Why Should You Save For Retirement When You’re Young with Jenny Logan - 142

[00:00:00] Can You Save More By Saving Less Earlier? Why Do You Need To Start Investing For A Tyrant Now? What Do You Do Once The Money Is Actually In Your A Tyrant In Account? Let's Find Out In Today's

[00:00:10] Episode. Welcome to Money Talk With Skyler Fleming, where we all do better with money by talking about it. Let's get talking. Welcome to today's episode of Money Talk. I'm your host, Skyler Fleming. Today we tackle the thrilling world of retirement savings because nothing says

[00:00:26] party like planning for the distant future am I right? Today we're diving headfirst into why starting early with your savings is like planting a money tree that just keeps on giving. We'll debunk some myths, uncover some secrets to maxing out those employer matches, which is free money

[00:00:41] by the way and maybe even sprinkle in some tips on how to retire like a rock star. So grab your favorite drink and if you're feeling adventurous, let's turn savings into the coolest things since

[00:00:51] sliced bread. The money talking points for today's episode are, can starting to save earlier with smaller amounts lead to larger retirement funds compared to saving larger amounts later? Do you know the difference between a 401k, Roth IRA and traditional IRA and which one do you think is

[00:01:07] best for you? Are you taking full advantage of any employer matching contributions in your retirement plan? With those money talking points in mind let's get talking. Hello everyone! Thank you for joining today's interview on Money Talk with Skylar Fleming. Joining me today I have Jenny Logan.

[00:01:32] We're talking about retirement today and I'm excited for this conversation but Jenny would you introduce yourself to everyone? Yeah hi Skylar thank you for having me on Money Talk. I'm Jenny Logan. I'm a certified financial planner and I'm an owner of a business online financial planning

[00:01:47] company that I've owned for about 15 years and so we work with clients all over the country individuals, families looking to build their portfolios, build a financial plan so that's kind of my perspective that we're going to talk about today. Awesome I'm excited to have you here talk a

[00:02:03] little bit about retirement we're going to get into some good questions like what is saving for retirement versus investing do you have to invest it? So there's some good things coming up for

[00:02:11] everybody but let's start just right out the gate why should people even care about saving early in their life? Yeah well there's a couple reasons there's a lot so it's always a good first and

[00:02:24] foremost I like to tell people it's a good habit. A lot of people that struggle with savings I found it's of course a cash flow problem right you want to have enough money to save but there's also

[00:02:37] that mindset and habit forming and so the earlier you start just knowing okay I have to set $x dollars aside towards retirement or you know whatever other goals you might have and you start

[00:02:48] doing it it's like part of you it becomes part of your habits so that's one reason why I say do it as soon as you can do it early and then the other thing is obviously time is on your side so if you

[00:03:01] start earlier so let's say you start in your 20s and then you invest the money particularly for retirement you're not only going to be saving that money but you're going to be putting it in the market

[00:03:12] which will also grow the money and the longer the money is in the market and invested in growing the more money you're going to have. If you start later let's say you know your late 30s early

[00:03:22] 40s or even after that you're going to have to save a lot more money to a mask the equivalent you would have if you just started saving in your 20s. Yeah and that honestly it's it's a little

[00:03:34] further down our list of questions but you kind of led into it perfectly of is it true that someone can save less earlier than if someone starts later do they have to save more later how does that work?

[00:03:45] Yeah so that's actually a huge reality that I think a lot of people who put off savings particularly for retirement have to realize. So if you start in your 20s and you know in your 20s you're not

[00:03:58] making that much money right you're starting out with your career you're probably just getting going and so typically your income is less but if you really start that habit and you save a little bit obviously the recommended is 10 ideally it's 15% towards retirement then you just keep going along

[00:04:16] if you do that in your 20s you're going to be a lot better off because every dollar you put into the market you're also going to be investing which will grow at anywhere between six to 10

[00:04:25] to even 12% depends on what you're invested in but if you start let's say 20 years later you're going to have to save a lot more money percentage wise of your income to essentially

[00:04:38] catch up if you had just saved less percentage wise in your 20s. Now one thing I will say and I didn't know if this would come up I do caution people you know if you are on the later spectrum

[00:04:51] right late 30s early 40s mid 40s and you haven't done a good job of saving for retirement don't let this reality stop you there is the the realistic nature that many of us don't have

[00:05:04] the income available to save until our careers take off we don't realize the importance right so don't stop yourself but just be aware like now you're going to have to catch up a little bit.

[00:05:14] Yeah because I think of that if you haven't invested and you do have to start later sure now you're coming to grips with the reality that you're going to need to save a little bit more but if

[00:05:21] that makes you stop now you're even worse off like further down the road it's even harder just the older you get if you just let that fear and that uncertainty of that higher percentage stop you

[00:05:33] but I do think it's good to think in percentages because if you think it 10 to 15 is high you're still going to think 20 to 25 is high even when you have more money because percentages are equivalent

[00:05:45] like they take 20% is 20% no matter how much you make so you need to you need to start soon and it like you said don't let it dissuade you if you haven't started. Yeah well and the reality too

[00:05:57] is as you make more money you're income your lifestyle expands to match that income right and so not only will the percentage have to go up if you don't start early but now you've expanded

[00:06:10] your lifestyle it might be even harder to make those cuts necessary to catch up so there's just so many things working against you if you don't start as soon as you can yeah and there's yeah so

[00:06:20] just get started I often you'll you'll get asked to sit the very end but when I ask people what's one thing you wish you knew sooner so many people say time the power of time with your

[00:06:30] money starting sooner that sort of stuff so it's a big deal but let's move into some misconceptions let's move into some thoughts people have about retirement what are some of those common misconceptions

[00:06:41] people have about saving well I think one is you know I can do this later when I have more money when I get that career advancement when I don't have to pay for private school or whatever it

[00:06:52] might be the other is I think people vastly underestimate how much their retirement is going to cost even people who are responsibly saving they don't sit down and really look at what their current

[00:07:07] lifestyle costs look like you know what is your budget what are you actually spending every year and what is it going to be required to sustain that in investments and then of course taking into account things like health care potential long-term care costs that will increase and

[00:07:25] the third thing that actually kind of along the same lines I see all the time with clients who I work with before retirement and then after retirement the vastly underestimate of what their hobbies

[00:07:40] and travel expenses or things they're going to plan on doing in retirement are going to cost you know because you have a lot more downtime what you stop retiring and a lot of us don't

[00:07:49] realize we're going to spend the money to spend you know to spend our downtime so you know I would say just if you're out there saving for retirement and you feel like you're doing a good job right

[00:08:00] go run some projections to see realistically if it's going to cover your lifestyle. Do you think people can tend to and this is speaking to the hobbies and traveling do people tend to think that

[00:08:10] retirement is easy like they don't develop those hobbies beforehand they don't know what they're going to do and they just think it's just going to come to them what do like I mean this is speaking

[00:08:19] a little bit more of once people get into retirement but is that something that's maybe a misconception? Yeah I think well there's a couple things I think people put off things to retirement I see it

[00:08:30] all the time like oh when I retire I'm going to take on ex hobby the first piece of advice which is not financial advice this is like advice don't do that if you think you're interested in something

[00:08:39] you know try to make time for it before your retire one to kind of your point to really find out what that hobby is going to cost what is this hobby you're getting into even things like you know

[00:08:50] I'm a big gardener and we have some animals those things cost money and if I had waited to retiremen and not really factor in the true cost of that hobby that really would have eaten into like

[00:09:02] what I had saved so yeah I think I think piece of advice really think about it but two like don't put stuff off if you really think you're interested in it but yeah you definitely want to overestimate your

[00:09:13] hobbies because they're going to be more expensive it's like everything it's going to be 10 15 20 percent more than you think it's going to be well especially when you've grown a custom to this lifestyle or maybe you're living comfortably and you don't want to start your hobby out from like

[00:09:26] bare bones square one you're like oh I can get the comfortable nice computer that I need for this instead of maybe being a little scrappy with it so there's yeah expected to cost more

[00:09:37] exactly expect everything to cost a little more than you think that's awesome so people are thinking oh well I don't need the retire that we talked about how one of the risks is you need to save more

[00:09:48] a higher percentage what are some of the other risks that people have to face when they come to delaying savings for retirement? Well so I touched a little bit on the power of exponentially

[00:09:59] growing your money using investment returns so that's one neat every dollar that you save for retirement right the assumption I am making is that hopefully you're putting that dollar into the stock market you're investing it in the US equities market and so that means over the coming

[00:10:15] decades that dollar will grow and you could project that to grow you know a really conservative percentage would be 6 percent on average per year that's what we use with our clients but fairly

[00:10:26] to be fair that's very low you're going to likely do better so for every decade or so that you avoid putting your money into the market you avoid all that growth on that money now people listening

[00:10:38] might be like oh but there's down years maybe all of what does when I say the average is you know 6 to even maybe 12 percent that includes those down years right and average means over time it

[00:10:48] doesn't mean year by year so keeping that in mind so you miss out on the stock market growth which really helps with your savings goals um if you have an employer match potentially you know

[00:10:59] if you're saving for retirement through an employer plan you may have a match where the company is going to save for every dollar you contribute will contribute extra dollars up to some amount

[00:11:10] you know all commonly we'll see like three or percent some of them are higher you know six even 10 percent but if you're not contributing to that you're not going to receive the match so you need to

[00:11:20] make sure that you do that it's free money and then like I mentioned before I think one really overlooked risk is just that habit living into the cash flow you have without setting money aside

[00:11:34] it's going to be a lot harder to then go backwards and say okay I have to save for retirement but I haven't been doing it that means I've just started putting this money away from my paycheck

[00:11:43] and to your point Skyler like 10 percent at 20 might seem overwhelming but imagine if it's 25 or 30 percent at you know late 40s now now you've really got some cash flow issues yeah in your lifestyle is

[00:11:57] at that point used to that money you're bringing home and this brought up the thought in my mind to the book the automatic millionaire he talks a lot about how starting with that small percentage

[00:12:06] like he said builds that habit but then you can increase it by one to two percent every so often it makes it so easy to get to that 15 20 percent but if you started early maybe you don't need to do

[00:12:16] that but that's how you can get to that bigger number is just some slow simple steps it's so hard to go there all the once. It'll exactly and so that kind of goes along the same lines as I was

[00:12:27] cautioning people who maybe haven't started don't let our conversation stop you and also it's not all or nothing you know like to your point exactly if you do get started today get started

[00:12:39] and then each month each quarter each year just pick it up a couple percent edge and eventually you will get there. Great I love the underlying theme of don't let our conversation stop you if anything so thinking it has started thinking about the long term that is still

[00:12:55] after you like sure maybe you're in your 40s but people are living longer and longer maybe you're in your 50s but maybe your investments start to go towards your future your children, your grandchildren things like that so just kind of maybe shift your mindset to that long time

[00:13:08] horizon make it a little easier on yourself to get started and then you can crank it up a little bit quicker so that's that's awesome fantastic there so let's talk a little bit about maybe retirement

[00:13:18] accounts first there's a couple things we're going to talk about here is where do you say for retirement then we're going to talk about actually investing it but let's start with the first one

[00:13:26] where do you put retirement money yeah that's a great question so most people or the majority of people in America have access to I shouldn't say majority a large percentage of people have access to a work provided retirement plan oftentimes they're called if 401k

[00:13:43] or a 4a 3b if you're sort of in the non-profit or government sector if you have one of those that is the easiest most straightforward place to start you can simply set up how much you

[00:13:56] want to contribute from your paycheck each pay period so it's automatically deducted you can pick the investments within there's a lineup of investments you can pick from and sometimes the plan

[00:14:07] will help you based on your age and stuff and so that's the easiest place if you don't have one of those though there's plenty of other things you can do you can have a Roth IRA or a traditional

[00:14:21] IRA those are just accounts that you open at an institution that you like I recommend you know Vanguard Schwab fidelity if you have some banks offer them and you can put money in there

[00:14:34] and depending on if you use a Roth or an IRA a traditional IRA some of it's going to be pre-tax so you get a deduction or it might not be pre-tax but you have those options and then if you're

[00:14:46] self-employed there's also some options you can actually depending on your business potentially have before a 1k you set up for your company or yourself or you may have a set which is similar to an

[00:14:57] IRA just with higher contribution amounts so there's so many options out there that there's really no excuse it really just takes you know go on YouTube do some goodwilling and you can see kind of what

[00:15:11] some of those options might be yeah there are you can search any Vanguard Roth IRA set up like any of those accounts and someone has a YouTube video on how to walk you through doing it or you can call like

[00:15:22] most of those places they'll be happy to sign up because that means they're going to get some of your money so there's plenty of people to help you with that I was just gonna add that I know I

[00:15:30] mentioned with the 401k and 4 or 3b it's easy because they automatically draw it from your paid period age paid period but the Roth and the IRAs those can also be set up to be auto

[00:15:41] contribution so you know there's very versatile options out there yeah indirect deposit is like the secret hidden gem of finance automation I don't think people use it as much as they could

[00:15:53] because you can split where your money's going you can make it so easy that and that's where the magic comes is when you don't see it that's why the government has this pay taxes straight out of

[00:16:01] our paycheck so you don't see it it makes it a lot easier to pay so if it's going to your retirement accounts it's a whole lot easier to save 10% when you don't even realize it's part of your paycheck

[00:16:10] you're just getting what you get very true so we're talking about saving in these accounts and I think people people want you're in the finance space you kind of match saving with investing but some

[00:16:22] people who're saving and they think they're just putting cash away or like my works for a one k the main account that the money's going into is just a cash account which is terrible I

[00:16:32] I've spoke against that for a while that we don't have any sort of targeted funds or things like that but what does investing your retirement actually mean once the money gets into these accounts?

[00:16:43] Yeah Skylar I'm glad you mentioned this because so many clients that come through my door will you know I ask for statements and I'm looking at their statements because I always look at the

[00:16:54] investments and I'm like do you realize you've been sitting in cash for like 20 years you know so here's the problem with that um you lose on that extra growth so like I mentioned you know on

[00:17:06] average each year you're going to on in addition to what you've contributed that money is going to grow by let's just say conservatively 6% that's money you don't have to save that's money that's

[00:17:16] going to grow it and this it's a bigger account and there's more available to sustain your retirement and so if you are investing for retirement make sure you know I would say go to your 401k

[00:17:30] login or your IRA whatever you have today and make sure and of course I'm not going to give you investment advice specifically but make sure you're in the equities market that is where the growth

[00:17:39] is going to happen and if you're sitting in cash and you're nervous about that you don't know what to invest in talk to somebody get some advice because you don't want to miss out on that growth each year.

[00:17:48] This doesn't even have to be crazy specific advice like yes sitting down with a financial advisor can be really helpful to help you plan out your investments but even I have co-workers at my

[00:17:58] job that they'll they'll just ask me like hey what is this investment because that's somewhere places where people even get stuck sometimes so you might have a co-worker even that understands

[00:18:07] it a little bit more and that's a great place to have a money talk and just get the conversation started. Yeah and I will say this and this is again I have to I have to qualify this is not specific

[00:18:16] investment advice I don't know your situation blah blah blah if you don't know where to start I think Skylar brings up a good point ask, ask around go on YouTube you don't necessarily need to pay

[00:18:25] someone for sure but if you're young and you don't know where to start easiest place total stock market fund Vanguard has one Schwab has one fidelity has one just pick it put your money in that forget about it

[00:18:38] 30 years later you'll thank me so that's that's my recommendation for people who are just starting out in there young awesome and of course that always has to come with it's not specific advice but pretty much if

[00:18:49] you start in those simple index funds you're going to be good and you're not going to need to sue someone for their financial advice so to speak because you're going to be just fine so it's a great place to

[00:19:02] but as we're coming to a close here that was a fantastic conversation about saving for retirement where to save how to actually invest it and some of the benefits of starting early

[00:19:11] and of course if you have anything else to add or ask please do so but a couple of questions as we come down here to the end I'll ask you this one last but just to get you thinking about it my

[00:19:19] final question is what's one thing you wish you knew sooner when it comes to money but before you answer that how can people find you online or get in touch with you? Yes so my company website is chizomfinancial

[00:19:33] planning.com you can find me on YouTube as well at chizomfinance and on sub stack which is our chizomfinancial planning dispatch so I write and you know make videos about financial planning we

[00:19:47] like to educate the public so being in business over the last 15 years I've seen lots of different things, lots of different scenarios and I've learned that really the fundamentals like our conversation today are where people are lost and they get side tracked with these sort of like

[00:20:06] very online ideas or strategies and it's like no let's just get back to basics so we really highlight that particularly on our YouTube channel. I love that the basics are a great place for people

[00:20:16] to make sure they have their foundation under them but Jenny as we wrap up here what's one thing that if you had to go back and in the past and tell yourself about money what's one thing you

[00:20:24] would share with everyone. The one thing I would say and of course we're highlighting starting early so I'm not going to say that but what I am going to say is that there are firm rules when it comes

[00:20:35] to financial planning that will work for everybody that being said a true financial plan and success has to take into account your situation. What is it that you want your life to look like?

[00:20:47] Not what society tells you it should look like not you know hard and fast rules like you have to retire to certain age but really what do you want your life to look like and build a financial

[00:20:57] plan around that and that's really it's going to look different for everybody and you can apply these straightforward rules and strategies to what you're trying to accomplish. Fantastic I love that you get to choose your lifestyle and that's what's going to work for you and that it's totally

[00:21:13] possible to build a financial planner on that that's what I heard we don't all have to live the same exact lifestyle where we're all doing the exact same thing so awesome fantastic this

[00:21:22] is been a great conversation and I'm sure people took away that they need to start early but it's still possible to start wherever they are but Jenny thank you so much for joining me.

[00:21:31] Thanks guys I appreciate you having me on. Thank you so much to Jenny Logan for coming on today's episode and for that great conversation we were able to have. What are some of the ways

[00:21:49] that that conversation can impact you? What do you think? Let me know shoot me an email or let me know on social media. My TikTok is actually growing a lot and there's some comments happening there so

[00:21:58] make sure you're going over there and engaging in the conversation but now you've decided to tune into the podcast and you wanted to figure out what you can take away. Let's go over some

[00:22:07] quick things that will impact you after you soaked in all the wisdom we just gave. Well first your future you will thank you it's 30 years from now you're lounging on the beach you're sipping your favorite drink and joining the great son the great beach your high

[00:22:21] diving past you because you started early and that was awesome because you're now able to have compound interest work in your favor you're seeing the fruits of your labor and that magic of

[00:22:31] compound interest so that's the first way you can have an impact is that your future you will thank you. You're also then able to dodge that all save later trapped that everybody tries to tell you

[00:22:42] you can do you'll finally understand why it's just a sneaky way of saying I'll regret this later because your friends may be in denial since they didn't start saving but you won't be because

[00:22:51] you started early after listening to today's episode. You're also going to become a ninja when it comes to retirement planning you're going to be the go-to person for your co-workers to ask how much

[00:23:01] do I need to put away from my retirement in order to get that company match what is a company match and then you're going to use the word Roth and your friends are going to be blown away so you're

[00:23:10] going to be able to take a lot away from today's episode. You're also going to have a great dose reality and know that retirement can be expensive and there's things that you need to consider

[00:23:18] like maybe hobbies you've been putting off and the health insurance and healthcare can be expensive as well. You're also going to know that you don't want to leave your money sitting in cash that's something

[00:23:27] we talked about in today's episode. You got to make sure it's invested to keep it simple in a total market index fund. Don't forget about that employer match it's been mentioned on so many episodes

[00:23:35] of my podcast but make sure you get it. Also, realize your hobbies need to be figured out maybe a little bit before you retire and you also may have something you're saving for retirement but be aware of

[00:23:46] those costs when it comes to figuring out how much retirement's going to cost you. And after today's episode the main thing you're going to do is get rid of procrastination when it comes to retirement savings.

[00:23:55] I believe in you, you can stop postponing retirement but you can also still have a fun and enjoyable life. Figure out those hobbies and do them now as well as saving for retirement that's why it's so

[00:24:05] important to set those percentages and then just leave them in let them be because your lifestyle is going to adjust around what you set those percentages as when you're saving an investing for your

[00:24:15] retirement. So I hope you're ready because after today's episode you're going to have some major upgrades to make you're going to have to become a Jedi Master of retirement planning so to speak.

[00:24:23] Always remember the best time to start investing was yesterday and the second best time is today. So go out and get your money invested and start saving for your retirement but next let's talk

[00:24:33] about the money talking points. Here we are once again at the money talking points and remember the point of these is to take them and talk about them with a friend. Send your friend a text

[00:24:51] message of one of the money talking points and then of course link them today's episode because I'd be very grateful for that but the first money talking point is can you start saving earlier

[00:25:00] with smaller amounts and lead to a larger retirement fund compared to saving larger amounts later. And yes this is 100% true. The earlier you start the more time that money has to grow and consistency helps so much so build the savings habit now and there's a great picture that

[00:25:16] I found that I'll link the article in the show notes but it says Susan invest $5,000 annually between the ages of 25 and 35 bill invest $5,000 annually between the ages of 35 and 65 and Chris invest $5,000 annually between the ages of 25 and 65. Of course we can tell that

[00:25:36] Chris is probably going to have the most money because he continues to invest but then once they've actually reached that point where they stop saving this is how much total they have invested so this is their cash the principal balance of their investment account.

[00:25:49] Susan after doing $5,000 from 25 to 35 invest $50,000 bill $5,000 from 35 to 65 invest $150,000 Chris investing $5,000 annually from 25 to 65 invests total $200,000 now who do you think has the most money? Well you're going to maybe be a

[00:26:10] little bit shocked to find out of course it's Chris he started the earliest but the real contest is between Susan and Bill because Bill invested longer bill invested for 30 years and he invested $150,000 whereas Susan invested only $50,000 but Susan wound up with $602,000

[00:26:32] dollars where his bill ended up with $540,000 now you're asking yourself you said Chris had the most money how much did he have? Well Chris because of consistency and doing it over a long period

[00:26:42] of time ended up with $1.1 million dollars so there's a lot of money that can come from consistency and then also starting earlier I mean the thing that I learned here is that Bill wasn't totally

[00:26:54] screwed he did it from 35 to 65 he invested $150,000 but he did only end up with $540,000 but this is where if you start a little bit later you still can do it you just maybe have to increase

[00:27:06] that amount that you're investing so there's a lot of ways this can work but ultimately starting earlier in staying consistent will be good but even just starting earlier for 10 years can be better than doing the same thing 10 years later for the rest of your working life so there's

[00:27:20] a lot of ways that that plays out but I hope I was able to paint that picture for you over a podcast but make sure you head over to the show notes and click on the link that says I wish I started

[00:27:30] saving earlier after seeing this chart and go check out the chart the second money talking point is do you know the difference between a 401k, Roth IRA and traditional IRA and which one do you

[00:27:40] think is best for you? Well the 401k is offered by an employer often includes matching contributions, contributions or pre-tax even though some can be Roth which will learn about in a

[00:27:50] second then if it's traditional we'll talk about both of those a little bit more with the IRA actually but the 401k is offered by employers. The Roth IRA is contributions being made with after tax dollars

[00:28:01] which are all during retirement or tax free including the earnings which is fantastic news who doesn't love tax free and that's what makes Roth such a good option for so many people. The traditional IRA is where you're postponing paying those taxes your money goes into the

[00:28:15] IRA or your traditional 401k pre-tax and taxes are paid upon with draw during retirement. So there's both options both play a good role in different tax planning situations. The Roth one is easy

[00:28:27] because then you get your money in and you don't have to pay any more taxes on it. It's simple and easy and avoids paying any more taxes to the government so decide which one's best for you.

[00:28:36] Often a good fallback is the Roth option because it is simple. The third money talking point is are you taking full advantage of any employer matching contributions in your retirement plan? And think about this those employee matching contributions are part of your compensation you need

[00:28:51] to make sure you claim it and be aware of vesting periods because those do matter because maybe you can stay for one more month and get a good amount of your money as yours vesting means the

[00:29:00] money is vested to you. I don't know how best to word it but it means that it's actually your money now instead of sometimes if it's on a vesting schedule if you leave before you reach certain thresholds

[00:29:10] then that company is able to take some of that money back. It's a way to get people to stay for longer and it's a good way to boost your retirement savings because you're getting some good money from

[00:29:19] another source that you don't have to put into the market so imagine your 25 to 35 but also that money you invested had a 10% match on it so now your employer is putting in more money on your

[00:29:29] behalf. It's a great way to make more money and one of the first steps that everyone needs to do is you need to make sure you are getting at least the full employer match by putting in as much

[00:29:40] money as you can in order to reach that threshold sometimes it will put in 4% if you put an 8% make sure you're putting in 8% then you gotta make sure you're getting that full employer match.

[00:29:50] But next I want to talk about the handy hint and what it means to start simple with your investments. Okay you're extremely confused after listening to so much jargon and talk from many podcasts about investing how do you actually get started well start simple with investments.

[00:30:13] Begin with your workplace plan if you have access to a 401k it's a great place to start. These plans are straightforward they often come with that crucial employer match and they often even

[00:30:22] have and they often even have ways to invest with a target date fund those can be a great starting place as well. But contributions are automatically deducted from your paycheck and that makes it

[00:30:31] way easier to stay consistent because I think honestly the direct deposit is a hidden superpower of financial automation you can do a lot with it and a lot that helps modify your behavior so that

[00:30:42] you're putting money in places and leaving it alone. You also need to maybe consider IRAs like I said wolf Roth and traditional or popular options you can open up these accounts it really any major

[00:30:52] institution like Vanguard Swab, Fidelity and one Finance but once you contribute you can choose how to invest the money with these accounts and you can also put money directly into these with a direct deposit there's gotta be a way to do it with an account and routing number.

[00:31:05] Also if yourself employed consider things like a set by IRA or a solo 401k I don't know a whole lot about these plans so make sure you're consulting and professional and doing some

[00:31:13] of research on your own. But make sure you start simple a total stock market index fund is a great starting point. Avoid holding cash in your retirement accounts because it needs to be invested

[00:31:23] to grow so that million dollars that was able to be earned in that story I told at the graph that is because it was invested this is going to be my hilded ion don't leave your retirement

[00:31:32] account and cash please I noticed this at my work and I brought it up and it's concerning that so many people's retirement accounts are probably sitting in cash that is so concerning because

[00:31:42] it's not doing anything because if you put in 5,000 dollars maybe after many years you're going to have like 5,000 in 200 dollars but that's not investing that's going to make people feel like they were retirement accounts screw them over so make sure your money is actually invested I love to

[00:31:57] sing this song and I'll make sure it's always being mentioned especially with workplace plans make sure your money is actually invested but what are some common misconceptions about retirement let's talk about those next. Alrighty I have three common misconceptions here the first one is I can save

[00:32:22] later most people believe they can just post-pone saving for retirement because maybe it'll earn more later which is fair and maybe it could catch you up but this delays the incredible benefits of

[00:32:31] compound growth that is needed to increase the amount you have for retirement and it makes it so much easier so you have to save less as you get older and guess what if you start now and you're

[00:32:42] able to save less as you get older as your income increases you're going to be able to enjoy life more without having to worry about your retirement way down the road because you've already started

[00:32:51] saving and you can keep that amount small because of the benefits of compound interest we also need to make sure to understand retirement costs people often miscalculate how much you'll need there's crucial things to factor in like healthcare long-term care hobbies travel other expenses what hobbies do you

[00:33:06] want to start are you doing things that's going to help you save for retirement are you starting hobbies now to figure out how much they'll cost maybe dip your toes into your retirement a little bit

[00:33:14] with trying out some of your hobbies you also need to make sure you don't overestimate how easy it is to retire because it's often a time to catch them on deferred activities yes but also if you don't really

[00:33:25] know what your interest in is going to be really hard to actually retire it's important to address your interest and needs now rather than just postponing them just so you can at least give it an

[00:33:34] experiment and try it out before you retire because what if you retire with this laundry list of potential hobbies and you hate all of them now you're going to be like well may as we'll go back and

[00:33:42] get a job but no no no don't do that that's not fun stay retired but you need to dip your toes into it a little bit beforehand and figure out what you actually want to do that wraps up common

[00:33:52] misconceptions next I want to talk about what's at stake if you don't start investing no matter your age alrighty what is at stake well you're going to miss out on potential exponential growth the earlier you start the more benefit you get from compound interest delaying investing means losing

[00:34:16] out on potential growth also don't forget to make sure you don't forfeit employer matches if you don't contribute to your 401k your employer's not just going to give you money but you need to

[00:34:26] make sure you're contributing so you can get that money that your employers promising you as that employer match you're also going to lack the savings habit how much harder is it to start

[00:34:34] when you're at 4550 maybe you have kids and your life is expensive and you still haven't started saving for retirement how much harder is it going to be to build that habit and start to save an

[00:34:45] invest when you then have to actually knock down your lifestyle a little bit in order to put a lot of money into retirement delaying it makes it harder and harder to develop these crucial habits

[00:34:55] that you need later in life next there's a key difference that I want to talk about and that's the importance of understanding the difference between saving in your retirement account and investing

[00:35:03] those dollars so let's talk about that next so what is saving and investing have to do or they different are they the same thing should they be the same thing well retirement accounts aren't just

[00:35:22] for savings a lot of people have their retirement accounts in just cash which misses out on key growth opportunities simply having money in a retirement account isn't enough it has to be because growth comes through investing investing allows your money to grow reducing the amount you

[00:35:38] need to save from your income because if you need $2 million but you make $100,000 a year it's going to take you a long time very long time to get to $2 million but if you're investing it you can

[00:35:49] get that compound interest working behind you things like total stock market funds can be a great place to provide significant growth also you need to make sure you have regular check-ins on your

[00:35:58] 401k and IRA because you need to make sure that money is invested that's why those statements come in the mail or their email to you make sure you look at them and your money is not sitting

[00:36:05] in some cash line item and if it is call up your 401k and figure that out and get it invested there's also a great opportunity for long-term strategy when you begin to understand the difference between

[00:36:15] saving and investing because your long-term strategy needs to include investing in effective retirement plan has some great wise early investing so make sure there's a big difference between saving and investing I think they should be synonymous and that saving should mean investing because investing

[00:36:31] is a great place to put your money but make sure your retirement account at least isn't sitting in cash well that does it for today's episode thank you for listening we'll let's wrap it up next

[00:36:50] so there you have it we've gone through why you should save for retirement and why you should start early remember the best time for retirement savings and investing is yesterday the second best time is right now

[00:37:00] so go ahead and get started no matter your age remember that direct deposit is the secret super power of financial automation it can do a lot including directing savings it directly into an IRA or

[00:37:11] your workplace 401k and automation can be a big game changer in your life if you really want it to be thanks again to Jenny Logan for coming on today's episode of Money Talk with Skyler Flimming

[00:37:21] and providing a great conversation on today's episode I know that I learned some great things for today's Money Talk and I'm sure you did as well now go ahead imagine yourself 30 years down

[00:37:30] the road thinking back on this podcast episode and how grateful you are that you want to head and start it investing for your future with your retirement and lastly don't forget that free money that you can go grab with your employer's company match just imagine it's free food

[00:37:44] at a company party and who doesn't want to take as much of that as they can be sure to take it and let your retirement savings grow speaking of growth this podcast is continuing to grow and grow

[00:37:54] let's hope we can get some compounding working behind it but getting you to share with a friend getting your friends to share with friends and let's continue to grow I'm looking to have more

[00:38:01] guests on as I prepare to take a few weeks off for my wife and I had to go to Hawaii in August so if you know anyone who has a money story they want to share send me an email let me know

[00:38:10] I'd be happy to have anyone on his guess which includes you so let me know if you want to come on and I'm happy to share any story so that we can all learn how to do better with money together

[00:38:19] and sharing with a friend is the number one way to help this podcast grow so if you enjoyed it please help us grow because I would appreciate that greatly or you can also

[00:38:27] suggest me to go on another podcast as a guest if you want to hear me talk to your favorite other podcast I'd be happy to go on other shows if you'd like to suggest me as a guest so

[00:38:36] think about this you have your second favorite podcast because we all know this is your first favorite show right but you got your second favorite podcast and you're like wow I want to

[00:38:45] hear Skyler talk about this but this person send them an email and suggest me as a guest I'd appreciate that greatly as well because going on other podcasts is also a great way to help the show grow

[00:38:54] of course all my contact information and links from today's episode and Jenny's contact information is in the show notes thank you all for listening to Money Talk with Skyler Fleming on your host Skyler Fleming have a great week thank you for listening to Money Talk with

[00:39:08] Skyler Fleming this show is provided for informational and entertainment purposes and may not be specific to your unique situation please be sure to do additional research before making any financial decisions