I’m incredibly excited to kickstart a new series called Financially Audacious at GenerationYRA! I wanted to find a way to highlight people that are doing some seriously awesome things to kick their personal finances into high gear. I like to call these people ‘financially audacious‘ because on the contrary, they’re actually finding ways to put their money to work (not the negative money matters that you see portrayed in the media). I know there’s quite a large population that’s finding ways to strengthen their financial game plan, and I hope to feature many of them here! Personal finances can be accomplished in a multitude of ways. Through this series I hope that you find different tips, tricks, and ways to tackle your personal finances from different perspectives.
Kickstarting this Financially Audacious series, I got a chance to interview my friend Meghan Jankovich, a self-proclaimed personal finance hobbyist. Specifically, we focused on retirement savings: where to start, how to keep the momentum going, and sources to use for your savings. Enjoy what you read below? Make sure to follow Meghan on Twitter: @mjankovich – she provides a wealth of insight & articles geared towards personal finance matters & retirement!
Let’s face it…saving for retirement isn’t necessarily inherent by nature, and we all have to start somewhere. What inspired you to start saving for retirement & when did you get started?
My responsibility with money and retirement can be first attributed to my parents. If there were items I wanted that weren’t necessities, I saved for them myself with money earned from babysitting. Even before I was old enough to babysit, I was given a money ‘bank’ with three different sections for ‘Needs’, ‘Wants’ and ‘Savings’. This idea of delayed gratification and separating short term vs. long term spending really resonated with me.
I learned more specifics about personal finance through various internet resources – especially because the financial crisis and recession happened while I was in college. Building on those lessons from childhood and the economic situation, I started a Roth IRA during my first job post college, and I also signed up for the 401(k) plan. In that job, there was no employer matching so my first priorities were paying down student loans and focusing on my IRA.
Sometimes envisioning your goals for the future can put everything into perspective. What do you envision your future retirement to be like? What will be your typical day?
Great question! Because I love to travel, I want to be able to continue to enjoy exploring the world in retirement. With that knowledge, I am inspired even more to save because travel is an extra expense on top of living expenses, potential healthcare costs, and other retirement basics.
I hope that I don’t have a typical day in retirement. I hope that I will have the financial freedom to spend ample time with my family and friends, read books and take classes, pursue hobbies, travel the world, all while also having days doing nothing except simply enjoying delicious coffee at a cafe.
Oftentimes it’s challenging to maintain saving for a goal that’s in the future. How do you maintain the momentum to stick to it (tips, tricks, methods)?
It can definitely be challenging, especially for many young adults who have a lot of student debt or have had trouble finding jobs with livable wages. In my opinion, you have to strike a balance between taking care of yourself in the present while also thinking of yourself in the future – due to compound interest, the best asset Generation Y has right now is time. So even when it gets tough, I remind myself that (a) even small amounts set aside in your 20s add up over time (b) my future self will thank me.
What works best for me is to have my savings automated. If your employer offers 401(k) matching, make sure that you contribute at least enough to get the full amount. Because it is taken out of my pre-tax paycheck and automatically invested, I don’t consider it as part of my take home income at all. For my IRA, I have a monthly automatic payment that I just consider one of my bills (it’s a bill investing in myself – so I’m happy to pay it!).
For non-retirement savings, my tip is to have separate savings accounts dedicated to specific goals. Make sure that your bank does not charge for this service, but for me having a physical separation between ‘Emergency Fund’ money and ‘Travel’ money works as a good psychological check in preventing accessing inappropriate funds. As a bonus, if you use Mint or other savings apps, you can tie the separate accounts to different goals and measure your progress.
What savings vehicles and/or services do you utilize to save for retirement?
I use a 401(k) and a Roth IRA. For me personally, because I am at the beginning of my career, I like having both pre-tax retirement savings via the 401(k) and also after-tax contributions via the Roth IRA. Tax diversification makes sense to me at this point in my life – because taxes have already been paid in the case of Roth IRAs, in retirement I won’t have to pay taxes on money withdrawn from that account.
Say someone hasn’t started saving for retirement yet, how do you suggest they start?
I would say start simple. If you have a job that offers a 401(k) plan, reach out to HR for more information and sign up at the next enrollment opportunity. If you’re not sure how much you can afford, there are free online calculators that help you see how it will impact your paycheck.
If you don’t have a 401(k) or matching, I recommend starting an IRA at a low fee company. For your retirement accounts, tax advantages give you a huge opportunity for savings but watch out for fees!
Do you find people around you (friends, family, communities) are also into the idea of saving for retirement?
I think it can sometimes be uncomfortable to have conversations about personal money in the U.S., even with close friends and family. I am willing to talk and I discuss when it comes up, but it’s not a subject that I encounter a lot in real life. That is one of the reasons why I was drawn to social media and Twitter: to find communities and resources excited about retirement savings. I hope that we build more financial education into our lives and conversations become normalized.
If you wanted to talk and learn about saving for retirement, what are some of your favorite resources?
I use news sources (Wall Street Journal, New York Times, Bloomberg Businessweek, Fortune), articles from industry and academic experts, bloggers, Twitter – really with the internet there are endless opportunities for learning and engagement. I want to give a special mention to Khan Academy as not only do they have great personal finance resources, but also their mission to make education accessible is amazing. Their section on investment vehicles, insurance and retirement includes many videos for those curious about the implications and definitions of different retirement choices.
What’s your #1 go-to tip when it comes to saving for retirement?
Just start. I know it can be intimidating, I know you have a million reasons why you haven’t started yet – but just start now. Set aside small amounts monthly and you can always increase as you go. It’s a marathon and not a sprint but you do have to start somewhere. The time is now.
Interested in trying out a new Retirement Calculator that can help organize how you save & maximize your contributions? Check out Personal Capital’s Retirement Planner. It’s absolutely free to use when you join Personal Capital!
Thanks, Meghan for stopping by Generation YRA! Have any questions about retirement savings? List them in the comments below!
Think you’re Financially Audacious? Feel free to contact me at Alyssa.Windell@live.com – I would love to feature you here!
*The following links listed above are not affiliate links. Just free services & tools that are available for all to use to help with their retirement planning!