as a brokerage account.

182
00:10:05,480 --> 00:10:06,520
Speaker 1: So that's where you.

183
00:10:06,480 --> 00:10:08,480
Speaker 2: Would take the money in your checking account or your

184
00:10:08,520 --> 00:10:12,680
Speaker 2: savings account, you'd transfer it to a brokerage account, and

185
00:10:12,760 --> 00:10:16,280
Speaker 2: in there you can start buying stocks and bonds. However,

186
00:10:16,520 --> 00:10:20,959
Speaker 2: that account is structured differently than a retirement account, so

187
00:10:21,480 --> 00:10:24,520
Speaker 2: a roth ira, an IRA, A four to oh one k.

188
00:10:25,320 --> 00:10:31,320
Speaker 2: These types of retirement accounts are structured to benefit later

189
00:10:31,400 --> 00:10:35,040
Speaker 2: on in life where you can draw on them in

190
00:10:35,160 --> 00:10:39,440
Speaker 2: retirement and not pay taxes or at least not pay

191
00:10:39,480 --> 00:10:42,240
Speaker 2: as high attax. So let's say you open up a

192
00:10:42,280 --> 00:10:45,120
Speaker 2: taxable account and then you also open up a roth

193
00:10:45,160 --> 00:10:48,880
Speaker 2: ira and you buy the same stocks in both. Let's

194
00:10:48,920 --> 00:10:52,240
Speaker 2: say it's one hundred thousand bucks in these accounts and

195
00:10:52,960 --> 00:10:55,920
Speaker 2: I'm sixty five. I can pull out that one hundred

196
00:10:56,000 --> 00:10:58,839
Speaker 2: k through my wroth IRA and I'd get one hundred

197
00:10:58,880 --> 00:11:01,960
Speaker 2: K in my checking account. Right if I pulled that

198
00:11:02,120 --> 00:11:05,000
Speaker 2: hundred k out from my taxable account, it would be

199
00:11:05,000 --> 00:11:08,280
Speaker 2: one hundred kus whatever tax bracket I'm in that year,

200
00:11:09,240 --> 00:11:14,360
Speaker 2: so it would be maybe seventy five thousand. So they

201
00:11:14,440 --> 00:11:17,400
Speaker 2: serve different purposes those types of accounts.

202
00:11:22,200 --> 00:11:25,120
Speaker 3: Is there an amount or percentage of our paycheck? And

203
00:11:25,160 --> 00:11:27,480
Speaker 3: I know this depends on this changes based on how

204
00:11:27,480 --> 00:11:30,480
Speaker 3: old we are, but on average that you would recommend

205
00:11:30,520 --> 00:11:32,080
Speaker 3: a person put away each month.

206
00:11:33,360 --> 00:11:36,640
Speaker 2: So if you try to set up a retirement account

207
00:11:36,760 --> 00:11:39,160
Speaker 2: or work with a financial advisor or anything like that,

208
00:11:39,640 --> 00:11:41,400
Speaker 2: the first question they're going to say is do you

209
00:11:41,440 --> 00:11:45,959
Speaker 2: have a budget? And I think most people don't. And

210
00:11:46,080 --> 00:11:48,720
Speaker 2: so going back to what I was saying earlier, where

211
00:11:49,040 --> 00:11:52,360
Speaker 2: one of the main inputs is time right to retirement,

212
00:11:52,800 --> 00:11:57,840
Speaker 2: the second input is having a budget. And so again

213
00:11:57,960 --> 00:12:00,199
Speaker 2: you can do your own research and see where you

214
00:12:00,240 --> 00:12:03,720
Speaker 2: want to land. But I've found the fifty thirty twenty

215
00:12:03,760 --> 00:12:07,320
Speaker 2: budget to be the one. What that means is you

216
00:12:07,360 --> 00:12:10,560
Speaker 2: take fifty percent of your money that should be for

217
00:12:10,640 --> 00:12:16,120
Speaker 2: your needs like rent, food, things like that. Thirty percent

218
00:12:16,559 --> 00:12:23,480
Speaker 2: should be your wants so like entertainment, traveling, vacations, stuff

219
00:12:23,520 --> 00:12:26,360
Speaker 2: like that, and then twenty percent should be your saving.

220
00:12:27,040 --> 00:12:33,120
Speaker 2: So the fifty thirty twenty budget is considered to be

221
00:12:33,240 --> 00:12:37,400
Speaker 2: pretty frugal. So what I did and what I tell

222
00:12:37,840 --> 00:12:39,880
Speaker 2: you know anyone that's interested in this kind of stuff,

223
00:12:39,920 --> 00:12:42,880
Speaker 2: is I actually flipped my thirty in my twenty. So

224
00:12:42,920 --> 00:12:47,839
Speaker 2: I went super frugal and I saved thirty percent and

225
00:12:48,280 --> 00:12:51,080
Speaker 2: limited my wants to twenty percent. And I did that

226
00:12:51,760 --> 00:12:54,720
Speaker 2: for a number of years just to get my snowball

227
00:12:54,840 --> 00:12:58,080
Speaker 2: kind of rolling. So the I guess the long way

228
00:12:58,120 --> 00:13:02,160
Speaker 2: to answer your question is is people need to create

229
00:13:02,200 --> 00:13:06,160
Speaker 2: a budget and track their money and see what they

230
00:13:06,200 --> 00:13:07,320
Speaker 2: actually can do.

231
00:13:07,480 --> 00:13:07,720
Speaker 1: Right.

232
00:13:08,320 --> 00:13:10,160
Speaker 2: It's easy to say, all right, I'm gonna save twenty

233
00:13:10,200 --> 00:13:13,439
Speaker 2: five percent, but if you don't know that you can

234
00:13:13,520 --> 00:13:16,319
Speaker 2: do it, you're kind of setting yourself up for failure.

235
00:13:16,840 --> 00:13:18,640
Speaker 2: So when you set up a budget, you can say,

236
00:13:18,640 --> 00:13:21,680
Speaker 2: holy crap, like I'm spending so much money on these

237
00:13:21,679 --> 00:13:24,520
Speaker 2: subscriptions that I forgot I even have I don't need.

238
00:13:24,559 --> 00:13:28,160
Speaker 2: This turns out I can actually save thirty percent. Right,

239
00:13:28,440 --> 00:13:31,600
Speaker 2: you don't know that stuff until you're going through the process.

240
00:13:32,200 --> 00:13:35,800
Speaker 2: So long way to answer your question is fifteen percent

241
00:13:35,840 --> 00:13:39,360
Speaker 2: I think is probably a base. The higher you go,

242
00:13:40,000 --> 00:13:43,160
Speaker 2: the better it is. The higher you go the sooner

243
00:13:43,200 --> 00:13:46,040
Speaker 2: in life, the less you have to do later in life.

244
00:13:46,520 --> 00:13:50,079
Speaker 2: It's kind of how it works. Everyone's situation is different.

245
00:13:50,160 --> 00:13:52,880
Speaker 2: Some people have families earlier in life, so they can't

246
00:13:52,920 --> 00:13:56,520
Speaker 2: save as much, and that's okay. It's knowing how much

247
00:13:56,520 --> 00:13:58,480
Speaker 2: you can save and starting the process.

248
00:13:59,360 --> 00:14:01,800
Speaker 3: Yeah, that's an excellent point, and it kind of perfectly

249
00:14:01,800 --> 00:14:04,080
Speaker 3: transitions into the next question that I have for you.

250
00:14:05,120 --> 00:14:09,360
Speaker 3: How much should we have stashed away, you know, for retirement?

251
00:14:09,480 --> 00:14:11,400
Speaker 3: What should be the goal? Like, at what point should

252
00:14:11,400 --> 00:14:13,480
Speaker 3: we say? Okay, I think we can start thinking about

253
00:14:13,480 --> 00:14:13,959
Speaker 3: this now.

254
00:14:14,520 --> 00:14:17,360
Speaker 2: The rule of thumb is you're going to need around

255
00:14:17,400 --> 00:14:21,040
Speaker 2: eighty percent of your expenses a year, plus or minus,

256
00:14:21,040 --> 00:14:23,200
Speaker 2: depending on the type of life you want you want

257
00:14:23,200 --> 00:14:26,720
Speaker 2: to live. So there are tools out there, like, for example,

258
00:14:26,760 --> 00:14:28,920
Speaker 2: I use Vanguard a lot. They have a lot of

259
00:14:29,000 --> 00:14:33,720
Speaker 2: free investor tools. Every dollar I spend I throw into

260
00:14:34,040 --> 00:14:37,320
Speaker 2: like a calculator and it'll say, okay, is this the

261
00:14:37,360 --> 00:14:40,080
Speaker 2: quality of life you want to maintain? Well, yeah, I

262
00:14:40,120 --> 00:14:43,000
Speaker 2: love my quality life right now, so yes, let's do that, right.

263
00:14:43,560 --> 00:14:43,880
Speaker 1: Cool.

264
00:14:44,120 --> 00:14:46,120
Speaker 2: It spits out a number and says, here's what you're

265
00:14:46,160 --> 00:14:49,520
Speaker 2: going to need each year to maintain this quality of life.

266
00:14:50,200 --> 00:14:54,400
Speaker 2: It factors in medical expenses, it's averages, right, stuff like that,

267
00:14:54,680 --> 00:14:56,760
Speaker 2: And then it'll say, okay, so this here's the number

268
00:14:57,360 --> 00:15:00,040
Speaker 2: that you're going to need to retire. And so so

269
00:15:01,000 --> 00:15:05,160
Speaker 2: once you have that figure, you have something to work towards.

270
00:15:08,360 --> 00:15:11,280
Speaker 1: Grown up stuff. How to Adult will be back after

271
00:15:11,320 --> 00:15:23,640
Speaker 1: a quick break. Welcome back to grown up stuff How

272
00:15:23,640 --> 00:15:24,160
Speaker 1: to Adult?

273
00:15:27,200 --> 00:15:31,200
Speaker 3: Okay, So, a retirement account is different from a traditional

274
00:15:31,240 --> 00:15:33,280
Speaker 3: savings account that you open at a bank because it

275
00:15:33,360 --> 00:15:36,960
Speaker 3: actually invests your money and grows it, unlike a savings account,

276
00:15:37,000 --> 00:15:40,560
Speaker 3: which just accrues minimal interest over time. A retirement account

277
00:15:40,640 --> 00:15:43,480
Speaker 3: is then different from your standard brokerage account that also

278
00:15:43,600 --> 00:15:47,200
Speaker 3: invests your money because there are various tax benefits associated

279
00:15:47,240 --> 00:15:51,480
Speaker 3: with the retirement account. But not all retirement accounts are alike,

280
00:15:51,760 --> 00:15:53,680
Speaker 3: and there are lots of different kinds in which you

281
00:15:53,680 --> 00:15:56,520
Speaker 3: can put your money, each with its own benefit. According

282
00:15:56,560 --> 00:15:59,200
Speaker 3: to Jonah, the smartest move is to diversify the types

283
00:15:59,240 --> 00:16:03,320
Speaker 3: of retirement accoun you have. How does it work once

284
00:16:03,680 --> 00:16:06,920
Speaker 3: we are retired? Is there a rule on you know,

285
00:16:07,120 --> 00:16:09,640
Speaker 3: when you can take money out? Is it a certain amount?

286
00:16:09,680 --> 00:16:10,640
Speaker 3: Is it a certain age?

287
00:16:10,680 --> 00:16:10,760
Speaker 4: Like?

288
00:16:10,880 --> 00:16:11,640
Speaker 1: How does it work?

289
00:16:12,160 --> 00:16:15,840
Speaker 2: So let's fast forward twenty eight years from now and

290
00:16:15,920 --> 00:16:20,120
Speaker 2: I'm sixty. If I follow all of the financial advice

291
00:16:20,160 --> 00:16:23,560
Speaker 2: that's out there, I would have a handful of different

292
00:16:23,560 --> 00:16:27,920
Speaker 2: accounts because you have different structures and different advantages. So,

293
00:16:28,160 --> 00:16:33,680
Speaker 2: for example, a roth IRA is money I put in

294
00:16:34,400 --> 00:16:39,120
Speaker 2: like today that is post tax, and so it accumulates

295
00:16:39,920 --> 00:16:41,680
Speaker 2: until I get to that age limit, and then I

296
00:16:41,720 --> 00:16:43,920
Speaker 2: can pull it out. And when I pull it out,

297
00:16:44,320 --> 00:16:48,360
Speaker 2: I pay zero taxes. So I could actually retire early

298
00:16:48,400 --> 00:16:50,600
Speaker 2: if I wanted to, and I could just live off

299
00:16:50,640 --> 00:16:53,080
Speaker 2: of that account because I don't have to pay the government.

300
00:16:53,520 --> 00:16:55,760
Speaker 2: So whatever I pull out of that account, I get today,

301
00:16:56,000 --> 00:16:58,000
Speaker 2: and I can coast until I get to that next

302
00:16:58,040 --> 00:17:00,000
Speaker 2: age limit that I have to hit for my four WAK.

303
00:17:00,720 --> 00:17:04,600
Speaker 2: So you want to have different accounts for different tax

304
00:17:04,600 --> 00:17:07,879
Speaker 2: advantages in different timings. You don't want to put all

305
00:17:07,880 --> 00:17:10,280
Speaker 2: your eggs in one basket because say you have an

306
00:17:10,280 --> 00:17:13,119
Speaker 2: accident at work, or you don't want to deal with

307
00:17:13,160 --> 00:17:17,119
Speaker 2: the stress or family issues and you just can't do

308
00:17:17,280 --> 00:17:20,720
Speaker 2: that job. Okay, But then I can't tap my four

309
00:17:20,720 --> 00:17:23,480
Speaker 2: to one K cause I haven't hit that age requirement yet,

310
00:17:23,560 --> 00:17:26,679
Speaker 2: so I get penalized when I pull money out. So

311
00:17:27,200 --> 00:17:32,520
Speaker 2: you want different types of retirement accounts for a tax diversification,

312
00:17:33,040 --> 00:17:37,640
Speaker 2: but b it gives you more flexibility, which really equates

313
00:17:37,720 --> 00:17:40,719
Speaker 2: to more financial freedom when you get closer to that

314
00:17:40,880 --> 00:17:42,040
Speaker 2: retirement age.

315
00:17:42,600 --> 00:17:45,359
Speaker 3: I think this is something really important because to be honest, like,

316
00:17:45,840 --> 00:17:48,080
Speaker 3: this is something that I have never thought about, and

317
00:17:48,119 --> 00:17:50,800
Speaker 3: I'm sure a lot of the people listening are like, well,

318
00:17:50,840 --> 00:17:52,639
Speaker 3: I have my four oh one K through work and

319
00:17:52,880 --> 00:17:55,639
Speaker 3: that's all I need. This is a great recommendation, is

320
00:17:55,680 --> 00:17:58,440
Speaker 3: that they should probably start also investing on the side

321
00:17:58,520 --> 00:18:03,000
Speaker 3: in like an IRA. That's what you're saying, exactly, what

322
00:18:03,040 --> 00:18:05,520
Speaker 3: do you recommend when we do leave a job where

323
00:18:05,560 --> 00:18:07,119
Speaker 3: we have a four to oh one K or a

324
00:18:07,160 --> 00:18:09,240
Speaker 3: four or three B and we start a new job

325
00:18:09,320 --> 00:18:11,520
Speaker 3: at a different company with a four to h one

326
00:18:11,640 --> 00:18:14,280
Speaker 3: K account, how do we go about making sure we

327
00:18:14,280 --> 00:18:17,200
Speaker 3: don't lose track of that money that we already started with.

328
00:18:18,320 --> 00:18:22,120
Speaker 2: So, first of all, that is your money. You don't

329
00:18:22,200 --> 00:18:24,720
Speaker 2: want to lose track of it. So there's a couple

330
00:18:24,720 --> 00:18:28,240
Speaker 2: of options that you have. You have option one, which

331
00:18:28,280 --> 00:18:34,159
Speaker 2: is leaving it with your now former employer. Option two

332
00:18:34,359 --> 00:18:37,320
Speaker 2: is you can roll it over. Let's say you have

333
00:18:37,359 --> 00:18:39,919
Speaker 2: a new employer they also offer you a four oh

334
00:18:39,960 --> 00:18:43,679
Speaker 2: and K or whatever it is. Option three would be

335
00:18:43,960 --> 00:18:48,439
Speaker 2: to roll it over into your own IRA. So you

336
00:18:48,520 --> 00:18:52,000
Speaker 2: might have one that already exists, or you might open

337
00:18:52,080 --> 00:18:55,960
Speaker 2: up anyone. So those are the three options. The biggest

338
00:18:55,960 --> 00:19:00,320
Speaker 2: deciding factor in what to do between those three is

339
00:19:01,040 --> 00:19:05,760
Speaker 2: what can you invest in? Depending on who the employer is,

340
00:19:05,960 --> 00:19:10,040
Speaker 2: their program might have a limited selection of investment options.

341
00:19:10,720 --> 00:19:13,119
Speaker 2: So if you know what you want to invest in,

342
00:19:13,480 --> 00:19:15,359
Speaker 2: or you have a preference in what you want to

343
00:19:15,359 --> 00:19:18,919
Speaker 2: invest in, and one of those options gives that to you,

344
00:19:19,200 --> 00:19:21,400
Speaker 2: then go with that option. I'll give you a real

345
00:19:21,440 --> 00:19:27,879
Speaker 2: life example. My partner was working and their program was

346
00:19:27,920 --> 00:19:30,560
Speaker 2: with Fidelity, and then she left that job and got

347
00:19:30,600 --> 00:19:34,000
Speaker 2: a different job and they work with Vanguard, And so

348
00:19:34,520 --> 00:19:36,359
Speaker 2: she came to me and said, what do I do?

349
00:19:37,280 --> 00:19:40,440
Speaker 2: And I looked at the funds that she was invested

350
00:19:40,480 --> 00:19:43,080
Speaker 2: in at Fidelity, and then I looked at the funds

351
00:19:43,119 --> 00:19:46,480
Speaker 2: that she would invest at Vanguard, and it looked like

352
00:19:46,680 --> 00:19:50,480
Speaker 2: it was five times more expensive for her to invest

353
00:19:50,520 --> 00:19:53,240
Speaker 2: in the Fidelity funds than the Vanguard funds, but the

354
00:19:53,280 --> 00:19:58,840
Speaker 2: return was the same. So why pay five times the

355
00:19:58,880 --> 00:20:03,520
Speaker 2: cost of something to get the same results. So that

356
00:20:03,680 --> 00:20:06,119
Speaker 2: was an easy one. We rolled over her for a

357
00:20:06,160 --> 00:20:11,440
Speaker 2: one K plan from her old employer to her new employer.

358
00:20:12,000 --> 00:20:14,240
Speaker 2: If her new employer didn't have one, or her new

359
00:20:14,240 --> 00:20:18,160
Speaker 2: employer had a worse option, then the third option would

360
00:20:18,200 --> 00:20:20,679
Speaker 2: have maybe made sense, which was to just open up

361
00:20:20,680 --> 00:20:24,160
Speaker 2: her own IRA and then roll it over there. And

362
00:20:24,240 --> 00:20:28,040
Speaker 2: so if your old employer is giving you an option

363
00:20:28,160 --> 00:20:32,960
Speaker 2: to invest in some pretty mediocre funds that get a

364
00:20:33,040 --> 00:20:36,480
Speaker 2: decent return, but they have a really high cost, like

365
00:20:36,480 --> 00:20:40,360
Speaker 2: a high management fee, why do that when you can

366
00:20:40,400 --> 00:20:44,159
Speaker 2: go to the new employer account where the returns are

367
00:20:44,200 --> 00:20:48,080
Speaker 2: higher and the cost is lower. And so again it's

368
00:20:48,119 --> 00:20:51,399
Speaker 2: a no brainer. The difference is that it's not convenient, right.

369
00:20:51,440 --> 00:20:53,240
Speaker 3: You got to you got to put some you got

370
00:20:53,240 --> 00:20:54,399
Speaker 3: to do your homework.

371
00:20:54,119 --> 00:20:56,000
Speaker 2: You gotta put Yeah, you got to put some legwork

372
00:20:56,040 --> 00:20:59,560
Speaker 2: into operationally moving the money around. But when you know

373
00:20:59,600 --> 00:21:02,680
Speaker 2: you're going to to save five times costs, I think

374
00:21:02,680 --> 00:21:04,120
Speaker 2: you'd be pretty stoked about it.

375
00:21:08,760 --> 00:21:11,879
Speaker 3: You mentioned that there's a penalty with taking things out

376
00:21:11,920 --> 00:21:14,240
Speaker 3: of your four oh one K early. Are there any

377
00:21:14,280 --> 00:21:18,000
Speaker 3: other extenuating circumstances in any of these retirement or you know,

378
00:21:18,080 --> 00:21:21,240
Speaker 3: these types of funds that allow you to take out

379
00:21:21,720 --> 00:21:25,800
Speaker 3: your money early, like for example, say buying a house.

380
00:21:26,600 --> 00:21:29,399
Speaker 2: Short answer is yes, And the reason is you want

381
00:21:29,520 --> 00:21:32,000
Speaker 2: the ability to draw an accounts at different times in

382
00:21:32,040 --> 00:21:35,879
Speaker 2: your life. For example, you come to a point where

383
00:21:35,920 --> 00:21:39,440
Speaker 2: you want to buy a house and you may say, oh,

384
00:21:39,960 --> 00:21:43,600
Speaker 2: I've just put so much money into my retirement accounts

385
00:21:43,800 --> 00:21:47,840
Speaker 2: and I can't touch them. Well, that's not entirely true.

386
00:21:48,240 --> 00:21:50,800
Speaker 2: Depending on the type of account and the structure of it,

387
00:21:51,480 --> 00:21:54,040
Speaker 2: you may have some advantages, and a roth ira is

388
00:21:54,080 --> 00:21:57,280
Speaker 2: an example of one, because any money you put in

389
00:21:57,480 --> 00:22:00,879
Speaker 2: as a contribution, you can pull that out free. And

390
00:22:00,920 --> 00:22:03,000
Speaker 2: it makes sense, right because that money you put in,

391
00:22:03,040 --> 00:22:05,840
Speaker 2: you already paid taxes to begin with. They can't be

392
00:22:05,920 --> 00:22:09,040
Speaker 2: double taxing you, right, So as long as you're only

393
00:22:09,040 --> 00:22:13,399
Speaker 2: pulling out what you put in, that's your cash. So

394
00:22:14,320 --> 00:22:18,800
Speaker 2: there's a down payment, and any of the earnings or

395
00:22:18,840 --> 00:22:22,479
Speaker 2: the dividends or interests that you received over those ten years,

396
00:22:22,760 --> 00:22:25,160
Speaker 2: don't touch it, leave it in the account. And that's

397
00:22:25,160 --> 00:22:28,919
Speaker 2: also accumulating for retirement, so you don't get penalized in

398
00:22:28,920 --> 00:22:32,520
Speaker 2: that case. Whereas let's say you're one of those people

399
00:22:32,560 --> 00:22:35,159
Speaker 2: who only has a four to oh one K. Well,

400
00:22:35,200 --> 00:22:37,480
Speaker 2: if you only have a four to one K, you

401
00:22:37,640 --> 00:22:39,640
Speaker 2: come along this path and you're like, oh, I need

402
00:22:39,680 --> 00:22:43,199
Speaker 2: money for a down payment, Well you're going to be

403
00:22:43,200 --> 00:22:46,080
Speaker 2: in a bit of a tough situation because if that's

404
00:22:46,080 --> 00:22:49,920
Speaker 2: your only source of money, you need to take money

405
00:22:49,920 --> 00:22:51,800
Speaker 2: out before the age limit, and you get a ten

406
00:22:51,840 --> 00:22:54,840
Speaker 2: percent penalty tax on top of the taxes you're going

407
00:22:54,880 --> 00:22:55,320
Speaker 2: to pay on it.

408
00:22:55,359 --> 00:23:02,639
Speaker 3: Already, this has been so enlightening and incredibly helpful. But

409
00:23:02,720 --> 00:23:04,679
Speaker 3: before I let you go, do you have any final

410
00:23:04,800 --> 00:23:07,960
Speaker 3: parting wisdom about retirement planning or even just how we

411
00:23:08,000 --> 00:23:10,479
Speaker 3: should be thinking about planning for our financial future.

412
00:23:11,560 --> 00:23:16,600
Speaker 2: If you try to do financial things based on convenience,

413
00:23:17,800 --> 00:23:21,600
Speaker 2: I wouldn't recommend it, because it's because it's when you

414
00:23:21,640 --> 00:23:27,879
Speaker 2: put the legwork in you differentiate yourself personal finance. Because

415
00:23:27,920 --> 00:23:30,840
Speaker 2: it's not very tangible and it's so far into the future,

416
00:23:31,400 --> 00:23:33,680
Speaker 2: people kind of don't bother with it. I'll give you

417
00:23:33,720 --> 00:23:37,719
Speaker 2: an example, Vanguard. You can give them your budget, how

418
00:23:37,800 --> 00:23:41,160
Speaker 2: much you plan to save, and they run that through

419
00:23:41,200 --> 00:23:46,000
Speaker 2: ten thousand different market scenarios. So it's pretty good and

420
00:23:46,040 --> 00:23:47,879
Speaker 2: it'll tell you like, here's what you're going to have

421
00:23:47,920 --> 00:23:49,200
Speaker 2: in this year and this year and this year and

422
00:23:49,240 --> 00:23:51,040
Speaker 2: this year. And I've been using them for like ten

423
00:23:51,119 --> 00:23:54,280
Speaker 2: years now, and they're pretty close. If I look back

424
00:23:54,320 --> 00:23:56,440
Speaker 2: to each of these last ten years, they were very

425
00:23:56,560 --> 00:23:59,800
Speaker 2: very good at forecasting where we were going to be.

426
00:24:00,359 --> 00:24:02,000
Speaker 2: I can look thirty years down the road and see

427
00:24:02,040 --> 00:24:06,080
Speaker 2: where I'm going to be. I mean that's like, that's empowering.

428
00:24:11,920 --> 00:24:14,800
Speaker 3: Okay, So here are some of the major takeaways that

429
00:24:14,840 --> 00:24:19,040
Speaker 3: we have learned today. First, start early. It's going to

430
00:24:19,080 --> 00:24:20,960
Speaker 3: help you in the long run. And even if you

431
00:24:21,000 --> 00:24:23,000
Speaker 3: start with just a small amount that you're putting away

432
00:24:23,000 --> 00:24:25,520
Speaker 3: for retirement every day in your twenties, it's going to

433
00:24:25,600 --> 00:24:27,320
Speaker 3: mean that there's a lot less you have to do

434
00:24:27,400 --> 00:24:30,359
Speaker 3: later on in life in your forties, fifties, and even sixties.

435
00:24:30,720 --> 00:24:34,520
Speaker 3: So even if it's a small amount, start now. We

436
00:24:34,680 --> 00:24:38,000
Speaker 3: also learned that we want to diversify. It's super important

437
00:24:38,000 --> 00:24:41,040
Speaker 3: to have more than one type of retirement account, So

438
00:24:41,160 --> 00:24:42,840
Speaker 3: even if you already have a four to oh one

439
00:24:42,920 --> 00:24:46,439
Speaker 3: K set up with your company, consider opening a roth ira,

440
00:24:46,680 --> 00:24:50,199
Speaker 3: which has different tax benefits. We also learned about matching,

441
00:24:50,359 --> 00:24:52,879
Speaker 3: and that's when your company basically gives you free money

442
00:24:52,920 --> 00:24:55,520
Speaker 3: to retire. So if you have a matching program for

443
00:24:55,560 --> 00:24:58,040
Speaker 3: your four ROH one K, make sure you're taking advantage

444
00:24:58,080 --> 00:25:01,000
Speaker 3: of it. Don't leave that money on the table. And finally,

445
00:25:01,080 --> 00:25:04,040
Speaker 3: do your homework and make sure you're setting up a budget.

446
00:25:04,280 --> 00:25:06,800
Speaker 3: Seek out free financial planning tools. Those are a great

447
00:25:06,840 --> 00:25:11,480
Speaker 3: way to start figuring out how much you should be saving. Now. Well,

448
00:25:11,680 --> 00:25:13,200
Speaker 3: that's all for today's episode.

449
00:25:13,359 --> 00:25:15,800
Speaker 1: Join us again in two weeks as we continue our

450
00:25:15,880 --> 00:25:19,240
Speaker 1: journey becoming better adults and healthier humans, as we learn

451
00:25:19,320 --> 00:25:22,760
Speaker 1: how you can be the perfect guest at your next wedding.

452
00:25:23,040 --> 00:25:24,800
Speaker 3: Thank God, because I think I've been doing a lot

453
00:25:24,880 --> 00:25:28,200
Speaker 3: of things wrong, starting with returning oursup cards super late

454
00:25:28,640 --> 00:25:31,080
Speaker 3: and buying things off the registry. Can I do that?

455
00:25:31,160 --> 00:25:31,639
Speaker 3: I don't know.

456
00:25:32,040 --> 00:25:34,440
Speaker 1: At least you've been getting people gifts. I've been going

457
00:25:34,440 --> 00:25:37,040
Speaker 1: around telling my friends that my presence as a present.

458
00:25:37,240 --> 00:25:39,639
Speaker 1: Have I been an asshole this whole time? We'll find

459
00:25:39,680 --> 00:25:42,959
Speaker 1: out in two weeks on grown up stuff, How to Adult.

460
00:25:44,480 --> 00:25:46,280
Speaker 3: This is a production from iHeartRadio.

461
00:25:46,520 --> 00:25:48,560
Speaker 1: Our executive producers are Molli.

462
00:25:48,400 --> 00:25:51,840
Speaker 3: Soosha and Matt Stillo. This episode was engineered by Matt

463
00:25:51,880 --> 00:25:52,640
Speaker 3: Stillo and.

464
00:25:52,680 --> 00:25:56,480
Speaker 1: Written by Molly Sosha. Special thanks to the Ruby team

465
00:25:56,560 --> 00:26:01,960
Speaker 1: at iHeart, including Ethan Fixel, Rachel swankras of Amber Smith, Nikkiathswinton,

466
00:26:02,200 --> 00:26:09,960
Speaker 1: Sierra Kaiser, Sierra Spreen, and Andy Kelly