I don't know about you but I was real clueless when I got into the workforce and was asked if I wanted to contribute to a 401K.
Before making a decision, I had a little conversation with myself in my head that went a little something like this:
"What the heck is a 401K?"
"That sounds real shady."
"It's gonna be coming out of my paycheck? Nah, I need ALL of my hard earned coins!"
"Well I guess I should sign up for it because they say they're gonna match me. What's the worst that can possibly happen here?"
I know I'm not the only one who has had a similar convo with themselves. I wasn't even thinking about no retirement, I was fresh out of school and simply trying to gain some real life experience and look fly while doing so. I was focused on what was going on in my world that day, that week, that month.
Nah, 30 to 40 years down the line didn't exist to me.
I ultimately ended up putting a good chunk of money into my 401K while at my first job, but when hard times hit a few years later, I was up against a wall and had no choice but to pull all of my money out. There I was with no savings, just like that. I didn't know any better though. Fast forward a few years, I started learning more and more about retirement planning and the different types of Individual Retirement Accounts (IRAs) and having real life conversations with my peers about it.
Shamese CampbellThe General Ledger Group
When I heard Shamese Campbell of The General Ledger Group tell her story, it struck a chord in me. Imagine making millions and millions of dollars as a boss babe business owner, traveling all around the world, and living the high life for years and years, but now being in retirement age with absolutely nothing to show for it.
This is Campbell's 82-year-old grandmother's reality. When business was booming, she was so focused on the "here and now" that she didn't think to plan for retirement. "We don't think about these things when we're young," Campbell said.
In the age of boss babes and Girl CEOs everywhere, it's especially important to ensure that the money you're bringing in while hustling has an assignment. "Everyone's always so focused on securing the bag that they're not even thinking about managing it and putting it aside for the future," she continued.
When you work for yourself, you have to make sure that you don't lose sight of retirement planning. Just because you may not have access to an employer sponsored 401K plan, doesn't mean that you can't contribute. You can take advantage of an IRA and set it up to where you're contributing the maximum amount each year ($5,500) so that you can earn more on your investment. This will allow you to ensure that you're gonna actually be able to enjoy the fruits of your labor over the years once you're ready to throw in the towel.
There's two common types of IRAs: Traditional and Roth. The difference between the two is that with a Traditional IRA, you're getting a slight tax break because you're putting pre-tax dollars into it. When it's time to withdraw, you'll get taxed on it. With a Roth IRA, it allows you to invest with after-tax dollars so that when it's time to pull from it, it's completely tax free. The unfortunate truth is this though: retirement seems so far away for so many millennials and, as a result, they are either not saving at all for it or not saving enough.
The General Ledger Group
It's a foreign concept for those who were never educated on the importance of retirement planning.
The whole point of retiring is so that you won't have to work anymore. Campbell says that, "If you have to get a job after retirement, then you've done something wrong along the way."
That's why we see so many older people working jobs these days. Not because they necessarily want to, but because they have to in order to survive. Think about it: do you want to be standing in front of a Wal-Mart greeting people when you're 70 years old? If your answer is "no," then it's time to really shift your mindset and start thinking about and planning for your FUTURE SELF.
Wherever you are in your workforce journey, it's never too late to start pouring into your future. Here's a few ways that you can ensure a happy and thriving retirement for yourself.
Make it a priority.
It's sad to see how we work every single day for so many years and end up broke, busted, and disgusted at the end of it all. That's because we're so conditioned to go to work in order to pay bills. Campbell says that you should be making it a priority to pay yourself first before doing anything else. Regardless of how much you're putting in, it's imperative to be contributing something. Start small if necessary and increase your contributions over time. You also gotta make sure that you're disciplined enough to not pull from it like I did when things got a bit rough.
Know where you are to know where you're going.
A lot of times, people don't know how much it truly costs to live the life that they live or even how to calculate their financial independence number. You have to have an idea of how much money you even need in order to retire comfortably and maintain your standard of living or better. Additionally, you have to take into account inflation over the years. Ask yourself this: With how much you're contributing currently, is your future self gonna be good or nah?
Sit down with someone.
Regardless of whether you're an entrepreneur or work a traditional 9-5, you should be sitting down with a professional to discuss your options and create a plan that will allow you to live the life you desire after retirement. You should also meet with them multiple times over the years to make changes to your contributions as needed. You do not need to figure it all out on your own, that's why there are qualified people who are willing and ready to help you get the most bang for your buck.
Campbell says that you should be planning for the future so that the future can take care of you. If you're not looking out for you, then who will? Make yourself a priority and do what's necessary TODAY so that you can live your best life TOMORROW.
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