Speaker 1: Episode two ninety one, What to Do if you have
Speaker 1: nothing saved for retirement. Welcome to the Frugal Friends podcast,
Speaker 1: where you'll learn to save money, embrace simplicity, rice, and
Speaker 1: liver with your life. Here are your host Jen and
Speaker 1: Jill oo oo. Welcome to the Frugal Friends podcast. My
Speaker 1: name is Jen, my name is Jill, and today we
Speaker 1: are talking to everyone, young, old, everybody that includes everyone. Yes,
Speaker 1: you are young at heart or old at heart, doesn't
Speaker 1: matter your age. We are talking to you if you
Speaker 1: have nothing saved or very little save for retirement, or
Speaker 1: if you feel like you're kind of starting late. We're
Speaker 1: gonna kind of talk about all the things. Yeah, we're
Speaker 1: gonna give you some practical tips, some encouragement, a little
Speaker 1: tough love. If I can say that, I don't want
Speaker 1: to say it's tough, but I think you with anything positive,
Speaker 1: we need to have some realization of the stakes that
Speaker 1: are up for losing if we don't take action. But
Speaker 1: the great thing about this is is that even if
Speaker 1: you feel like you're starting late, every little action counts.
Speaker 1: So there's nothing you holding you back but you and
Speaker 1: we are going to, hopefully by the end of this episode,
Speaker 1: give you the encouragement, so you believe that too, and
Speaker 1: we're here with you because we're talking to ourselves and
Speaker 1: this as well. We all need reminders about retirement and
Speaker 1: what to be keeping our sights on because it's not
Speaker 1: something we think about all day every day. Of course,
Speaker 1: that depends on where we're at in life, but it
Speaker 1: is a reminder that we often need to be focusing on.
Speaker 1: And do I have the things set up? Am I
Speaker 1: going to look back with some version of regret wishing
Speaker 1: I had made the most of this time? So we're
Speaker 1: going to talk about how to do that. Yeah. But first,
Speaker 1: this episode is brought to you by The Spending Makeover.
Speaker 1: It's a three day challenge foe free that we are
Speaker 1: going to give you so that if you don't have
Speaker 1: anything saved for retirement, you can get on the path
Speaker 1: to controlling some of that impulse spending that you think
Speaker 1: may be keeping you from having extra margin to invest
Speaker 1: and save. So if you feel like that is something
Speaker 1: you struggle with, which I think a lot of us do,
Speaker 1: then head to Frugal Friends podcast dot com Slash Makeover
Speaker 1: and get that free three day challenge with three videos
Speaker 1: a workbook, and it's really going to guide you through
Speaker 1: taking control of your discretionary spending. Do it? It's so fun? Yes,
Speaker 1: all right. So if you are getting serious about saving
Speaker 1: for retirement, then we have a lot of a lot
Speaker 1: of investing and retirement episodes. We use the words interchangeably
Speaker 1: because everybody kind of recognizes retirement, but retirements not something
Speaker 1: that's at the top of your mind. It's something that's
Speaker 1: usually pretty far away until one five year period of
Speaker 1: your life. So we use that word because everyone understands it,
Speaker 1: but we also use the word investing, and we kind
Speaker 1: of use them interchangeably. Sometimes we'll say saving for retirement
Speaker 1: when we really mean investing for retirement, just because saving
Speaker 1: is a more accessible word. But what we really mean
Speaker 1: is investing. And so anytime we talk about investing, we
Speaker 1: don't talk about investing to get rich quick to retire
Speaker 1: in your thirties or forties. Like we talk about investing
Speaker 1: as a habit that you build to essentially pay for
Speaker 1: bills and retirement. We definitely don't believe in going all
Speaker 1: out and retiring super super early. So that's kind of
Speaker 1: how we talk about retirement and investing. So if you
Speaker 1: go back into our archives, really any episode that mentions
Speaker 1: retirement or investing is going to be helpful for you.
Speaker 1: Some of them are episode two oh five, how to
Speaker 1: Save for Retirement, which like I said, could be also
Speaker 1: titled how to invest for retirement, or episode ninety four,
Speaker 1: which is Retirement one oh one, and we basically cover
Speaker 1: kind of everything frugal people need to know about saving
Speaker 1: for retirement. But we also have a recent episode with
Speaker 1: Delia and Barrows about understanding your workplace retirement accounts. We
Speaker 1: have our minimalist investing episode, and all of these different
Speaker 1: investing episodes. Don't be afraid of them just because they
Speaker 1: have the word investing in them. They are for you. Yeah,
Speaker 1: and it can be one of those set it and
Speaker 1: forget it things which you'll learn about in those episodes
Speaker 1: if you feel like going back, and we'll chat a
Speaker 1: little bit about that today. But it doesn't have to
Speaker 1: feel I think that's one of the barriers to entry
Speaker 1: for a lot of people is I feel like I
Speaker 1: need to know so much in order to know what
Speaker 1: I'm going to need in my finances and retirement when
Speaker 1: I still feel like I'm figuring it out right now.
Speaker 1: And that doesn't have to limit us or keep us
Speaker 1: from thinking about being kind to ourselves when we're older. Now,
Speaker 1: there's some very easy, accessible things that we can be
Speaker 1: doing that will really help us later in life. Here's
Speaker 1: a story before we get into the articles. Here's a
Speaker 1: story I hope you will find encouraging if you feel
Speaker 1: that way. So, my husband and I both have our
Speaker 1: own individual retirement accounts iras, and I kind of try
Speaker 1: to make mine more I don't know, fancy. I don't
Speaker 1: know if fancies the word. We're very simple. But I
Speaker 1: had different funds where for most of the time, my
Speaker 1: husband was just in a target date fund. That's it,
Speaker 1: just a target date fund, which people will tell you, oh,
Speaker 1: you can do, you can make it yourself, you get
Speaker 1: lower fees, YadA YadA, you can get more aggressive. So
Speaker 1: he was just in the target date fund and I
Speaker 1: was in the more quote unquote optimized fund, and I
Speaker 1: was looking. So we started investing at the end of
Speaker 1: twenty seventeen, basically at the end of the bull market.
Speaker 1: People want to say that it ended in twenty twenty,
Speaker 1: but it actually actually ended in twenty eighteen, and not officially.
Speaker 1: But if you look at returns, twenty eighteen was not
Speaker 1: the year you wanted to get started investing. It was
Speaker 1: a flat line year, and so we started in twenty
Speaker 1: eighteen December of twenty seventeen, and our return for five years,
Speaker 1: even with that flat first year, the twenty twenty stuff,
Speaker 1: the twenty twenty two stuff where everyone lost, we still gained.
Speaker 1: But Travis, with his quote unquote like unsophisticated, you know,
Speaker 1: just target date fund, he beat me by a percentage
Speaker 1: point on overall return. Right, So, so don't do not
Speaker 1: be scared about the types of like investing itself. A
Speaker 1: very simple portfolio can yield more than an optimized one
Speaker 1: theoretically simplicity. Love it. Yeah, so let us get into
Speaker 1: this first article on what happens when you don't say
Speaker 1: for retirement from one of my favorite websites, Investipedia, a
Speaker 1: cautionary tale. There were a lot of options that we
Speaker 1: could have gone with on the internet when what's going
Speaker 1: to happen to me if I don't say for retirement
Speaker 1: we were search We went with the not as harsh
Speaker 1: of an article with Investipedia and some helpful cautionary tales
Speaker 1: for us of what we could be looking at. Not
Speaker 1: being too doom and gloom either. I mean, there is
Speaker 1: just a reality to this and even the best laid
Speaker 1: plans could lead to some shifts that need to happen
Speaker 1: in retirement. So I kind of walk away with this
Speaker 1: with some level of encouragement of like, Okay, it can
Speaker 1: get figured out, even if you start later in life,
Speaker 1: even if you don't have any savings right now. But
Speaker 1: to be able to look at the reality of, Okay,
Speaker 1: this is what my life, my financial situation might look
Speaker 1: like if I don't say for retirement, and is this
Speaker 1: the reality that I want for myself or are there
Speaker 1: shifts I can be making? So it's it I think
Speaker 1: is worth going through. What they're listing out in this
Speaker 1: article is what happened for people who don't save for retirement,
Speaker 1: just to have an understanding to kind of put some
Speaker 1: motivation or fire under us to say, yeah, let's make
Speaker 1: some shifts, let's do some things right now, because I
Speaker 1: think many of us need to hear that. I think
Speaker 1: for many of us, what do they say, Almost half
Speaker 1: of Americans don't have a retirement saving So chances are
Speaker 1: that's a lot of us listening in. Or if we
Speaker 1: do have retirement savings or investment accounts, maybe we're not
Speaker 1: doing the most that we could be with them. So
Speaker 1: the first thing that they list of what can happen
Speaker 1: is that we might solely live on social Security if
Speaker 1: we don't have any savings or investment accounts for retirement.
Speaker 1: A lot of times that means people's plans are to
Speaker 1: live on social Security. What it means is they need
Speaker 1: to find a way to live off of social Security.
Speaker 1: But the thing about social security is that it's usually
Speaker 1: about forty percent of you like the income that you
Speaker 1: typically were used to making. It's like and there's definitely
Speaker 1: ways to maximize how much you take out of social Security.
Speaker 1: Those who are close to this stage of life know
Speaker 1: what that is. You know the age that you start
Speaker 1: pulling from social Security. But essentially social Security is best
Speaker 1: as a an additional income, like an additional piece of
Speaker 1: money that comes in, not what you could solely live
Speaker 1: off of. It usually represents not enough to pay for
Speaker 1: your mortgage if you still have it bills, even if
Speaker 1: you want to do some fun things in your retirement age.
Speaker 1: It's not a great plan, but that is what most
Speaker 1: people will then try to lean on and fall back on. Yeah,
Speaker 1: you're going to have to plan to start withdrawing as
Speaker 1: late as possible, so when you are seventy, I think
Speaker 1: it is you're going to want to plan to do
Speaker 1: it then. But again we've talked about this before, is
Speaker 1: that the average age Americans say they want to retire
Speaker 1: is sixty seven, and the average retirement age is sixty three.
Speaker 1: But you're going to have to plan to work till seventy,
Speaker 1: but you don't know if you're going to make it there,
Speaker 1: so you still need to do other things to supplement that.
Speaker 1: So they recommend you might need to downsize your lifestyle,
Speaker 1: which is one hundred percent. Most people do this anyway,
Speaker 1: even if they have saved, so this, I feel is
Speaker 1: maybe a redundant recommendation, but downsizing your home into something smaller,
Speaker 1: which can be just fantastic anyway if you don't have
Speaker 1: a bunch of children running around, and then maybe going
Speaker 1: down to a smaller car that takes less gas, that
Speaker 1: is more reliable, and then just kind of downsizing all
Speaker 1: of the subscriptions and all of that things. So if
Speaker 1: you haven't thought about all of those, because everyone kind
Speaker 1: of thinks about downsizing their home, but there's a lot
Speaker 1: of other things to downsize, Definitely go get our spending
Speaker 1: Makeover Trugle Friends Podcast dot com slash makeover because we're
Speaker 1: going to give you space and guidance on how to
Speaker 1: take an inventory of all those things and then from
Speaker 1: there figure out what you can downsize, which, yeah, again
Speaker 1: that could be possible for anyone in retirement, but it's
Speaker 1: not so great when that's not what you wanted to do,
Speaker 1: or you need to downsize as a result of not
Speaker 1: having saved, or you need to cut things that you
Speaker 1: wouldn't have otherwise wanted to cut just to make it work.
Speaker 1: So while there's kind of two sides, I think to
Speaker 1: look at that downsizing piece of yeah, plan for it.
Speaker 1: That can be great. It's a great kind of frugal solution,
Speaker 1: but it is also a reason to be investing for
Speaker 1: retirement because if you're forced to downsize as a result
Speaker 1: of not having prepared, that can be a really, really
Speaker 1: tough reality for many. And we hope if you're listening
Speaker 1: to this you still have a little bit of time
Speaker 1: to save. But chances are if this is the episodes
Speaker 1: you chose to listen to, like you just searched it,
Speaker 1: then these are realities for you already. Like this first article,
Speaker 1: these tips are already realities for you. You're going to
Speaker 1: have to pursue them. If you're a regular Frugal Friends
Speaker 1: listener and you're just tuning in, we hope that you've
Speaker 1: already kind of taken some steps and you're hearing this
Speaker 1: early enough to know that these are the stakes you're
Speaker 1: working with. So these are the things that are going
Speaker 1: to be at stake if you don't ramp up to
Speaker 1: the amount of investing that you need. They also list
Speaker 1: that it might be necessary to take on a roommate
Speaker 1: if you still own a home. Many seniors, those in
Speaker 1: retirement age will turn to their homes as a source
Speaker 1: of income. That could mean running out a portion of
Speaker 1: their space as a separate apartment, it could mean just
Speaker 1: an actual other roommate in the home. I would even
Speaker 1: add that I've seen many times older adults needing to
Speaker 1: move in with their adult children, and that's another version
Speaker 1: of having a roommate. If you don't have enough saved
Speaker 1: or invested for retirement. Housing is one of our biggest
Speaker 1: expenses that doesn't stop when we enter into retirement, and
Speaker 1: so be living with somebody else is often a way
Speaker 1: that those who don't have enough money saved will turn
Speaker 1: to to be able to pay the other bills that
Speaker 1: they have. So again, if this is not something that
Speaker 1: you want to be looking at in retirement age, then okay,
Speaker 1: cautionary tale. Otherwise then yeah, you could use it as
Speaker 1: a tip moving with your adult kids, take on a roommate.
Speaker 1: But if that's not something you want, that would be
Speaker 1: a bitter pill to swallow of. Okay, I have to
Speaker 1: share my space now. After all my decades of living life,
Speaker 1: I now have to learn how to have a roommate
Speaker 1: to be able to afford life. And if you listen
Speaker 1: to episode two eighty five where we talked about how
Speaker 1: your parents' finances affect you, and you're listening to this
Speaker 1: and you're like, oh, my goodness, my parents don't have
Speaker 1: anything for retirement and this is what they're dealing with.
Speaker 1: This is a good moment to prepare yourself that this
Speaker 1: may happen to you, even though you have time to
Speaker 1: save for retirement. That's another reason people retire earlier than
Speaker 1: they want to is because they become caregivers for their parents.
Speaker 1: So it's definitely a stake, not just in your saving
Speaker 1: for your retirement, but and if you don't want to
Speaker 1: do this to your children, if you don't want to
Speaker 1: be forced to move in with your children. This is
Speaker 1: a stake that you have to be really aware of,
Speaker 1: is to save enough so that you don't have to
Speaker 1: force them to retire before they're ready. I don't know
Speaker 1: I say that's a reason to have kids. I mean,
Speaker 1: it absolutely is a reason to have kids. They owe you.
Speaker 1: You provided for them in their time of need, and
Speaker 1: they owe you provision in your time of nis. Why
Speaker 1: am identifying one to two of my nieces and nephews
Speaker 1: to really invest in their lives so that later on
Speaker 1: they'll take care of me. Yeah, you don't have any
Speaker 1: kids in my own, so one or two of my
Speaker 1: nieces or nephews better pan out for us. I hope
Speaker 1: you're not thinking Jack's gonna do it. Jack, it's not
Speaker 1: the four year old growls at people. He's not going
Speaker 1: to care for me. Who literally growled at my son
Speaker 1: yesterday And I thought he was just making monster truck noises. No,
Speaker 1: that would be what you would think as like the
Speaker 1: mom of a very sweet boy, like they're making monster
Speaker 1: truck was this? But Jack was not even growling. He
Speaker 1: was being a monster. He was very He was a
Speaker 1: very nice monster. Though I totally understood in a very
Speaker 1: big difference between a monster and a monster drop. Yes,
Speaker 1: all right. So the next one is you might have
Speaker 1: to continue working part time, which is actually something a
Speaker 1: lot of people in retirement do just for fun, but
Speaker 1: you're going to have to plan to do it for
Speaker 1: supplementation of the Social Security income. So I think it
Speaker 1: is wise at this point to start thinking about what
Speaker 1: kind of part time work you'd like to do after retirement,
Speaker 1: whether it's consulting in your industry or taking on a
Speaker 1: part time role at the same company or a different field.
Speaker 1: Maybe you hone your skills in a you know, some
Speaker 1: kind of parallel field so that you can work part time.
Speaker 1: It is never too early to start thinking about this
Speaker 1: so that when you do have to work part time
Speaker 1: in retirement, it's something that you at least can semi enjoy.
Speaker 1: So we don't want to like bea we don't want
Speaker 1: you to be miserable, and we're not going to tell
Speaker 1: you to be miserable in retirement just because you have
Speaker 1: to do some things differently. And the final reality that
Speaker 1: they mentioned in this article is that for some retirement
Speaker 1: might not even be on the table. Many people who
Speaker 1: have not saved or invested enough for retirement, or maybe
Speaker 1: aren't willing to completely overhaul their lifestyle, then it just
Speaker 1: might not be an option to really scale back in working,
Speaker 1: and they might need to continue to work full time
Speaker 1: or end as long as possible if there's not enough saved,
Speaker 1: which is that can be fine, and many people choose
Speaker 1: to continue working just because they prefer that lifestyle and
Speaker 1: want to set their hands to something. The pinch can
Speaker 1: come when your life circumstances demand something different, like needing
Speaker 1: to care for anyone in the family, an elderly parent,
Speaker 1: a spouse, an adult child who knows there could be
Speaker 1: things that require caregiving of us or our own medical
Speaker 1: concerns that would keep us from working full time. So
Speaker 1: there are those other additional pieces that need to be considered.
Speaker 1: And I think just the bottom line that they are
Speaker 1: driving home here is that retirement without a plan, without
Speaker 1: some financial nest egg, will require a lot of sacrifices,
Speaker 1: a lot of overhauling, revamping, problem solving, and potentially just
Speaker 1: not being able to have the lifestyle that you may
Speaker 1: have hoped for in your later years, your golden years, yes,
Speaker 1: and they can still be golden. So we've talked about
Speaker 1: what the majority of retirement would look like if you
Speaker 1: are starting very late and have nothing saved. And when
Speaker 1: we say very late, we're talking about like fifties. If
Speaker 1: you want to, you know, retire in your sixties and
Speaker 1: you have nothing saved in your fifties, that's kind of
Speaker 1: what we're saying. It might if you're in your forties,
Speaker 1: you might feel like you're starting late, but you actually
Speaker 1: have like a really good time horizon. So starting now
Speaker 1: can still get you to a really good place. Obviously,
Speaker 1: not any of those sexy projections people talk about when
Speaker 1: people start in their twenties, But I mean, how many
Speaker 1: people really start investing in their twenties there, So we yeah,
Speaker 1: we did start investing in our twenties, but like most
Speaker 1: of the time, it's an accidental like you're automatically signed
Speaker 1: up for your four oh one K. So so our
Speaker 1: next article is from the Balance and it's seven tips
Speaker 1: for saving for retirement if you started late in life.
Speaker 1: And so when we're looking at investing, if you're starting,
Speaker 1: say in your fifties, and you want to retire in
Speaker 1: your sixties or seventy, we're going to look at it different.
Speaker 1: We're not going to look at this money as a
Speaker 1: way to carry you through your full retirement. The first article,
Speaker 1: those tips are going to kind of really carry you
Speaker 1: through retirement, but you are not absolved from saving and
Speaker 1: investing for retirement because probably in the last five years
Speaker 1: of your life, all of that is going to change.
Speaker 1: You're not going to be able to have a roommate
Speaker 1: or live with your kids. You'll probably need some really assisted,
Speaker 1: heavy assisted living care. You're gonna have more medical bills,
Speaker 1: You're not going to be able to work even part time.
Speaker 1: So and this sounds very sad, but this is kind
Speaker 1: of how to prepare. Like you're investing and your savings
Speaker 1: later in life can be put towards those last five
Speaker 1: ish years. That's kind of how you want to look
Speaker 1: at it. And if you're starting at fifty and you're
Speaker 1: maybe investing from fifty to fifty five, then and you
Speaker 1: invest nothing else for the rest of your life and
Speaker 1: you don't use that money until you're gosh, worst case
Speaker 1: scenario seventy five, probably eighty, that money still has twenty
Speaker 1: or twenty five years to grow and compound interest, and
Speaker 1: that your money usually doubles around every ten years, so
Speaker 1: it can still make a lot of growth. If this
Speaker 1: is the way we're looking at that is encouraging. Yeah. Yeah,
Speaker 1: first case scenario, isn't that bad. Yeah, So if you
Speaker 1: are closer to retirement and you're like, it's just too
Speaker 1: late to start investing, it's not. And it's really a
Speaker 1: necessity that you should be doing so that you have
Speaker 1: the quality of life that you want and it's less
Speaker 1: of a burden to any of your familial caretakers later on.
Speaker 1: So that's really what I think we want to have
Speaker 1: that mindset going into this article. Yeah, so this one
Speaker 1: comes from the balance and it goes through different things
Speaker 1: that can be done if we feel like we're starting
Speaker 1: later in life. They are identifying forty as that later
Speaker 1: in life age. A lot of the examples that they
Speaker 1: give our forty, but a lot of these tips apply
Speaker 1: even if you're older. So the first one is to
Speaker 1: play catchup. So you are legally allowed to save nineteen thousand,
Speaker 1: five hundred and a four h one K retirement plan.
Speaker 1: This was in twenty twenty one, so not too much different.
Speaker 1: Now after you turn fifty, you can contribute additional amounts
Speaker 1: sixty five hundred and catch up contributions. That's not a ton,
Speaker 1: but we might as well be taking advantage of those things.
Speaker 1: If that is the age bracket that we find ourselves in. Yeah,
Speaker 1: anything that has a limit has a limit for a reason,
Speaker 1: because it's really good for cosumers and not really good
Speaker 1: for the irs or the government. And so we want
Speaker 1: to take full advantage of anything that has a limit,
Speaker 1: and that includes a four oh one K, or if
Speaker 1: you are not currently offered a four one K, then
Speaker 1: an ira or both if you have the funds too.
Speaker 1: The next is to identify how much savings you need,
Speaker 1: So this one probably should be first, but here we are.
Speaker 1: So again you might tell yourself you don't need a
Speaker 1: million dollars or that you want a simple life, which
Speaker 1: I think is what most of us do tell ourselves.
Speaker 1: And if you're starting later in life, you probably won't
Speaker 1: get to a million dollars. So there you go. But
Speaker 1: in twenty five years you're going to see a lot
Speaker 1: of inflation. I think if you think back twenty five years, gosh,
Speaker 1: if you think about back two years ago and how
Speaker 1: much inflation and that we've seen, like in the eighties,
Speaker 1: with that inflation and just over time, a million dollars
Speaker 1: is this like arbitrary number that we think of as
Speaker 1: a lot, but is becoming like less and less. So
Speaker 1: if you're thinking about it with that mindset, don't think
Speaker 1: more money means like you know is for more like
Speaker 1: bougie people. I think we all need to be investing
Speaker 1: in saving as much as we can, as much as
Speaker 1: our incomes and expenses allow. And if you get to
Speaker 1: a million, cool, you'll probably need it. If you don't, cool,
Speaker 1: we'll figure other stuff out. But you do need to
Speaker 1: identify how much that is. And most experts agree that
Speaker 1: you should withdraw no more than three to four percent
Speaker 1: of your retirement portfolio each year. I think most people
Speaker 1: will say about four percent of your retirement portfolio. Again,
Speaker 1: if you're starting later in life, you're probably going to
Speaker 1: be saving and then just kind of taking it out
Speaker 1: in big swoops near the end of your life. I
Speaker 1: probably would not plan to take out four percent every
Speaker 1: year unless you've been saving for a long time and
Speaker 1: you have that nest egg. So that's that's kind of
Speaker 1: But so if you have a nest egg, if you're
Speaker 1: starting in time to build that, then plan to do
Speaker 1: about four percent of it. So if you do the math,
Speaker 1: three percent of one million is thirty thousand and four
Speaker 1: percent of a million is forty thousand. So if you're
Speaker 1: planning on living on forty thousand dollars a year in retirement,
Speaker 1: then you do need a million dollars, and they do
Speaker 1: reference that's that's assuming it's not accounting for a pension,
Speaker 1: rental properties, or potentially other socials of income during retirement
Speaker 1: social security. So that could be enough if you are
Speaker 1: living modestly and you have some of these other additional
Speaker 1: sources of income. But it really is eye opening, like
Speaker 1: this is the amount of money that needs to be
Speaker 1: saved even to live modestly into retirement. And of course
Speaker 1: that depends on how long you're living. That depends on
Speaker 1: the value of the dollar at that point in life,
Speaker 1: and so if we're decades away from retirement, then for us,
Speaker 1: it probably is more than even that one million that
Speaker 1: we want to be aiming at. Yeah, but definitely at
Speaker 1: least like taken to considerations the tips from the first
Speaker 1: article and how much that will net you, and then
Speaker 1: think of an ideal gap and whatever that is. Just
Speaker 1: try to shoot for that gap at least, whether it's
Speaker 1: a couple hundred thousand dollars, you know, seven hundred and
Speaker 1: fifty thousand, whatever, you can do shoot for it. The
Speaker 1: next tip in here for those of us who might
Speaker 1: be starting a little bit later is to not take
Speaker 1: on more risk than what you are able to, and
Speaker 1: really that's dictated by our age. People in their twenties
Speaker 1: can accept greater losses, so their investments can be a
Speaker 1: little riskier versus people in their forties can accept less risk,
Speaker 1: and still less for people in their fifties. So being
Speaker 1: aware of the level of risk that's in your investment portfolios.
Speaker 1: They give a couple of different asset allocation formulas that
Speaker 1: could be implemented and utilized. A few of them include
Speaker 1: one being invest a percentage of one twenty minus your
Speaker 1: age and stock funds, with the rest going into bond funds.
Speaker 1: This represents a higher but acceptable level of risk. Even
Speaker 1: more moderate risk would be investing a percentage of one
Speaker 1: hundred and ten minus your age and stock funds with
Speaker 1: the rest and bond funds. And then finally, a more
Speaker 1: much more conservative level of risk would be investing the
Speaker 1: percentage equivalent to your age and bond funds with the
Speaker 1: rest going into stock funds. So that can be a
Speaker 1: helpful formula. Obviously, do what's going to make sense for you.
Speaker 1: Just know that less risk the older you get is
Speaker 1: the ultimate formula. But honestly, if that confused you, a
Speaker 1: target date fund is going to self allocate. It's going
Speaker 1: to do it for you in the percentages and grow
Speaker 1: in conservativism the closer you get to retirement. So typically
Speaker 1: they say, if you are going to choose the date
Speaker 1: where you're going to retire, So if I'm going to
Speaker 1: retire at sometime between the age of sixty five and seventy,
Speaker 1: because the target dates there's not one for every year.
Speaker 1: They go every five years, so just whatever year is
Speaker 1: sometime between when you turn sixty five and seventy, choose
Speaker 1: that one. That's if you're if you're using it long term.
Speaker 1: If you're not. If you're going to wait to pull
Speaker 1: any money out until later in retirement, then choose the
Speaker 1: one that is within the year the five years that
Speaker 1: you're going to start, you think you'll start pulling it out.
Speaker 1: So if you want to wait until eighty to start
Speaker 1: pulling it out, then whatever date is between whatever five
Speaker 1: year period is when you turn eighty, choose the I
Speaker 1: choose the later one because they do tend to run
Speaker 1: more conservative the later you get to them. So that's
Speaker 1: how if you, like, if you turn eighty in twenty
Speaker 1: fifty three and you want to, you know, just do
Speaker 1: a target date fund, then the target date fund for
Speaker 1: twenty fifty or twenty fifty five is going to be
Speaker 1: for you. I would I am in twenty fifty five,
Speaker 1: that's not when I turn eighty, but so so yeah,
Speaker 1: target date fund, it will it will allocate in a
Speaker 1: really standard way and it will self rebalance and you
Speaker 1: don't have to worry about it. And it's got, you know,
Speaker 1: if you go with a Vangard or Fidelity or a Schwab,
Speaker 1: really low fees so you don't need to worry about it.
Speaker 1: Simplicity and maintaining It's not about timing the market and
Speaker 1: keeping a pulse on it and checking what's happening every day.
Speaker 1: It's just making a decision one day, setting up automatic
Speaker 1: payments to that, and maintaining it. Yes, that's it, and
Speaker 1: then thanking yourself later. And then remember like my husband
Speaker 1: was in a target date fund and beat my quote
Speaker 1: unquote optimized fund still, I mean just by one percent, yeah,
Speaker 1: but so well done still, and neither of us lost
Speaker 1: money overall, and even in the worst five years of
Speaker 1: investing in our lives. So yeah, and that's just been
Speaker 1: five years. And if we let it, if we let
Speaker 1: that money sit twenty years, then it will grow more.
Speaker 1: I believe you can't predict the stock market, but I
Speaker 1: mean over its history, it goes up into the right
Speaker 1: and that's what we hope will continue to happen, at
Speaker 1: least in the next twenty thirty years. Who knows after that,
Speaker 1: but hopefully that's all you're gonna need to know. So
Speaker 1: the next one is to open a roth ira to
Speaker 1: save more. So it says once you're finished maxing out
Speaker 1: your four oh one K, to open an ira and
Speaker 1: maximize that. I would say everyone needs to have a
Speaker 1: roth Ira or at least some ira, because a lot
Speaker 1: of us don't have four oh one ks or four
Speaker 1: or three b's, etcetera, etcetera available. About forty percent of
Speaker 1: people don't have them available, and even some of the
Speaker 1: ones that do have horrible options and don't need the
Speaker 1: tax benefits like immediately. So while four oh one ks fantastic,
Speaker 1: they're way better than a brokerage for most people. Even
Speaker 1: if you don't need the immediate tax benefits, still having
Speaker 1: a roth ira if you're eligible is great because that's
Speaker 1: got tax benefits down the road. So most people aren't
Speaker 1: going to be able to max out both, especially when
Speaker 1: you get to the age where you can do ketchup
Speaker 1: contributions on both. If you can, that's great. I would
Speaker 1: ask you why haven't you been doing that the whole time?
Speaker 1: But I take rass do what you can head your bets.
Speaker 1: Even if you want to do part, you know, half
Speaker 1: in a pre tax and half in a post tax,
Speaker 1: which is which would be half in a four O
Speaker 1: one k half in a roth ira do that. It's
Speaker 1: really up to you. There's I mean for us and
Speaker 1: for what the purpose of this episode is, Like wet,
Speaker 1: we don't have a recommendation on that. That's really up
Speaker 1: to you how you do it. But I mean, if
Speaker 1: you if you're maxing out a four one k, okay,
Speaker 1: open a rothyra. But if you're not maxing out a
Speaker 1: four one K, open a rothy ar. Anyway, if you're eligible,
Speaker 1: just do it. The next on here is telling us
Speaker 1: to buy adequate insurance, stating that most personal bankruptcies are
Speaker 1: caused by unexpected calamity, and isn't that just the case.
Speaker 1: We don't know what's going to happen in retirement. If
Speaker 1: you could expect calamity, would it be calamity? Right? I
Speaker 1: think that that's so. I mean that's that's an emergency fund.
Speaker 1: That is what savings is for. We don't know what's
Speaker 1: going to happen in retirement. I think it's good to
Speaker 1: plan for the worst while not dwelling on the possibilities
Speaker 1: of the worst. But we won't be so shocked by
Speaker 1: things if we have a contingency plan, if we've thought
Speaker 1: about it and we've put some things into action, it
Speaker 1: really reduces the feeling of something being a calamity. Yeah.
Speaker 1: So we can do this by buying adequate health insurance,
Speaker 1: disability insurance, I mean car insurance. I think you have
Speaker 1: to have car insurance to be driving on the road
Speaker 1: most places. Okay, And these things are really going to help,
Speaker 1: especially if we've got dependence, being able to have life
Speaker 1: insurance set up, so these things can help us and
Speaker 1: be prepared for those calamities. Insurance is another one. We're
Speaker 1: not going to be able to tell you how much
Speaker 1: or what to do because it is so per person.
Speaker 1: This is where the five years before you retire or
Speaker 1: you want to before you want to start with, drying, retiring,
Speaker 1: whatever feels good to you. It is really useful to
Speaker 1: get a financial planner, a certified financial planner that has
Speaker 1: the CFP designation because when you find a CFP, they're
Speaker 1: going to have a fiduciary duty, which is a legal
Speaker 1: ethical responsibility to you, not to the company they work for.
Speaker 1: Because you'll find a lot of financial planners and financial
Speaker 1: advisors from insurance agencies and their best interest is to
Speaker 1: sell you insurance policies, as retirement policies, as retirement accounts.
Speaker 1: You're going to find a lot of money managers working
Speaker 1: for investments that are their best interest is to sell
Speaker 1: you on a particular fund of investments. You know, so
Speaker 1: you want somebody, especially in the five years before you retire,
Speaker 1: who's really going to be working in your best interest.
Speaker 1: You will pay them for that. If you're getting advice
Speaker 1: for free, know that you're paying for it in other ways.
Speaker 1: But you want to pay for advice, and they're going
Speaker 1: to tell you this is the type of insurance you need,
Speaker 1: because if you're starting later in life with saving for retirement,
Speaker 1: you'll probably need more insurance than somebody who is not.
Speaker 1: And so that CFP is going to tell you kind
Speaker 1: of how to head your bets in pre and post
Speaker 1: tax investing. They're going to guide you on insurance. These
Speaker 1: are the things where like we get we get emails
Speaker 1: about this and we're like, we can't answer this for you.
Speaker 1: And even if I, even if I had more information
Speaker 1: about you, I would not answer this for you because
Speaker 1: I'm I don't hold the CFP, I don't hold any
Speaker 1: you know, licenses to do that. So take some savings,
Speaker 1: take some money, pay for a certified financial planner to
Speaker 1: tell you what these things are for you. The next
Speaker 1: one we can tell you, we can give you all
Speaker 1: the advice on this one is to pay down debt.
Speaker 1: And we're talking about high interest debt, high interest car loans,
Speaker 1: high end non mortgage debt. These are the things you're
Speaker 1: going to want to focus on. You may want to
Speaker 1: pay off your mortgage before retirement, but if you have
Speaker 1: nothing invested, a paid off house isn't going to buy
Speaker 1: you food in retirement. That's gonna be money. So you're
Speaker 1: going to need to really be careful with how much
Speaker 1: debt you pay off, even though yeah, you'd like to,
Speaker 1: I'm sure be debt free in retirement. That would be
Speaker 1: a huge weightlifted. But if you have nothing invested, that
Speaker 1: may not be a wise dream. But paying down high
Speaker 1: interest debt pretty much anything. I would say definitely above
Speaker 1: ten percent, ideally above five if you can do it,
Speaker 1: those are the things to focus on, yish. And lastly,
Speaker 1: I love this one. You and your spouse come first.
Speaker 1: So this is a really helpful thing because emotional emotions
Speaker 1: come into play with spending, and especially I think, yeahs,
Speaker 1: so you have kids and grandkids, but reality is, we
Speaker 1: don't want to ruin our retirement savings and investing plan
Speaker 1: if that like, by sending kids to college. I know
Speaker 1: this sounds like a really tough truth here, but it
Speaker 1: would be better if you have to choose between one
Speaker 1: or the other. Right Obviously, if you can do both, fantastic,
Speaker 1: keep contributing to your savings accounts and send your kids
Speaker 1: to college. But at the end of the day, it's
Speaker 1: going to be better for you and your children if
Speaker 1: you continue to contribute to and focus on your retirement
Speaker 1: savings plan then to send your kids to college, because ultimately,
Speaker 1: if you trash your retirement savings by not trying, I
Speaker 1: mean that's what the article says. It's the word for
Speaker 1: your places. But if you kind of interrupt, intersect that
Speaker 1: retire and savings plan and maybe even pull money out
Speaker 1: of it to give to your children, that's then setting
Speaker 1: yourself up to not be in a great place come retirement.
Speaker 1: It may put extra financial burden onto the children to
Speaker 1: be paying for you in retirement or somehow financially responsible
Speaker 1: for you when your children have more time to be
Speaker 1: able to say for themselves in retirement, They've got the
Speaker 1: opportunity in their twenties and thirties to be saving for
Speaker 1: that retirement. They've got the rest of their lives ahead
Speaker 1: of them, versus you, who might be starting later in life,
Speaker 1: really need to be focusing on that retirement versus giving
Speaker 1: all the money to the children. Yeah, here's a really
Speaker 1: easy way to make this decision. Ask your teenager, or
Speaker 1: if your kids are older, just ask them now if they,
Speaker 1: in their adult lives, would rather you pay for their
Speaker 1: college now or if they would rather take care of
Speaker 1: you part time to full time in their home in Yeah,
Speaker 1: in your later years, ask them which one they would
Speaker 1: rather do, and you're going to get the most honest
Speaker 1: answer from a teenager. But I mean, that's really what
Speaker 1: it is. You're either paying for their college now, or
Speaker 1: they're going to spend their time or money taking care
Speaker 1: of you later in life. And so ask them what
Speaker 1: they want to do. Maybe they do want to take
Speaker 1: care of you in your older years, and in which case,
Speaker 1: cool factor that in. But I think most of the
Speaker 1: time they're going to say, I'll take out a student loan.
Speaker 1: The best gift you can give your children is your
Speaker 1: own fine financial or tie or ment security. That's a
Speaker 1: line in the article that she just sang, yeah like
Speaker 1: a jingle. Yeah, it's a jingle. Now it's the best
Speaker 1: gift you can give to your children. And I agree, Yeah,
Speaker 1: in their in their forties and fifties freedom. As an
Speaker 1: adult child, I couldn't agree more absolutely, as an adult
Speaker 1: child who knows I will be a caregiver in my
Speaker 1: forties fifties, I will just believe that out there, wish
Speaker 1: you had received the best I wish somebody had as
Speaker 1: giving that gift to your children. Yeah, you know what
Speaker 1: the best gift is that we can give to our listeners. Yeah,
Speaker 1: and I'm gonna ask you as a teenager or as
Speaker 1: a full grown adult, But I'm only gonna take your
Speaker 1: answer right now. The Bill of the week. That's right,
Speaker 1: it's time for the best minute of your entire week.
Speaker 1: Maybe a baby was born and his name is William.
Speaker 1: Maybe you've paid off your mortgage, maybe your car died,
Speaker 1: and you're happy to not have to pay that bill anymore.
Speaker 1: Bill Buffalo Bills, Bill Clint, this is the bill of
Speaker 1: the week, right, Jen, love your podcast. So I actually
Speaker 1: have a couple of bills of the week. One is
Speaker 1: the bill for the remaining car payment on one of
Speaker 1: our vehicles, as well as the balance for the birth
Speaker 1: center for my son. We actually refinanced those and was
Speaker 1: able to lower what was a ten percent APR and
Speaker 1: an eighteen percent APR to just around eight percent. The
Speaker 1: second bill is the remaining balance for the birth center.
Speaker 1: Kids are expensive, love them to pieces though. I've paid
Speaker 1: it on our Chase credit card and they have the
Speaker 1: my Chase plan, so we're able to for a small fee,
Speaker 1: be able to pay it over a portion of time
Speaker 1: versus leaving it outstanding with the provider and having to
Speaker 1: incur severe interest costs by having the balance just hanging
Speaker 1: out on the credit card. And actually a third bill
Speaker 1: anything else that we have from a medical standpoint, I've
Speaker 1: contacted the providers and asked that we gets it up
Speaker 1: on a payment plan, and I'm able to use my HSA,
Speaker 1: so again, it's not something that we're having to incur
Speaker 1: on our credit cards or anything like that. So a
Speaker 1: lot of moving wheels, but feel really good about the
Speaker 1: ways that we have to take care of those without
Speaker 1: going into your medical debt. So again, love you guys. Thanks,
Speaker 1: that's great. Lowering the interest rate eighteen is very very
Speaker 1: high and it's definitely more manageable. So that's amazing, and
Speaker 1: I hope everybody checks out. We have an episode with
Speaker 1: doctor Virgie on negotiating medical bills. I will find that
Speaker 1: episode tell you what it is you are moving and
Speaker 1: shaken over there, which is awesome. Congratulations the birth of
Speaker 1: your child that is so exciting, and the fact that
Speaker 1: you have a health savings account you're able to utilize that.
Speaker 1: I think just what stands out to me in your
Speaker 1: multiple bills is just kind of knowing the resources that
Speaker 1: are available to you, implementing utilizing them, and making some
Speaker 1: really wise decisions with your finances to get rid of
Speaker 1: some of this debt. Lowering these interest rates really really awesome,
Speaker 1: and hoping with you that all of these payments get
Speaker 1: paid off quickly. That'll be a great feeling. Yes, if
Speaker 1: you all listening have a bill that you want to submit,
Speaker 1: if it has to do with moving and shaken, given birth,
Speaker 1: or just out there being a bill being a person
Speaker 1: named Bill. Visit Frugal Friends podcast dot com slash Bill,
Speaker 1: leave us your bill, Yes, and episode two thirty, that's
Speaker 1: the one negotiating medical debt. Episode two thirty. Check it out.
Speaker 1: That's a great one. And now it's time for my
Speaker 1: name right all right? So today, what is your biggest
Speaker 1: worry about retirement? Jill. I've thought about this quite a
Speaker 1: bim and I think it comes from seeing what many
Speaker 1: people face in retirement, and that is just unforeseen medical
Speaker 1: issues and concerns. I guess I'm anticipating it, so maybe
Speaker 1: I'm kind of seeing it but not knowing exactly what
Speaker 1: it would be or look like. Some of that's unavoidable,
Speaker 1: but I think it's leading to a lot of different
Speaker 1: potential decisions for me, like the reality that retirement could
Speaker 1: mean caregiving. It could mean me being chronically ill or
Speaker 1: face some sort of difficulty physically medically. That has a
Speaker 1: financial impact, But I think also an emotional mental relational
Speaker 1: impact that holds concern for me. I mean, I don't
Speaker 1: want to spend a ton of time thinking about that
Speaker 1: or considering that, but definitely preparing for it. I think
Speaker 1: in some ways it makes me consider what are the
Speaker 1: things I want to do in life now. I have
Speaker 1: seen a lot of people hope for big travel, lots
Speaker 1: of excitement in their retirement years, only to experience a
Speaker 1: different reality, oftentimes that know no fault of their own,
Speaker 1: just life interrupts and that's not possible anymore. So it
Speaker 1: definitely leads me to think, how can I live life
Speaker 1: to the fullest now while I maintain a level of health,
Speaker 1: but then prepare for what that might look like in
Speaker 1: the future as well, kind of holding the tension of both.
Speaker 1: I don't want to, you know, you only live once
Speaker 1: and blow all my money now because I'm anticipating, you know,
Speaker 1: not a great lifestyle in retirement, but kind of both
Speaker 1: how do I make sure that I am making the
Speaker 1: most of the right now while preparing for what might
Speaker 1: be to come, but yet optimistic about maybe having some
Speaker 1: really beautiful golden years ahead of me. So, but I
Speaker 1: would say that's that's a concern, you know, facing medical issues.
Speaker 1: I think it is a concern and potentially a very
Speaker 1: real reality. Yeah, what about for you? I mean yeah,
Speaker 1: I mean I kind of you just summed up our
Speaker 1: whole ethos is to like live for today while being
Speaker 1: able to live in our golden years, to hold the
Speaker 1: tension between both. And I think I my biggest worry
Speaker 1: m okay, vulnerability time. Yeah here we are okay, Yeah,
Speaker 1: so entered the door's open. Yeah. I think we're saving.
Speaker 1: We're saving well, we're having children that can drive us
Speaker 1: around when we're old. I think just my greatest fear
Speaker 1: might be just I don't know, maybe doing it alone. Yeah,
Speaker 1: because all of my grandfather died before I was born.
Speaker 1: My dad died when I was in high school. So
Speaker 1: I think that seeing what that did to my mom
Speaker 1: and my grandmother, I think that's really my only like fear. Yeah. Otherwise,
Speaker 1: I feel like we've prepared really well, right, And those
Speaker 1: are the things money can't, yeah, buy to enjoy the
Speaker 1: years that we have while hoping that we get good
Speaker 1: years in the future, but we don't know. There's only
Speaker 1: so much we can do with finances. It's we can
Speaker 1: face additional difficulties and stressors if we've not prepared financially.
Speaker 1: But there are things that are going to happen in
Speaker 1: life that have nothing to do with money. They can
Speaker 1: be compounded and exaggerated by a lack of money. But yeah,
Speaker 1: the medical concerns, money can't solve that. The medical debt money,
Speaker 1: money solves. Yeah. Being doing retirement alone, it's not something. Yeah, yeah,
Speaker 1: I mean that's why you build community and friends if
Speaker 1: you're alone. General, still be here. I've got longevity on
Speaker 1: my side and will be the old women, yeah, will
Speaker 1: be the old women who are roommates, just like living
Speaker 1: life together. Yeah, I'm down for that. Okay, you won't
Speaker 1: be all I will call you so yeah. Yeah, Well everyone,
Speaker 1: thanks for listening. Many of you know we have a membership.
Speaker 1: If you need friends in retirement, you want to start
Speaker 1: building friendships now and accountability to say for retirement, then
Speaker 1: maybe have friends for retirement. Many of our listeners are
Speaker 1: paying down debt and we do monthly money challenges that
Speaker 1: offer accountability groups just in general help you make wise
Speaker 1: financial decisions. We have a lot of new members right now,
Speaker 1: so it's hot time to join and meet new double
Speaker 1: the size of the membership in January. Yeah, So currently
Speaker 1: we don't have any massive wins to report, but we
Speaker 1: are loving seeing everyone's intro posts. Yes, we have lots
Speaker 1: of people from all over the country and world. We
Speaker 1: have probably about like one hundred and twenty hundred and
Speaker 1: thirty members in right now, and it is a great
Speaker 1: place to be pursuing financial security. I love all over
Speaker 1: the world. Is so fun. So yeah, you can join
Speaker 1: even if you're not living in the States. Thanks for
Speaker 1: listening everyone. If you want to check out this membership
Speaker 1: where we have all of these courses, interviews, challenges, and friends,
Speaker 1: go to Frugal Friends podcast dot com slash club. Check
Speaker 1: it out, See you next time. Frugal Friends is produced
Speaker 1: by Eric Sirianni. What do you think we would do
Speaker 1: together if we were fully retired, Like we weren't working
Speaker 1: anymore for some reason, our husbands are not with us.
Speaker 1: What are we doing? Um? For sure, margaritas. I feel
Speaker 1: like we will have perfected the margarita. Yeah point, or
Speaker 1: we won't care. It's so true, It's so true tequila.
Speaker 1: Both of us prefer the tequila part of the margarita. Yeah.
Speaker 1: So I don't think we will care. Yeah, I think
Speaker 1: we'll just we'll just be hanging out with our friends.
Speaker 1: We might learn to play bridge, we might join a
Speaker 1: bridge club. Do you think that that will be a
Speaker 1: thing for us as were older? That was the thing
Speaker 1: for the older people. Nineties clothes are back in style.
Speaker 1: It target, so they're selling pants with butterflies on them.
Speaker 1: So the things that were all the rage for the
Speaker 1: retirees will content like, they'll make cycles. I think I
Speaker 1: think gen Z is going to get into Bridge. If
Speaker 1: we're being honest, I think they're gonna wow adopt it.
Speaker 1: I think you're just naming and claiming it right now. Yeah,
Speaker 1: I mean prophesying. First it's pickleball, then it's Bridge. We've
Speaker 1: got the vulnerability lightning round and we've got the prophetic
Speaker 1: post show, prophetic word post show by Jen. I'm here
Speaker 1: for it. Yeah, I'm here for the salt in tequila
Speaker 1: and Bridge. All right, Yeah, it's not so bad. I
Speaker 1: like it.