Retirement Success

To start out, I am NOT a financial advisor - so please speak to one for your best chance of optimizing for you and your personal needs. Such as my friend from college Don, at KISC, LLC. They do say hiring an advisor can maximize your overall investment strategy, but I also have a strong desire of doing it myself. So this is a guide from what I learned on DYI for retirement.

There can be plenty of ways to prepare for retirement and life after work, please do what’s best for you and your family.

Physical

First, as you probably know I’m into physical things; however, if you have ever read Outlived (which you should); you may learn quickly that all your hopes/dreams in retirement might not come down to do I have money? But can I physically do this?

If you’re out of shape, can’t hike/bike/pick up something in your 40s - you’re not going to be able to do in your 60/70/80s. The best time to get in shape is now; so find something, anything, that brings you passions/happiness now to start improving your health. Resistance training (ie weight training) is considered the most ideal as you lose a lot of muscle mass as you age. Do you feel selfish taking time away from kids/family? You shouldn’t, unless I mean you’re never home…but otherwise, the best thing you can do for your family is be healthy.

High Yield Savings Account

As the old saying goes you should have 3-6 months saved for job loss or other unexpected bills. Like myself and my water heater deciding today was the day. The first step in finical freedom besides being debt free outside your mortgage is going to be this savings account.

Now this money you shouldn’t have just sitting around doing nothing, I recommend a High Yield Savings account. There’s several out there, look for ones that are liquid, high return, low to no fees. For the most part you should be able withdraw it at any time but getting 4.5% or greater return. Make your money work for you; I also use this as my “I’m not sure what I want to do with this money saved” account.

Other options, if you want less liquid or can do 3 or 6 months terms is T-bills. I do this when I’m not sure what other investment strategy I want to take; but I don’t need this in my emergency cash.

Company 401K - Matched Earnings

If you work for a company that has a 401K match you should contribute as much as you can to get the full match. I.e. if they match 6% on your 6%, you contribute 6%. This is free money! Just everything is taxed on withdrawl.

Now there can be a catch, sometimes these are vested unless you’re at the company for X-amount of years - and if you don’t make it they take the money back. Just don’t forget to take it with you if you leave that employer so you don’t forget about it.

Roth IRA

If you make under the threshold, a Roth IRA is a great way to go. It’s money now after tax and after 59 1/2 if it’s generally not taxed. You can normally also penalty free withdraw if needed from the principle on these accounts. These can only put in about $7K annually - but another great way to save money for retirement.

Solo 401K

If you own your own business where you’re only active employees are your family, this is your jam. You can invest up to $69K annually, some of it as a business expense - and these can come with other perks. Now, one thing to note; if you go through a financial planner you’ll most likely end up on an account that has transaction fees. If you go through someone like Fidelity, the accounts are free and trading thousands of different shares is also free. The downside of course being you’re alone…so very alone. What should you invest in? All you baby.

HSA Plan

Did this come out of right field? First, you can vest these - which means make gains. These are normally pre-tax income, and normally the money and interest coming out are also not taxed. You can save receipts up for as long as the account is opened and then withdrawal when you need the funds vs right away.

Be careful if this is an employer sponsored plan, those normally have year over year rollovers. I.e. use it or lose it. So not a retiremenet strategy more of a employer might contribute short term strategy.

Let’s face it, when you’re older you most likely are going to have health care needs - greater than those when you’re younger. So to have the double tax advantage here will save you money and it’s money you will use.

Brokerage Accounts

For this, I’m not suggesting being a day trader; but having some money making large returns even if after tax money and taxed on gains - can still help set you up in a good position for your current life…so you can also save for retirement.

The market always grows, even after a crash the market will recover. It’s about time of the investment and seeing it through. This is less liquid than a HYS, but more liquid than let’s say an HSA or 401K.

Other

I have seen other things that say you should invest here or there, which might be viable, but the above is a start of making your money make money. Most will come down to how risk adverse you are.

Now how much you get to apply to retirement and savings might be a factor of how much the rest of your life cost vs your income; and how much you can save or put into less liquid vehicles. If you can do 50% on needs/life, 5% to savings, 10% to investing, 5% to your kids future and the rest for wants you’re doing pretty good and should be able to maximize your retirement and still have a comfortable life. Also, I’m writing this knowing house interest rates are like 8% on houses that have doubled to tripled in price, car interest are insane, and inflation has doubled way more than salaries have increased…so words like savings and retirement savings might be like dreams; however, the best advice is the longer the money sits the more you’ll have. So anything today, set aside in something earing interest for 20 years is better than nothing and can still contribute to your retirement success.

Divorce (Is an anti-strategy)

Also, what tends to hurt people are divorces; so it might be worth looking into prenups and/or marital dissolution contracts. So if you do divorce all the sudden your 401Ks and what not are now someone else’s. Not saying count on divorce, but let’s be real, 50% do end up in divorce. The person you married or set 401Ks up with is not the same person you’re divorcing. So make sure during good times you talk about these things to ensure you’re not 40 something, divorced, no savings, no 401K, paying alimony and not saving. Though with that, both spouses should have personal contributions/personal roths and if you can bare it personal HYS accounts, - even if one person doesn’t work to be a stay at home parent; so that both of you are gearing up for retirement (together or independently).