Help Me Retire Podcast - Episode 21
- Mike Brown
- Jun 18
- 11 min read
Saving and investing for retirement
Show notes:
So... you’re still working right now... but you see retirement getting closer all the time...
You look forward to having the option one day... of not working for money anymore... and letting money work for you...
How do you make that happen? How do you accumulate the wealth you’ll be able to live off one day?
I’ve got TEN ideas to help you in today’s episode...
Plus... some timeless advice aimed at those who are just getting their start in life... from someone who’s been there before you...
That’s what’s on tap in this episode of... the Help Me Retire podcast...
This is the Help Me Retire Podcast… with your host… Mike Brown… Senior Wealth Advisor with Raymond James Financial Services… and head of Brown Family Wealth Advisors…
Mike is the best-selling author of Your Way to True Wealth: How to Make It Happen, Make It Last, and Make It Matter…
He and his team have been helping clients pursue their dreams of financial independence for the past 30 years… and in the Help Me Retire Podcast… he’ll share his best ideas with you…
And now… here’s Mike…
We’re talking about building wealth today... saving and investing for retirement... but first... I want to let you know about developments that might help you along the way... things happening right now... that could impact your financial life... regardless of where you are on the road to True Wealth...
The first... is a new online government database... that could help you track down any retirement savings you might have lost track of...
Don’t laugh... did you know there are about 29-million unclaimed 401-k and pension accounts out there... worth a total of more than 1.6 TRILLION dollars?
Some of that money might be yours... maybe some money you didn’t even know about...
Here’s the website... LostAndFound.DOL.gov... it’s in the show notes for this episode...
You’ll need to show some I-D to access the database... but it’s never been this easy to track down missing money... and might be worth your time...
Hey... maybe if you find some missing money on that new government website... you can use it to set up an emergency savings account... a reserve... if you don’t have one already...
The Federal Reserve tells us... that more than a third of Americans would struggle financially if they had an unexpected 400-dollar expense...
And Vanguard did a study just last year... that found there’s a direct connection between having emergency savings of just a two-thousand dollars... and your sense of financial... well-being...
Just knowing there’s some cushion between you and your next financial setback... can make a hug difference in the quality of your life overall...
Now... talk about stress...
A new survey from the insurance company Allianz... says Americans are more afraid of running out of money when they retire... than they are of dying...
And a new study from Northwestern Mutual... says Americans believe they need about one-and-a-quarter million dollars in savings today... for those fears to start letting up...
That’s about 200-thousand dollars less than what they said in last year’s estimate... but a long way from what the typical American has saved for retirement... about 87-thousand dollars....
If those numbers have you thinking about how much you’re saving for retirement... and whether you’ll have enough to retire on your own terms one day... you’re in the right place today...
I’ve got some great... workable ideas for you to put in place to help you save more money today... and make it work for you... are you ready?
Okay... I’m going to assume that if you came to a website called... Help Me Retire... and you’re listening to a podcast with the same name... that you want to retire one day if you haven’t already...
And I want you to know that the farther you are away from that day... the more the advice I’m about to give you is likely to work...
But even if retirement is coming up fairly soon... these 10 ideas should help you...
Number one... and this applies to everyone... whether you’re just starting out... or whether you’ve been retired for years...
This is the absolute key to creating wealth... and making your wealth last once you start living off it...
The key is to always... spend less than you earn...
If you’re earning minimum wage... find a way to live on less...
If you make a million dollars a year... find a way to live on less...
And whatever income your investments are producing in retirement... figure on spending just a little bit less than that amount...
Now, what do you do with the extra... the money you’re not spending each month?
Well... you’re saving it somewhere... and here’s another good tip... idea number two...
Save that money before you spend anything else... pay yourself before you pay the mortgage... pay yourself before you make your car payment... pay yourself... even before you buy groceries...
And if you really want to make this easy... put your savings on autopilot... have a fixed percentage of your income... automatically diverted out of every paycheck... into your savings...
That way you won’t have to think about it... and eventually... you won’t even feel it...
Okay... so you’re working... and earning a paycheck... and you’re doing a good job... becoming a more valuable asset to your employer...
You’re going to get a raise one day... either at your current job or the next one you take...
Idea number three... is to use this as an opportunity to put even more money away for the future...
Even if you don’t change the percentage of each paycheck you’re saving... you’ll be putting more dollars away every month...
But if you really want to get ahead... maybe even increase that percentage every time you get a raise...
Again... you’re not going to feel it... you’re still spending the same net amount each month...
But now you’ve got more money working for you... money that’s making more money...
You’re building a snowball of savings... and before you know it... your money might be growing every year... faster than you’re adding to it... that’s how you build wealth...
Put away a little something extra every time you get a raise...
Do you have a 401-k plan at work... or something similar?
That’s a great way to save for retirement on autopilot...
It’s even better if your employer matches some of what you’re putting in...
You know what that is? That’s free money... and you can’t afford not to take it...
If you see a 20-dollar bill on the sidewalk... you’re going to stop and pick it up, aren’t you?
Same idea... never pass up free money in your 401-k...
So make sure you’re contributing as much as you have to... to get all the free money your employer is throwing your way...
That’s idea number four for building wealth... wealth you’re going to be living off of one day... when you decide to stop working...
Now, while we’re talking about 401-ks and other retirement savings plans... here’s another opportunity to take advantage of...
At age 50... you get to make what are called “catch-up” contributions... you’re able to put away even more money for your retirement...
How much more?
You can put an extra thousand dollars into your traditional IRA or Roth IRA every year...
And you can put 75-hundred dollars extra into your 401-k... maybe even more if you’re age 60 to 63... check with your financial or tax advisor on that... it’s a fairly new provision in the tax code...
If you’re enrolled in a SIMPLE plan at work... your extra catch-up contribution is 35-hundred...
You can even put an extra thousand dollars every year into your health savings account if you have one... a great way to pay healthcare expenses once you retire...
So if you’re age 50 or older... and able to save more for retirement... make sure you take advantage of those catch-up contributions...
Okay... that was wealth-building tip number five... idea number six... is to save money in a spousal IRA...
Let’s say you’re a stay-at-home spouse... and you don’t have an income...
You can make the full IRA contribution each year into your own IRA or Roth IRA if you qualify...
As long as you and your spouse earn enough money to cover the total of both your IRA contributions...
With spousal IRAs... even if only one spouse is working... you can save twice as much toward your retirement each year...
Idea number seven... did you get a tax refund this year? What did you do with it?
Another great way to get ahead a little...
Add that money to your savings... build up your emergency reserve account... put it in your IRA...
Or even use it to pay down your credit cards... stop paying those double-digit interest rates...
And if you’re getting a really big tax refund... it probably means you’re over-withholding from your paychecks...
That might feel really good when you get that refund...
But realize it’s your own money you’re getting back... money you’ve been lending to the government for the last 12 months... interest-free...
So, who do you trust more with your money... yourself... or Congress? Do yourself a favor... give yourself a raise... adjust your withholding...
Now... a couple of ideas on how to invest all this money you’re saving for retirement...
Idea number eight... I love seeing money compound... and if you really want to see how that works... look at investments that pay you to own them...
Stocks that pay dividends, for example... you can use each one of those dividends to buy even more shares... to earn more dividends... to reinvest in more shares... you get the idea...
That’s how you make wealth compound...
Now... if you focus your attention on companies that not only pay dividends... but INCREASE those dividends over time... you’re actually compounding... on top of compounding...
When you retire... these companies can create an income that you might be able to live on... and when those dividends are rising faster than your cost of living... you won’t have to worry about inflation... which is one of the biggest challenges retirees face...
Idea number nine for building wealth so you can retire one day... is to take advantage of pullbacks...
If you own stocks... you might already realize we get 10-percent or more “corrections” every year or two...
And bear markets... when stock indexes go down 20-percent or more... those have come along every five to seven years on average...
So what do you do when these big drops come along?
Three things...
One... look at corrections and bear markets not as something to be afraid of... but as opportunities to buy more shares of your favorite investments at lower prices...
The markets are doing you a favor... market pullbacks are short-term... and your retirement is a long-term goal...
Two... don’t stop the compounding... don’t pause your 401-k contributions... and don’t even think about trying to time the market...
Just keep doing what you’re doing... keep saving... and let the markets... and time... help you grow your wealth...
Three... rebalance your portfolio when the markets get a little crazy...
If you’ve decided you want... say... 80-percent of your retirement savings in equities... and 20-percent in something less volatile... like fixed-income investments...
A market pullback might push you away from those percentages... maybe now you’re at 70/30...
The market is giving you an opportunity to move that extra 10-percent in fixed-income... over to the equity side... which does two things...
It helps you invest in more in stocks at lower prices... and it also brings your portfolio back into the mix you’ve decided is right for you...
It’s called rebalancing... and it works whether stock prices are way down... or way up...
And I’d suggest doing it with your portfolio every year or so... maybe more often when things get really out of whack...
My last bit of advice for building wealth for retirement... is really simple... whether retirement is 50-years away... or just five...
Start doing all these things now if you haven’t already...
It’s not too early... and it’s not too late... these ideas are doing to help you afford a nicer retirement one day...
You might say... well I’m 25-years old and I don’t have any money to invest...
Well... neither did I... not a nickel... and life has turned out okay...
What I did have... is exactly what you have... and that’s TIME.
If you’re young and just getting started... time is the biggest asset you’ve got...
Save... invest... compound your way to wealth... and let time take care of the rest...
There’s a website you should take a look at some time... if you’re retired or seriously contemplating it...
It’s called Humble Dollar... humbledollar.com... and it’s sort of an online forum... featuring contributions from a lot of people... some financial professionals... and a LOT from ordinary people who are navigating their way through retirement... just like you might be... now or sometime in the future...
One of my favorite contributors... is a retiree named Richard Quinn... who retired from Corporate America 15 years ago... and has been blogging on a regular basis ever since...
Dick and his wife have four children and 13 grandchildren... according to the website... and they’ve been married for more than 50 years...
A few years ago... Mr. Quinn wrote a piece called... “Quinn’s Commands”...
It’s an open letter to 18-year-olds... people just beginning their adult lives...
And for young people like that... this is the summer after graduation from high school... but I think his advice might be just as useful for college graduates as well...
DEAR 18-YEAR-OLD: You may be better educated and more intelligent than me. You may have more potential. But for sure you don’t have more experience. I have 60 years on you, so—as hard as it may be—take my advice:
There are no guarantees in life. You have to make of it what you will. Never give up.
You will have obstacles placed before you. You will be treated unfairly. You will have to deal with less-than-honorable individuals. You will be slighted and overlooked at times. Get over it and move on.
A college education gives you what you put into it. Obtaining a degree means nothing if you got that piece of paper simply by getting by.
Once you’re hired for your first job, where you went to college is meaningless. It’s up to you to prove your value to your first and subsequent employers.
Political rhetoric about inequality is irrelevant to you. There are as many opportunities today as there have ever been, perhaps more. If money is your goal, there’s no reason you can’t make it. But it will take drive, creativity, effort, dedication and perseverance. Look within, not without.
If you seek a career that isn’t about money, but rather about things more important to you—service to others, the arts—that’s fine. Just know there’s a price to be paid. Don’t envy others or expect more financial reward than your choices can deliver.
The system is always rigged by some people and for some people. No denying it, it’s harder for some folks to get ahead. That’s always been the case and always will be. Ignore it.
Eschew seeking what you feel you’re entitled to, rather than what you earned. All you’re entitled to is stated in the Declaration of Independence.
Take responsibility for your actions and choices. Keep a mirror handy.
Be prudent with money. Always save first before you spend a single cent. Live within or below your means. Never pay credit-card interest. Avoid the accumulation of unnecessary stuff.
Be aware. Pay attention to what’s happening in the world so you’re better prepared to separate fact from opinion.
Plan ahead. Think long term. The future is not as far away as you may think.
Good advice for new graduates... good advice for you and me... good advice for our kids and grandchildren...
And goodbye for now... see you next time...
Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC.
Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Brown Family Wealth Advisors is not a registered broker/dealer and is independent of Raymond James Financial Services.
Any opinions are those of Mike Brown and Brown Family Wealth Advisors and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a recommendation. There is no guarantee that these statements or opinions will prove to be correct. Investing involves risk, and you may incur a profit or a loss regardless of the strategy selected. Past performance is not indicative of future results. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
