Does planning for retirement feel overwhelming?
In this episode, I talk about how developing your own investment philosophy can help you approach saving for retirement with clarity and intention. I share my personal journey—from starting small with company-matched contributions to maximizing my retirement savings as an entrepreneur.
The best time to start planning for retirement is now, and I outline three steps to help you build your investment philosophy. You’ll get practical tips on automating your retirement contributions and balancing financial priorities so you can begin investing in your future.
If you’re ready to stop stressing over retirement savings and start building a money management strategy that addresses your goals, this episode is for you. Tune in now and grab those tips that will change the way you think about planning for retirement. Your future self will thank you!
Learn how to prioritize your retirement by creating your investment philosophy…
- [02:30] Where are you at with retirement?
- [07:45] Why you need to prioritize saving for retirement
- [12:20] 3 steps to take now
Tune into this episode of Money Files to learn how to build an investment philosophy and start prioritizing your retirement.
Are you ready to start asking for help with your finances? Apply to work with me, and let’s start working towards your financial goals.
If you loved the discussion about building your investment philosophy check out the episode, Investing, Planning For Retirement, And Building Wealth As A Financial Coach!
Transcript for “How To Simplify Your Retirement Plan”
Intro: Hi and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work everyday with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.
Keina: Hello and welcome back to a new episode of Money Files. So today I just want to talk to you. I was thinking about some of the things I love about budgeting and what it has allowed me to do and I think that budgeting allows me to play with my numbers. I think budgeting allows me to chart my own path. I think a lot of things can feel really stressful when we’re thinking about finances and we’re thinking about like where to start. And one of the things that I’ve kind of given to myself as a gift is just the ability to show up in the way that I want to show up, to show up in a way that makes sense for me and knowing that I get to evolve over time. So I think that there’s a lot of information in the world right now, especially when we think about finances and if you have some people that say like you can’t pay off your debt and save money at the same time, you have some people that may subscribe to more of a yoga lifestyle, whatever that is. But it’s been really important for me to have and develop some of my own philosophies based off of what I’m experiencing with my finances and based off of my financial goals.
So I wanted to talk to you specifically about retirement because I think that one of the questions that comes my way a lot is, am I on track for retirement? And I’ve definitely had that question at different points in my life and I think asking the question of like, am I on track for retirement can sometimes feel really overwhelming depending on what season of life you’re in. It could be, if you’re asking that question in your twenties, you could think you don’t have anywhere to start. If you’re asking that question in your forties, you could also think like, I’m not sure where to start. I’ve lost so much time. And both of those situations and seasons of life can cause you to have a freeze response. And the question that I started to ask myself was more so like, where am I right now? What information do I have right now? And I just wanted to talk to you a little bit about that because I want you to develop your own philosophy when it comes to investing and I want you to be thinking about it in a way that makes sense for you so that way you’re also not living in a world of fake math and that you are building a path for you to set up some incremental change.
When I say build your own philosophy, I’m not giving you permission to not do anything. I’m giving you permission to do it in a way that makes sense for you and to do it in a way that feels good to you. And I also want you to know that those things can change over time. When I think about my retirement and the lack of knowledge that I had to when I gained awareness and how I’ve shifted, like my investment philosophy has shifted over time and it has grown with me. So back in my early twenties, like when I was working in St. Louis public schools, I can’t really tell you that I had a real awareness of retirement. I knew it was a thing I needed to prepare for but at 22, 23 I kind of had just like defaulted to the retirement plan that came with the school system. And then I moved and I started working for a charter school. We had access to a 403b. I remember someone telling me, just make sure that you have the match and at least like make sure that you are investing the match.
So at the time I thought that was like really sound investment decision. So I was putting 4% of my income into my retirement. I was getting about 6% from the company. They were matching plus they were contributing. So like 10% of my overall income was going into my 403b. I was very happy, I was very excited about that. And then I gained new knowledge, I gained the new knowledge that I could actually be contributing a lot more to my retirement based off of the limit that the IRS sets every year. So prior to, I was thinking I just need to get the match. And then I actually learned, oh, I could be contributing upwards of 17,000, then it was 18,000. That number grew over time because the IRS changes the number. So I think it’s at that point that I started to be more aware of how I wanted to invest in my retirement. I knew from taking finance classes in college that the time value of money was really important.
And for me, part of my investment philosophy was I want to make sure that I can invest early and often. It is going to be cheaper for me to save for retirement in my twenties than it is if I wait some other point in my life. I started making a plan for how I could increase my contributions to my retirement to go from like the 4% to making sure that I was maxing out with, I think it was like 18% at the time. And so with that 18,000 I needed to be putting in about 18% of my base income if I wanted to meet that annual contribution limit. So I started devising a plan for that. It was like, okay, I already know that I’m at four. How can I get to six? After I’m at six, how can I get to eight and after I’m at eight, how can I get to 10? And this is where I talk about the playfulness coming in because I started playing with my budget to say like what would it look like if I shifted my retirement contributions from 4% to 6%, from 6% to 8%? What parts of my life am I willing to adjust, am I willing to change because I have this goal of being able to max out my retirement contributions?
Some of that I did through the fact that I got an annual cost of living adjustment. So it would be like, okay, that 3% increase that they give you, just put that all into your retirement. Also every single year increase it by 1%. So I made a plan for myself to actually get to the place where I could become someone who maxed out my retirement. And my main thought that I had about maxing out my retirement was like, once I do this, I get to like set it and forget it. It’s so much cheaper for me to do it right now. Also, once I get to that point, all the money that I get back and when I say get back, all the money that I net, that’s going to be my money. I’m no longer going to be thinking about am I maxing out my retirement? That’s not going to be a question for me anymore. So I wanted to position myself to be in a place where I was maxing out my retirement, that was really important and as I left from actually working for someone else and then starting to work for myself, I still wanted to be the person that maxed out my retirement.
The numbers look a lot different now. I can contribute so much more to my retirement, but because I have this investment philosophy, from the time that I became an entrepreneur, I was considering and making it a priority, how can I make sure that I am investing in my retirement? I didn’t leave it as something that I would do once I could afford it. And that’s the power of having a philosophy behind something and having a plan behind something is because I wanted to make it a priority. I talk to entrepreneurs all the time and even people that are W2 employees and because you have never explicitly said that something is a priority for you, you stall on it and you don’t actually commit to doing something like I as a person and just like my fundamental. like kind of money beliefs is like I want to make sure that I’m contributing and paying myself first before I’m doing anything else that’s kind of fun and not in a restrictive way but I feel like if I can have a $500 car payment, I also want to make sure that I have at least $500 going to my retirement.
If I can save a thousand dollars a month to go on vacation, I also want to be saving a thousand dollars in my retirement. And so not everything comes down to this like one for one, but it makes me get real with myself and say like where can I cut out excuses and where can I make my future a priority? And like I said, this is my philosophy, it is not ways in which I talk to clients, but I do offer them like how are you making sure you are putting your retirement on autopilot? And the reason being, and my thoughts behind that is because if we don’t put it on autopilot, we’ll always forget about it. It’ll just be the thing that sounds really nice and we won’t ever do it. And sometimes you just have to make the commitment to be like, okay, you know what? This is the year that I’m increasing my retirement by 4%. However the chips fall I’m going to figure out how to budget whatever comes into my account from there.
Because once you make that adjustment every single time, every year after that, if you get a raise, it’ll just be the thing that you do. The 4% will be a greater amount than what you were putting in the year before. But you are going to get the compound effect of being the person that invests and prioritizes your retirement above all else. If you are an entrepreneur then it’s a similar principle in thinking about what is that dollar amount that you want to contribute every single month and how do you make that a priority? And the reason that I can speak candidly about this is because you are taking draws to make sure that you can do all these other things in your life but you are forgetting the fact that you have a future. There’s a reason that you built your business and your business is actually not paying into your future self.
I want you to be the best employer that you’ve ever had and by being the best employer that you’ve ever had, I need you to prioritize the retirement. For my business everything that I pay myself, I have a set percentage that I make sure that I put into retirement and at times it’s been like, okay, I’m going to put in 8% of everything I’m paying myself. The next year it’s going to be 10% of everything I’m paying myself. The next year it’s going to be 15% of it, whatever I’m paying myself. But I have prioritized retirement because I knew that if I didn’t allow myself to start somewhere, then I would let myself off the hook and I just wouldn’t prioritize my retirement at all. So I would go two, three years and not have actually shifted or set up a retirement account or made excuses for why I couldn’t save for retirement.
And no matter if you are on the entrepreneur side or on the W2 side, I want you to have a plan for how you want to invest in your retirement. If money seems tight right now, that’s okay, but I still want you to think like where could I take a 1% increase? Because you are going to take that 1% increase in some other area of your life like you are allowing and giving yourself permission to do other things. So I also want you to allow and give yourself permission to invest in your future self. I think it’s one of the most amazing gifts that you can give to yourself is that I’m going to start contributing now because of the time value of money and the time value of money simply means that the sooner you get started, the easier it is to accumulate wealth for your future self.
It’s going to be cheaper at 20 than it is at 30 than it is at 40. And if you are someone who’s over 40 or over 30, don’t be discouraged by this. But I want you to use it as motivation to like just start today. Start somewhere so that you can know that when you turn 60 or 65, that was the gift that you gave yourself. And I think, like I said, it’s the best gift that you can give yourself. So if you have a question like, am I ready for retirement? Will I have enough to retire? I do want you to think about having some type of investment and philosophy plan, but I also want you to, in one of your money dates, even if you just do it once a quarter, I want you to actually go and make sure you identify who is the account holder of my retirement plans.
So I need you to know, is that Hartford, is it Fidelity? And I want you to actually look at one of those statements. And the reason I want you to know the holder of your retirement plan and look at the statements is because I want you to know how much money do I actually have right now in my retirement? Is my money sitting in cash or is it invested in an asset? And so if you look at your statements from month to month, you should be able to see, like are they actually in stocks or does it actually say that it’s sitting there in cash and available to be invested? So that’s like just a small thing that you can do. I’ve had several clients where we’ve gone through and we’ve looked at their retirement statements and we realize that the money that they’ve been contributing has just been sitting there in cash and it’s not actually being invested in the market. So that’s the first thing.
The second thing I want you to do is I want you to establish your investment philosophy. So how do you want to balance investing in your retirement with other financial priorities in your life? Maybe you really love to travel and you love new experiences, but how do you want to balance that with also knowing what’s your baseline for investing? So maybe you really love to travel and you would love, love, love to save a thousand dollars a month to travel, but you realize that you’re not putting anything into your retirement fund. And so maybe this year you’re willing to say like, I’m at least going to put $500 towards retirement every single month and I’ll do $500 for travel. Once again, this may go against some of the other things that you’ve heard, but the reason that I am asking you to have an investment philosophy is because I want you to get started.
Right now you might be going against all of the knowledge and everything that you’ve heard and so you are not starting at any particular level. I want you to get started. Getting started is better than doing nothing. I want you to give yourself permission to start somewhere and not just ignore the fact that you aren’t contributing to your retirement and that you’ll just figure it out somewhere. Because the truth is that some of you are spending $20,000 on things that you enjoy every single year and you might be putting in a thousand dollars into your retirement. So I want you to ask like, does that feel really balanced for me? And if you go to that future version of yourself, when would that future version have wanted you to prioritize your retirement? And just thinking about when I get a raise, what do I automatically think about doing? How do I allocate some portion of this to my future self? And this is where we start to shift the habits. We start to shift about how we think about money differently.
The next part I want you to do is I want you to automate and adjust. So make sure that you have automatic contributions. So investing isn’t something that you’re like constantly thinking about. And if you’re not investing right now, how can we start small? 1% matters. Maybe by the end of the year we’re going to get you 2%. Maybe by the beginning of next year we’ll get you to 5%, but how do we get you to start somewhere so you’re not stuck in like an all or nothing mentality or even telling yourself that it doesn’t matter I’m so far behind? Because you can always come back and adjust your plan. And then I want you to make sure that you leverage time and growth.
So investing is about starting right now and not waiting until you make more money because your future wealth, your future financial independence is really built on you making a small move today. It’s not about you waiting until there’s a better time. So that is the process that I want you to go through as a result of this episode so that way you aren’t waiting to make more money for you to invest or just looking at the fact like, well I have money in my 401k or I don’t even know what my 401k is. So you’re making it mean that because you have a lack of knowledge, then you can’t do this. Or even giving yourself a pass because you have some debt and you think that because you have debt you shouldn’t actually be contributing to your retirement. One of my clients, Ellie and she is on my podcast as well, when we were working together, I want to say she got about a $30,000 raise.
And with that raise, we did something that she had never done before. We prioritized her financial goals. And one of the ways that we did that is that we maxed out her retirement. She started contributing to her retirement. And if you like ran a simple retirement calculator, she was in her late twenties and that decision was like a $5 million decision for her. So I think she started making a little over $130,000 a year and now she’s maxing out her retirement. So she was putting in at least $20,000 every single year. She’s going to do that for at least the next 30 years. And that’s a $5 million decision for her. Like her earning potential is going to continue to go up. But also because she made that decision, she’s never going to have to think about like, oh my goodness, am I contributing enough for retirement because we did that once and for all?
And now everything that she’s netting and getting after her retirement contributions, after her healthcare deductions, etcetera, that’s money she truly gets to play with. She gets to save. She has some debt that we were paying off. She also wanted to travel internationally once a year, like that was one of her goals. But she was able to put that into motion without the guilt of like, should I be doing more when I think about my retirement? So she built her investment philosophy while she was working with me and she gave her future self just a beautiful gift. And as her earning potential continues to increase, then her retirement is going to increase. But her ability to have extra money to play with different goals that she had, there’s going to be more opportunities and less financial guilt about what she should be doing with her money.
So thank so much for tuning into this episode and like I said, what I want you to take away from this episode is that you want to think about what is my investment philosophy when I’m thinking about my retirement, where am I right now? How can I make sure that I’m balancing my investments with my other financial goals? So how can I make sure that I’m creating a lifestyle that feels both and for me so that way your 65-year-old self is going to thank your current self for making those, what might seem like difficult decisions right now, but are going to feel like no-brainer decisions as you see your investment portfolio grow. And as you see that, like I can invest and I can also spend money in ways that I value right now.
Outro: Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.wealthovernow.com/appointment and let’s get started.
