April 12, 2022 • 31 mins
“Save for retirement” is something many of us have heard but getting started can be overwhelming. Bola Sokunbi, a Certified Financial Education Instructor and money expert, joins Gam to share all her tips and tricks related to saving money, planning for retirement, and investing.
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@clevergirlfinance
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Episode Transcript
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Speaker 1 (00:09):
What's up, everybody. I'm Gammy and this is positively gam
Last season, I did an episode on retirement. This time,
I want to focus on how to say for your retirement,
because I really don't think I did that all that well.
I'm excited to have a financial expert join me on
today's episode, so let's get into it. BOWLISHA Coombe is
(00:30):
a certified financial education instructor, finance expert, best selling author, speaker,
and founder of Clever Girl Finance, a financial education platform
and community for women, empowering them to achieve financial wellness
and live life on their own terms. Hi, Bolo, welcome.
(00:50):
Thank you for having me. I'm so excited to be here.
I'm at the age where a lot of my friends
are retired or starting to retire, and we're constantly talking
about how we wish we knew to save earlier in retirement,
and I definitely did not do that. And I think
it's really difficult for people a lot of times because
we get so overwhelmed with just making it day to day,
(01:14):
you know, making sure you have enough funds to pay
the bills, and then you know you're trying to set
aside funds for you know, to be able to enjoy
some vacation. And I think when you're young, you just
don't think about retirement. It seems like it's so far away. Yes,
so when should people start saving for retirement? Well, the
(01:37):
best time to start saving for retirement is pretty much today,
as soon as you can, right, and this is because
of the power of time and your ability to take
advantage of compounding, appreciation and dividends. However, even if you
are starting late, it's important to keep in mind that
retirement is not a day. So the average retirement lasts
about twenty to twenty five years, and most people don't
(01:58):
get to the statured retirement age of age sixty five
and just stop working. Many people take on second careers,
take on part time jobs, etcetera. So there is the
opportunity that if you're starting late with saving for retirement,
that you can also take advantage of catch up opportunities
with things like the i R a UH, the Individual
Retirement Account where for two you can contribute up to
(02:20):
six thousand dollars, but if you're over fifty you can
contribute seven thousand dollars, and then also catch up savings
with things like the four one K four three b
et cetera. Where you can save an extra I believe
sixty dollars if you're over the age of fifty, So
there are opportunities for you to catch up. But while
you're young, the best time to start saving for retirement
(02:41):
is right now. So is that like as soon as
you start working. Yeah, so, as soon as you get
that first paycheck, you know, and you lay out your budget,
one of your goals should be to think about your
future self and put a small percentage aside. Right, the
more time you have, the less amount of money you
need to save, because over the long term, that money
(03:01):
will compound and appreciate and gain dividends as that investment growth.
So you know, while you're young, you get your first job,
start saving. Okay, So as an older person, let's say
in your fifties, right, how much what percentage of your
salary would you be needing to put aside compared to
(03:25):
you know, a young person who's just starting out. It
really depends. I would say that for an older person,
you definitely want to take advantage of those catch up savings.
So with the I R, like I mentioned, there's that
extra thousand dollars you can save with the four one k,
four three four seven bees there as the extra six
you can save, and then whatever else you have to spare.
(03:47):
After you have met your day to day obligations, your
other shorter term goals, you can think about putting that
towards retirements. It's important to keep in mind that you
when it comes to retirement savings. Right when you get
to your retirement age that you decide to retire, you're
not going to cash out your entire retirement portfolio in
that one day. Ideally, what you're gonna be doing is
(04:07):
taking out a certain amount every year, which means that
you still have a chunk of money that can continue
to grow for you even during retirement. So you want
to think about taking advantage of those catch up savings
and then contributing whatever else you have extra towards saving
for retirement. I guess I was thinking more of a
percentage like fient of your salaries should put aside, compared
(04:32):
to a younger person who may only need to put
maybe five percent, like I don't know. Yeah, So it's
kind of hard to say because it really depends on
the person's financial obligations. The rule of thumb is that
you should put aside ten of your income. That's the
general rule of them. But if you're trying to catch up,
then it all depends on your obligations. In terms of housing.
(04:55):
You know how much you're paying for housing, how much
you're paying for your other financial obligations. But a rule
of thumbis ten percent, and then if you are trying
to catch up or more, if you can fit it
into your budget. So what are some of the most
common challenges when it comes to saving for retirement? The
bills that you had, your daily expenses, are those kinds
of things that kind of get in the way of
(05:17):
saving for retirement. Absolutely, so, a lot of people worry
about just not having enough in their paycheck to save
for retirement. A lot of people worry about the fact
that or they kind of give up a little bit
if they didn't start early enough, and they're like, Okay,
what's the point, I'm not going to be able to
save much? And then a lot of people worry about
not having enough when they get to retirement, even though
(05:39):
they're saving right now. A lot of you know, a
lot of what I see is people worrying about how
do I make get spare money within my existing budget?
To put aside for my future self when life is
happening to me right now. And how can people leverage
an I RA or four oh one K for retirement? Basically,
you set up an account rate you can set up
depending on your employment status. Your employer may offer you
(06:02):
a retirement savings plan that you can set up and
have automatic peril deductions taken out of um your paycheck,
or you don't have to worry about it. You just
set up your percentages. Or you can open your own
account with a brokerage right like a trow Price a
Vanguard of Fidelity, for example, open your own traditional IRA
A savings account and start to make contributions that you
(06:23):
build into your budget into that accountant every time you
get paid. Okay, now, what about people that don't want
to just have their money sitting in a bank. What
are some other ways that you can invest or other
(06:45):
ways that you can't get a good return on your dollars?
Like I somebody who never still don't understand stocks and bonds,
but I know and cryptocurrency, Like that's like speaking Greek
to me. What can you say that would be helpful
in the language that we can comprehend about other ways
(07:07):
to invest your money besides just putting in a bank
and IRA. Yeah, so when it comes to investing, their
variety of different ways. But the key thing that you
want to keep in mind is broad diversification, and that
basically means that you don't want to put all of
your eggs in one basket, so you want to diversify.
You can invest in stocks, which is where you buy,
(07:28):
you know, part of a company, you become a part
owner in a company. You can invest in in funds,
which is an aggregation of different stocks into one fund
where you become a part owner of several different companies.
So you may hear people talk about index funds mutual
funds as an example where they could have an arrogate
of different types of companies within the fund. You can
(07:50):
invest in bonds, which are essentially an IOU when you
make a loan to the government or a corporation and
in return they pay you interest as they pay you
back their loan. And of course they're the more trendy
investments like cryptocurrency n f T s. And then another
investment is investing in business, whether it's your own business
or somebody else's small business. The key there is diversification,
(08:13):
understanding your risk tolerance, what's gonna cause you not to
sleep well at night, and make sure you do your research.
And I know a lot of people feel comfortable keeping
their money in bank accounts, but really you want to
put your money to work for you. And in the
bank account it's great for short term savings, it's great
for emergency savings, but inflation eats away at your savings
(08:34):
in the bank account. Right So, prior to the pandemic,
the average inflation rate in the US was about two
and a half percent, and I recently read an article
that says as a result of the pandemic, inflation is
about six to six and a half percent right now.
And think about the interest rates that banks are giving
you all less than one percent right now. The longer
you have that money there when you think long term,
(08:54):
the less it's worth. So anything that you need your
thinking about investing for the future or long term, you
want to put it to work for you. So stocks, funds, bonds, business,
real estate. That's another great way to invest and realistic.
It's not just about renting property. You could buy farmland,
you could buy into our resorts, you could buy into
(09:15):
commercial property. You could buy into car washes. There's all
kinds of real estate diversification ongoing. And then as you
said about crypto, you know, it's new, it's highly volatile
when it comes to investing in crypto n f T S.
If you struggle with sleeping at night and you can't
afford to lose it, that's it. I think that's really
(09:36):
important for people over fifty to consider, like really be
I do know that much like you have to be
careful with what you decide to invest in because we
can't afford to be that risky. So we want to
be careful with the decisions that we make on what
we and how we're going to invest our money. Where
(09:57):
As a younger person, you know, they have a little
bit more time and they may be a little bit
more willing to take those risks. You were talking about
investing in real estate and farmland, and you know, I
(10:17):
just want to say that, you know, there there are
a lot of young people that are working and coming
into large amounts of money right and it's exciting and
it feels good and you want to kind of splurge
and take advantage of luxury items and all of that.
(10:37):
But I feel like there's a lot of young people
out here that are really doing well for themselves, and
I just hope that they're getting the proper financial counsel
because we have to provide for ourselves, We have to
provide for our communities, and you know, we have to
take on that challenge and responsibility for ourselves. We can't
always be looking for somebody else to give us something.
(10:59):
And creating your own business. Real estate, there was an
article not too long ago where people and it was
being highlighted in social media where people were buying farmland
because land is money. Real estate is money, you know,
and those are investments exactly. Those are investments for the future,
(11:19):
investments for your children. So we gotta kind of get
past the fancy cars and the diamonds, you know what
I mean. I couldn't agree with you more. I'm a
firm believer of building wealth, prioritizing. You can have the
nice things. You can have the fancy cars, you can
have the jewelry, but you want to prioritize building wealth,
and not just building wealth for yourself, but also passing
(11:40):
on the knowledge that you gain in your community, in
your family, and teaching your children the value of a
dollar before you just hand them the dollar. That's where
that generational wealth building begins, instilling the values and understanding
the value of a dollar. You don't have to have
a million dollars to transition generational wealth. You can transition
(12:00):
generational knowledge to start building that generational wall. Yeah, and
you were also talking about investing in business, like, for example,
if there's a baker who wants to own their own
shop later in life, or like I really love skating
and I wanted to buy a skating make and my
husband was like, that is the most ridiculous thing I've
(12:22):
ever heard, and we're not doing that, but it would
have been fun. But he didn't really see that, and
he was probably right. He didn't see that as an
investment is something that was going to financially benefit us.
And so that's the Those are the kinds of things
that you have to think about when you're investing in
(12:43):
a business. Am I right? Yes, you are right. So
when you're investing in business, first of all, you have
to make sure the numbers work for you have to,
you know, you can't just be I want to buy
a bakery, What does the bakery? What's it gonna earn?
You want average, how much money do you have to
put into start it up? And how much money do
you estimate you're gonna get from this bakery every month.
You're gonna need to know your numbers so you can
(13:04):
get some clarity and before you kind of go into
delve into this business full time, you also want to
make sure that you have a backup plan for yourself
right start to save money. Put money aside for your emergencies.
Put money aside to cover your day to day bill
so that when you put your full focus on that business,
you have a window of time, a buffer where your
bills are taken care of while you focus your energy
(13:26):
and getting your business on its feet and getting it
to start generating income. Another really important thing about owning
a business is that just like you have emergency savings,
or you should have emergency savings, but your personal life
in case life happens, you also want to start. Once
your business starts making money, a percentage of your profits
ten start putting it aside to create a buffer for
(13:47):
your business. Because every business has a slow season. You
want to meet payroll, You want to be able to
make your products and services. You want to continue to
market your business, so that way, you've built this buffer
of cash that when things get slow you can tap
into it. Especially you know, when you think about happening
to the pandemic and black and brown communities being locked
out of the PPE loan option, there was no fallback. Lin.
(14:10):
So I'm a huge advocate of businesses having you know,
buffer is the same way you create a buffer in
your own personal life. I want to speak a little
bit because I have a lot of friends who are
um have job opportunities now, like with contract work and
(14:33):
freelance work or part time work that is bringing in
extra dollars. And also speak about entrepreneurship because there's so
many entrepreneurs out here, so they don't have access to
for a one K that's matching, you know, the money
that they may be setting aside for themselves, what do
(14:57):
they how do they invest or how do they manage
those dollars that there those extra dollars that they're making.
It might be as small as three hundred extra dollars
a month and they decide, oh, well, I'm just going
this is just my play money. So you have people
that that are just have that kind of extra money,
(15:19):
or people that are making thousands of dollars because some
of these contracts, some of this contract work is particularly
in healthcare, they're making really good dollars, and so how
do you manage that money properly so that you really
are saving the way you think you want to? Because
it I mean, I think if I was bringing home
(15:41):
that much money, it would be I would be like
whoa you know, and it would be difficult for me
to just say, Okay, now you're doing this for a reason.
You're doing this to help plan for your retirement. What
is the best way to handle those extra dollars? This
is a great question I want to get asked for
very often. So the first thing you want to do
(16:02):
as you're making money each paycheck, especially if your contract
based is you want to set money aside to pay
your taxes, because come end of the year, you're gonna
get that tax bill from Uncle Sam. And Uncle Sam
doesn't play when it comes to his money. So about
that income should be put aside separate account to cover
your tax obligation. If at the end of the year
(16:23):
you don't owe that much in taxes, that's great. You
have extra money to save to invest in pursue your goals.
The second thing you want to do is to create
a budget. And a lot of times when people are
working on contract basis, they have an inconsistent income and
so they have low income paid low windows of income
and high income high windows of income. And you want
to determine what is your average what are your average
(16:45):
expenses that you have to pay for every month and
know that once you have that high window of income,
you're gonna put money aside to be able to cover
those monthly expenses when you have that low period of income.
So you want to know what your average expenses are
and create that ash buffer to cover yourself when your
income is lower. The next thing you want to do
is save for retirement. And there are several options that
(17:07):
have tax deferred benefits, meaning you don't pay taxes now
on that money, and your money has the opportunity to
grow tax free into the future, and you can say
for retirement and they're actually really great plans. So the
one we all know about is the individual Retirement account
the IRA, and you can open one of those at
a brokerage. It allows you to save up to six
thousand dollars. However, depending on how you have structured your
(17:31):
business or your freelancing work or your contracting work. There
are other investment options like the s c P I
RA or the Simple I RA or the self employed
form mon K that are specific for business owners and
self employed individuals where you can save more money. So,
for example, with the step I ra UM you can
contribute up to twenty of your up to a maximum
(17:53):
of I believe sixty one thousand dollars every year into
a retirement account tax deferred, and if you have in ployees,
you would have to contribute to that for them as well.
A Simple I RA is for business owners who have
less than a hundred employees, where you can also contribute
up to fourteen thousand dollars in two right, and a
(18:13):
self employed foreign K is specific to individuals who are
self employed with no employees other than their spouse and
they can also contribute up to twenty dollars tax deferred
in So there are options for you to save for retirement.
As a business owner, entrepreneur or self employed person. You
want to make sure that you understand the eligibility requirements
(18:34):
and you can simply do that on the I r
S website or talk to an accountant. But don't think
that because you don't have an employer offering you a
form on K that you cannot save. You absolutely can,
and you can actually save more on average than someone
who's employed by a company. You know this. Even listening
to you, Bola, I'm still overwhelmed. I'm still really overwhelmed
(18:55):
because it is so much information, and I'm feeling like,
is it worth in vesting in a financial advisor to
help you kind of figure all of this out? Because
I'm just listening to you, I'm I'm still like yes.
So I always tell people, you know, it's always when
we talk finances, there's always a lot of information. But
pick one place, right, and it could be starting with
(19:16):
a financial advisor. And if you're someone who is overwhelmed
by all the different plans and terms and you're not
sure where to start, a financial advisor financial planner is
a great place to get help with managing your finances,
get that professional guidance. But it's important to remember that
this is a relationship, right, So you have to be
clear on your goals. What do you want to accomplish
with your money. You have to be clear on your
(19:38):
risk tolerance, right. The financial advisor cannot read your mind
and you want to make sure that they're creating a
plan for your hard earned money in a way that
it's gonna work for you and allow you to sleep
well at night. So when you're thinking about a financial advisor,
you definitely want to ask them for their credentials. Right,
what qualifies you to be a financial advisor or financial planner?
How do you typically in ask money and make sure
(20:01):
it aligns with your risk tolerance? Right? You don't want
them taking risks with cryptocurrency if that's not what you're
interested in doing and you don't feel comfortable with that.
You want to get a sense for their values and
their ethics to make sure that they are in line
with yours and they're going to put it be putting
your money in investments that aligned with you. You also
want to get a sense of their fee structure. What
is it gonna cost you? Do they charge you a
(20:22):
flat fee, are they going to charge you a percentage
based on how much you invest with them, or are
they going to charge you based on commission? And ultimately,
when it comes to any financial advisor financial planner, they
should be working in your best interests first and not
trying to sell your products and services ahead of that.
So what is the best way to even find a
(20:43):
financial planner for yourself? Like, do you just go to
the bank or are you asking a friend or you know,
how do you find that person? Yes, so the most
popular way of finding a financial planner is through word
of mouth from referrals, friends and valily because they already
trust that person. You can certainly walk into your financial
establishment and asked to be paired with one, or you
(21:05):
can visit a CFP dot net the certified financial Planning
board that can assign you or showcase to you financial
planners in your area. But again, it's a relationship, right.
This person is handling your hard earned money. You work
really hard for it, so you can ask them questions,
you can do research on this person. You can take
(21:26):
your time getting to know them before you hand over
your money, because you want to feel comfortable with this
person who's going to be handling your money for you. Okay,
let's talk a little bit about social security because I
(21:47):
feel like people don't feel like they can live off
the social security anymore. I guess back in the day
they could, but the cost of living now is so high.
First of all, let me say this, most of my
friends and family typically have multiple streams of income. I
don't know too many people anymore. Number one, I don't
know anybody who can afford to have a wife that
(22:08):
stays home with the kids. Like most households, both partners
are employed. And most of my friends that have retired
also have taken on second careers because they don't feel
like that they can live off of Social Security. So,
(22:29):
how does saving for retirement affect your social security? You know?
That is it's so true. And my mom is at retirement.
My mom is seventy one and she gets a security
check every month and it's about six and she can't
do she can't do much of anything with that money. So, um,
(22:49):
it's really important not to rely on Social Security as
your plan. I I continue to hear updates and read
updates about how it may not even exist for the
younger generation. Right may not be available, and so it's
important to start saving for yourself right. You know, second career,
second jobs is some sometimes what many people have to
(23:09):
do because that Social Security check is not cutting it.
And sometimes when people start collecting their social Security benefits early,
So early is when you start collecting it. I believe
at age sixty two, you actually get smaller monthly payments
than what you would if you waited until your normal
retirement age of sixty five, between sixty five to sixty seven.
(23:31):
So social Security, you know, back in the day, it
was something that was meant to support people into retirement, right,
but it's no longer the case, and at this point
it's almost pretty much everyone for themselves. It's six dollars
that my mom gets cannot I mean, you can't even
pay rent. So yeah, we have to prioritize our own
(23:51):
retirement savings, our own multiple streams of income, like you said,
just doing what we can to bring money in for ourselves. Yeah,
so I guess you have to really pay attention. And
the Social Security sends out you know that your information
to you every so often. You just really have to
pay attention to win is the best time for you
to retire? I guess because I'm really it's really frustrating
(24:16):
to work all of those years and then not be
able to really benefit at all from Social Security. I mean,
like you said, six hundred dollars, who can live off
for six hundred dollars. It's a real challenge and it's
unfortunate you know if my mom didn't have my mom
still works. You know, she started a second career as
a nurse, as an infant nurse, and so that's how
(24:38):
she brings money in addition to whatever she had saved
for retirement over the last several years. So was she
in health care before? No, my mom wasn't banking. And
then in her fifties she went to nursing school. Okay, okay, yes,
and took on a second career. Yeah, and she loves it,
doesn't she. Yeah, I'm sorry she loves her baby. I
(25:00):
know I'm missing so much. But anyway, that's a whole
another conversation. Okay, Bola, thank you so much. This was
really um an interesting conversation. I hope it was helpful
for the listeners. Now it's time for the segment. Wouldn't
(25:23):
you like to know before you go? Bola, I have
a couple of rapid fire questions for you. What book
are you currently reading? I'm actually about to start a
new book that I have here, and it's called His
Only Wife. It's a novel by peace ad Zo Media.
So I'm hoping it's a good one. All right, sounds good.
(25:43):
I had to put that on my list. It's set
in West Africa. Yes, all right, what is one positive
thing you want to get off your chest? The one
thing is encouragement to people to know that it is
possible to achieve financial wellness. But it starts with adjusting
your mindset first and believing that you can, because that
(26:05):
belief will help you take those first small actions. And
a lot of people feel that those actions are too
small to be significant, but they do add up over time,
making the effort to save the small dollars, to invest
the small dollars, to learn more about finances, to budget,
it all adds up. So really, people, I want to
believe that it is possible to achieve your own financial wellness, right,
(26:27):
And I mean even if it's as small as five
or ten dollars a month, you know you have to
start somewhere and you really have to make it a
priority for yourself. So maybe you have to skip you know,
getting your nails done or you know, getting your hair
done or whatever that may be. But you really have
(26:49):
to start investing early because you know you're so right.
SoC security is not going to do it for you,
lad us, but not least. What's a model that you
live by always do my best. I'm a mom to twins,
I'm a business owner. Not every day is a great day,
(27:11):
but I do my best. I love it. I love it.
Thank you so much for joining us today, Bola. Tell
people where we can find you on social media. It
was such a pleasure, and you can find me at
clever Gon Finance, on Instagram, on YouTube, and on Facebook.
Thank you Bowlad for stopping by Positivity Gammon talking to
(27:33):
us all about saving for retirement. Appreciate you. Thank you.
So this is my major takeaway from this episode is
that I know it sounds like a lot of money
and the average person just doesn't have it. The important
(27:55):
thing is that you've got to start to save, even
if it's just a dollar. You've got to start saving
and planning because Social Security is not going to do
it for you. Now it's time for Gams Corner, where
(28:18):
I answered band questions from my listeners. Okay, what was
your favorite thing about being a nurse? Wow? How about everything?
I absolutely loved being a nurse. I missed it so much.
I made that decision kind of late in life. I
was like maybe twenty seven when I went to nursing
(28:41):
school and I was the oldest person in my class.
But I just I loved it. My father was a doctor,
my brother in law was a doctor, and I used
to go to the hospital with my dad when he
would make grounds. Now he couldn't take me, you know,
of course, into the patient's rooms or anything like that,
but I just I liked being in that atmosphere that
(29:04):
back in the day of Provident Hospital, they had an operator,
and I would sit with the operator, the telephone operator,
while my dad made his rounds. And I just it's
kind of in my blood and I just enjoy healthcare
and everything medical. And we are a family of service.
So everybody in my family it has a role that
(29:27):
is in service to the community some way, and this
was my way and just health and healing. It's just
something that I loved. And I chose a specialty women's
health that was important to me, and it was basically
a happy place. I was a mother baby nurse and
bringing life into the world and participating in that just
(29:50):
brought me so much joy and I truly miss it.
The second question is if you could trade lives with
someone for a day, who it it be. Okay, So
this is what I'm gonna say about that you never
know what's really going on behind closed doors. You never
know the challenges that other people have to deal with.
So I am grateful for the life that I have
(30:13):
and the life that I live. So I choose to
say in my own seat, today was a great episode.
I appreciate you guys so much. You can submit your
questions to positively gam at red table talk dot com
for a chance to hear me read them on my
next episode. And that's our show for this week of
(30:35):
positively gam. You can follow me online at gammy nors
and now on TikTok at gammy Nors. Also help us
out by leaving a five star review on Apple Podcast
and by hitting the follow button on I Heart Radio.
Stay grateful, y'all. Positively Gam is produced by Red Table
(31:00):
Talks Podcast and I Heart Radio. Executive producers are Adrian Banfield,
Naris Valen Jethro and Jada Pinkett Smith. Our audio engineer
is Calvin Bailiff, and our associate producer is Irene Bischofberger.
Our theme song is produced by d Beats
What's up, everybody. I'm Gammy and this is positively gam
Last season, I did an episode on retirement. This time,
I want to focus on how to say for your retirement,
because I really don't think I did that all that well.
I'm excited to have a financial expert join me on
today's episode, so let's get into it. BOWLISHA Coombe is
(00:30):
a certified financial education instructor, finance expert, best selling author, speaker,
and founder of Clever Girl Finance, a financial education platform
and community for women, empowering them to achieve financial wellness
and live life on their own terms. Hi, Bolo, welcome.
(00:50):
Thank you for having me. I'm so excited to be here.
I'm at the age where a lot of my friends
are retired or starting to retire, and we're constantly talking
about how we wish we knew to save earlier in retirement,
and I definitely did not do that. And I think
it's really difficult for people a lot of times because
we get so overwhelmed with just making it day to day,
(01:14):
you know, making sure you have enough funds to pay
the bills, and then you know you're trying to set
aside funds for you know, to be able to enjoy
some vacation. And I think when you're young, you just
don't think about retirement. It seems like it's so far away. Yes,
so when should people start saving for retirement? Well, the
(01:37):
best time to start saving for retirement is pretty much today,
as soon as you can, right, and this is because
of the power of time and your ability to take
advantage of compounding, appreciation and dividends. However, even if you
are starting late, it's important to keep in mind that
retirement is not a day. So the average retirement lasts
about twenty to twenty five years, and most people don't
(01:58):
get to the statured retirement age of age sixty five
and just stop working. Many people take on second careers,
take on part time jobs, etcetera. So there is the
opportunity that if you're starting late with saving for retirement,
that you can also take advantage of catch up opportunities
with things like the i R a UH, the Individual
Retirement Account where for two you can contribute up to
(02:20):
six thousand dollars, but if you're over fifty you can
contribute seven thousand dollars, and then also catch up savings
with things like the four one K four three b
et cetera. Where you can save an extra I believe
sixty dollars if you're over the age of fifty, So
there are opportunities for you to catch up. But while
you're young, the best time to start saving for retirement
(02:41):
is right now. So is that like as soon as
you start working. Yeah, so, as soon as you get
that first paycheck, you know, and you lay out your budget,
one of your goals should be to think about your
future self and put a small percentage aside. Right, the
more time you have, the less amount of money you
need to save, because over the long term, that money
(03:01):
will compound and appreciate and gain dividends as that investment growth.
So you know, while you're young, you get your first job,
start saving. Okay, So as an older person, let's say
in your fifties, right, how much what percentage of your
salary would you be needing to put aside compared to
(03:25):
you know, a young person who's just starting out. It
really depends. I would say that for an older person,
you definitely want to take advantage of those catch up savings.
So with the I R, like I mentioned, there's that
extra thousand dollars you can save with the four one k,
four three four seven bees there as the extra six
you can save, and then whatever else you have to spare.
(03:47):
After you have met your day to day obligations, your
other shorter term goals, you can think about putting that
towards retirements. It's important to keep in mind that you
when it comes to retirement savings. Right when you get
to your retirement age that you decide to retire, you're
not going to cash out your entire retirement portfolio in
that one day. Ideally, what you're gonna be doing is
(04:07):
taking out a certain amount every year, which means that
you still have a chunk of money that can continue
to grow for you even during retirement. So you want
to think about taking advantage of those catch up savings
and then contributing whatever else you have extra towards saving
for retirement. I guess I was thinking more of a
percentage like fient of your salaries should put aside, compared
(04:32):
to a younger person who may only need to put
maybe five percent, like I don't know. Yeah, So it's
kind of hard to say because it really depends on
the person's financial obligations. The rule of thumb is that
you should put aside ten of your income. That's the
general rule of them. But if you're trying to catch up,
then it all depends on your obligations. In terms of housing.
(04:55):
You know how much you're paying for housing, how much
you're paying for your other financial obligations. But a rule
of thumbis ten percent, and then if you are trying
to catch up or more, if you can fit it
into your budget. So what are some of the most
common challenges when it comes to saving for retirement? The
bills that you had, your daily expenses, are those kinds
of things that kind of get in the way of
(05:17):
saving for retirement. Absolutely, so, a lot of people worry
about just not having enough in their paycheck to save
for retirement. A lot of people worry about the fact
that or they kind of give up a little bit
if they didn't start early enough, and they're like, Okay,
what's the point, I'm not going to be able to
save much? And then a lot of people worry about
not having enough when they get to retirement, even though
(05:39):
they're saving right now. A lot of you know, a
lot of what I see is people worrying about how
do I make get spare money within my existing budget?
To put aside for my future self when life is
happening to me right now. And how can people leverage
an I RA or four oh one K for retirement? Basically,
you set up an account rate you can set up
depending on your employment status. Your employer may offer you
(06:02):
a retirement savings plan that you can set up and
have automatic peril deductions taken out of um your paycheck,
or you don't have to worry about it. You just
set up your percentages. Or you can open your own
account with a brokerage right like a trow Price a
Vanguard of Fidelity, for example, open your own traditional IRA
A savings account and start to make contributions that you
(06:23):
build into your budget into that accountant every time you
get paid. Okay, now, what about people that don't want
to just have their money sitting in a bank. What
are some other ways that you can invest or other
(06:45):
ways that you can't get a good return on your dollars?
Like I somebody who never still don't understand stocks and bonds,
but I know and cryptocurrency, Like that's like speaking Greek
to me. What can you say that would be helpful
in the language that we can comprehend about other ways
(07:07):
to invest your money besides just putting in a bank
and IRA. Yeah, so when it comes to investing, their
variety of different ways. But the key thing that you
want to keep in mind is broad diversification, and that
basically means that you don't want to put all of
your eggs in one basket, so you want to diversify.
You can invest in stocks, which is where you buy,
(07:28):
you know, part of a company, you become a part
owner in a company. You can invest in in funds,
which is an aggregation of different stocks into one fund
where you become a part owner of several different companies.
So you may hear people talk about index funds mutual
funds as an example where they could have an arrogate
of different types of companies within the fund. You can
(07:50):
invest in bonds, which are essentially an IOU when you
make a loan to the government or a corporation and
in return they pay you interest as they pay you
back their loan. And of course they're the more trendy
investments like cryptocurrency n f T s. And then another
investment is investing in business, whether it's your own business
or somebody else's small business. The key there is diversification,
(08:13):
understanding your risk tolerance, what's gonna cause you not to
sleep well at night, and make sure you do your research.
And I know a lot of people feel comfortable keeping
their money in bank accounts, but really you want to
put your money to work for you. And in the
bank account it's great for short term savings, it's great
for emergency savings, but inflation eats away at your savings
(08:34):
in the bank account. Right So, prior to the pandemic,
the average inflation rate in the US was about two
and a half percent, and I recently read an article
that says as a result of the pandemic, inflation is
about six to six and a half percent right now.
And think about the interest rates that banks are giving
you all less than one percent right now. The longer
you have that money there when you think long term,
(08:54):
the less it's worth. So anything that you need your
thinking about investing for the future or long term, you
want to put it to work for you. So stocks, funds, bonds, business,
real estate. That's another great way to invest and realistic.
It's not just about renting property. You could buy farmland,
you could buy into our resorts, you could buy into
(09:15):
commercial property. You could buy into car washes. There's all
kinds of real estate diversification ongoing. And then as you
said about crypto, you know, it's new, it's highly volatile
when it comes to investing in crypto n f T S.
If you struggle with sleeping at night and you can't
afford to lose it, that's it. I think that's really
(09:36):
important for people over fifty to consider, like really be
I do know that much like you have to be
careful with what you decide to invest in because we
can't afford to be that risky. So we want to
be careful with the decisions that we make on what
we and how we're going to invest our money. Where
(09:57):
As a younger person, you know, they have a little
bit more time and they may be a little bit
more willing to take those risks. You were talking about
investing in real estate and farmland, and you know, I
(10:17):
just want to say that, you know, there there are
a lot of young people that are working and coming
into large amounts of money right and it's exciting and
it feels good and you want to kind of splurge
and take advantage of luxury items and all of that.
(10:37):
But I feel like there's a lot of young people
out here that are really doing well for themselves, and
I just hope that they're getting the proper financial counsel
because we have to provide for ourselves, We have to
provide for our communities, and you know, we have to
take on that challenge and responsibility for ourselves. We can't
always be looking for somebody else to give us something.
(10:59):
And creating your own business. Real estate, there was an
article not too long ago where people and it was
being highlighted in social media where people were buying farmland
because land is money. Real estate is money, you know,
and those are investments exactly. Those are investments for the future,
(11:19):
investments for your children. So we gotta kind of get
past the fancy cars and the diamonds, you know what
I mean. I couldn't agree with you more. I'm a
firm believer of building wealth, prioritizing. You can have the
nice things. You can have the fancy cars, you can
have the jewelry, but you want to prioritize building wealth,
and not just building wealth for yourself, but also passing
(11:40):
on the knowledge that you gain in your community, in
your family, and teaching your children the value of a
dollar before you just hand them the dollar. That's where
that generational wealth building begins, instilling the values and understanding
the value of a dollar. You don't have to have
a million dollars to transition generational wealth. You can transition
(12:00):
generational knowledge to start building that generational wall. Yeah, and
you were also talking about investing in business, like, for example,
if there's a baker who wants to own their own
shop later in life, or like I really love skating
and I wanted to buy a skating make and my
husband was like, that is the most ridiculous thing I've
(12:22):
ever heard, and we're not doing that, but it would
have been fun. But he didn't really see that, and
he was probably right. He didn't see that as an
investment is something that was going to financially benefit us.
And so that's the Those are the kinds of things
that you have to think about when you're investing in
(12:43):
a business. Am I right? Yes, you are right. So
when you're investing in business, first of all, you have
to make sure the numbers work for you have to,
you know, you can't just be I want to buy
a bakery, What does the bakery? What's it gonna earn?
You want average, how much money do you have to
put into start it up? And how much money do
you estimate you're gonna get from this bakery every month.
You're gonna need to know your numbers so you can
(13:04):
get some clarity and before you kind of go into
delve into this business full time, you also want to
make sure that you have a backup plan for yourself
right start to save money. Put money aside for your emergencies.
Put money aside to cover your day to day bill
so that when you put your full focus on that business,
you have a window of time, a buffer where your
bills are taken care of while you focus your energy
(13:26):
and getting your business on its feet and getting it
to start generating income. Another really important thing about owning
a business is that just like you have emergency savings,
or you should have emergency savings, but your personal life
in case life happens, you also want to start. Once
your business starts making money, a percentage of your profits
ten start putting it aside to create a buffer for
(13:47):
your business. Because every business has a slow season. You
want to meet payroll, You want to be able to
make your products and services. You want to continue to
market your business, so that way, you've built this buffer
of cash that when things get slow you can tap
into it. Especially you know, when you think about happening
to the pandemic and black and brown communities being locked
out of the PPE loan option, there was no fallback. Lin.
(14:10):
So I'm a huge advocate of businesses having you know,
buffer is the same way you create a buffer in
your own personal life. I want to speak a little
bit because I have a lot of friends who are
um have job opportunities now, like with contract work and
(14:33):
freelance work or part time work that is bringing in
extra dollars. And also speak about entrepreneurship because there's so
many entrepreneurs out here, so they don't have access to
for a one K that's matching, you know, the money
that they may be setting aside for themselves, what do
(14:57):
they how do they invest or how do they manage
those dollars that there those extra dollars that they're making.
It might be as small as three hundred extra dollars
a month and they decide, oh, well, I'm just going
this is just my play money. So you have people
that that are just have that kind of extra money,
(15:19):
or people that are making thousands of dollars because some
of these contracts, some of this contract work is particularly
in healthcare, they're making really good dollars, and so how
do you manage that money properly so that you really
are saving the way you think you want to? Because
it I mean, I think if I was bringing home
(15:41):
that much money, it would be I would be like
whoa you know, and it would be difficult for me
to just say, Okay, now you're doing this for a reason.
You're doing this to help plan for your retirement. What
is the best way to handle those extra dollars? This
is a great question I want to get asked for
very often. So the first thing you want to do
(16:02):
as you're making money each paycheck, especially if your contract
based is you want to set money aside to pay
your taxes, because come end of the year, you're gonna
get that tax bill from Uncle Sam. And Uncle Sam
doesn't play when it comes to his money. So about
that income should be put aside separate account to cover
your tax obligation. If at the end of the year
(16:23):
you don't owe that much in taxes, that's great. You
have extra money to save to invest in pursue your goals.
The second thing you want to do is to create
a budget. And a lot of times when people are
working on contract basis, they have an inconsistent income and
so they have low income paid low windows of income
and high income high windows of income. And you want
to determine what is your average what are your average
(16:45):
expenses that you have to pay for every month and
know that once you have that high window of income,
you're gonna put money aside to be able to cover
those monthly expenses when you have that low period of income.
So you want to know what your average expenses are
and create that ash buffer to cover yourself when your
income is lower. The next thing you want to do
is save for retirement. And there are several options that
(17:07):
have tax deferred benefits, meaning you don't pay taxes now
on that money, and your money has the opportunity to
grow tax free into the future, and you can say
for retirement and they're actually really great plans. So the
one we all know about is the individual Retirement account
the IRA, and you can open one of those at
a brokerage. It allows you to save up to six
thousand dollars. However, depending on how you have structured your
(17:31):
business or your freelancing work or your contracting work. There
are other investment options like the s c P I
RA or the Simple I RA or the self employed
form mon K that are specific for business owners and
self employed individuals where you can save more money. So,
for example, with the step I ra UM you can
contribute up to twenty of your up to a maximum
(17:53):
of I believe sixty one thousand dollars every year into
a retirement account tax deferred, and if you have in ployees,
you would have to contribute to that for them as well.
A Simple I RA is for business owners who have
less than a hundred employees, where you can also contribute
up to fourteen thousand dollars in two right, and a
(18:13):
self employed foreign K is specific to individuals who are
self employed with no employees other than their spouse and
they can also contribute up to twenty dollars tax deferred
in So there are options for you to save for retirement.
As a business owner, entrepreneur or self employed person. You
want to make sure that you understand the eligibility requirements
(18:34):
and you can simply do that on the I r
S website or talk to an accountant. But don't think
that because you don't have an employer offering you a
form on K that you cannot save. You absolutely can,
and you can actually save more on average than someone
who's employed by a company. You know this. Even listening
to you, Bola, I'm still overwhelmed. I'm still really overwhelmed
(18:55):
because it is so much information, and I'm feeling like,
is it worth in vesting in a financial advisor to
help you kind of figure all of this out? Because
I'm just listening to you, I'm I'm still like yes.
So I always tell people, you know, it's always when
we talk finances, there's always a lot of information. But
pick one place, right, and it could be starting with
(19:16):
a financial advisor. And if you're someone who is overwhelmed
by all the different plans and terms and you're not
sure where to start, a financial advisor financial planner is
a great place to get help with managing your finances,
get that professional guidance. But it's important to remember that
this is a relationship, right, So you have to be
clear on your goals. What do you want to accomplish
with your money. You have to be clear on your
(19:38):
risk tolerance, right. The financial advisor cannot read your mind
and you want to make sure that they're creating a
plan for your hard earned money in a way that
it's gonna work for you and allow you to sleep
well at night. So when you're thinking about a financial advisor,
you definitely want to ask them for their credentials. Right,
what qualifies you to be a financial advisor or financial planner?
How do you typically in ask money and make sure
(20:01):
it aligns with your risk tolerance? Right? You don't want
them taking risks with cryptocurrency if that's not what you're
interested in doing and you don't feel comfortable with that.
You want to get a sense for their values and
their ethics to make sure that they are in line
with yours and they're going to put it be putting
your money in investments that aligned with you. You also
want to get a sense of their fee structure. What
is it gonna cost you? Do they charge you a
(20:22):
flat fee, are they going to charge you a percentage
based on how much you invest with them, or are
they going to charge you based on commission? And ultimately,
when it comes to any financial advisor financial planner, they
should be working in your best interests first and not
trying to sell your products and services ahead of that.
So what is the best way to even find a
(20:43):
financial planner for yourself? Like, do you just go to
the bank or are you asking a friend or you know,
how do you find that person? Yes, so the most
popular way of finding a financial planner is through word
of mouth from referrals, friends and valily because they already
trust that person. You can certainly walk into your financial
establishment and asked to be paired with one, or you
(21:05):
can visit a CFP dot net the certified financial Planning
board that can assign you or showcase to you financial
planners in your area. But again, it's a relationship, right.
This person is handling your hard earned money. You work
really hard for it, so you can ask them questions,
you can do research on this person. You can take
(21:26):
your time getting to know them before you hand over
your money, because you want to feel comfortable with this
person who's going to be handling your money for you. Okay,
let's talk a little bit about social security because I
(21:47):
feel like people don't feel like they can live off
the social security anymore. I guess back in the day
they could, but the cost of living now is so high.
First of all, let me say this, most of my
friends and family typically have multiple streams of income. I
don't know too many people anymore. Number one, I don't
know anybody who can afford to have a wife that
(22:08):
stays home with the kids. Like most households, both partners
are employed. And most of my friends that have retired
also have taken on second careers because they don't feel
like that they can live off of Social Security. So,
(22:29):
how does saving for retirement affect your social security? You know?
That is it's so true. And my mom is at retirement.
My mom is seventy one and she gets a security
check every month and it's about six and she can't
do she can't do much of anything with that money. So, um,
(22:49):
it's really important not to rely on Social Security as
your plan. I I continue to hear updates and read
updates about how it may not even exist for the
younger generation. Right may not be available, and so it's
important to start saving for yourself right. You know, second career,
second jobs is some sometimes what many people have to
(23:09):
do because that Social Security check is not cutting it.
And sometimes when people start collecting their social Security benefits early,
So early is when you start collecting it. I believe
at age sixty two, you actually get smaller monthly payments
than what you would if you waited until your normal
retirement age of sixty five, between sixty five to sixty seven.
(23:31):
So social Security, you know, back in the day, it
was something that was meant to support people into retirement, right,
but it's no longer the case, and at this point
it's almost pretty much everyone for themselves. It's six dollars
that my mom gets cannot I mean, you can't even
pay rent. So yeah, we have to prioritize our own
(23:51):
retirement savings, our own multiple streams of income, like you said,
just doing what we can to bring money in for ourselves. Yeah,
so I guess you have to really pay attention. And
the Social Security sends out you know that your information
to you every so often. You just really have to
pay attention to win is the best time for you
to retire? I guess because I'm really it's really frustrating
(24:16):
to work all of those years and then not be
able to really benefit at all from Social Security. I mean,
like you said, six hundred dollars, who can live off
for six hundred dollars. It's a real challenge and it's
unfortunate you know if my mom didn't have my mom
still works. You know, she started a second career as
a nurse, as an infant nurse, and so that's how
(24:38):
she brings money in addition to whatever she had saved
for retirement over the last several years. So was she
in health care before? No, my mom wasn't banking. And
then in her fifties she went to nursing school. Okay, okay, yes,
and took on a second career. Yeah, and she loves it,
doesn't she. Yeah, I'm sorry she loves her baby. I
(25:00):
know I'm missing so much. But anyway, that's a whole
another conversation. Okay, Bola, thank you so much. This was
really um an interesting conversation. I hope it was helpful
for the listeners. Now it's time for the segment. Wouldn't
(25:23):
you like to know before you go? Bola, I have
a couple of rapid fire questions for you. What book
are you currently reading? I'm actually about to start a
new book that I have here, and it's called His
Only Wife. It's a novel by peace ad Zo Media.
So I'm hoping it's a good one. All right, sounds good.
(25:43):
I had to put that on my list. It's set
in West Africa. Yes, all right, what is one positive
thing you want to get off your chest? The one
thing is encouragement to people to know that it is
possible to achieve financial wellness. But it starts with adjusting
your mindset first and believing that you can, because that
(26:05):
belief will help you take those first small actions. And
a lot of people feel that those actions are too
small to be significant, but they do add up over time,
making the effort to save the small dollars, to invest
the small dollars, to learn more about finances, to budget,
it all adds up. So really, people, I want to
believe that it is possible to achieve your own financial wellness, right,
(26:27):
And I mean even if it's as small as five
or ten dollars a month, you know you have to
start somewhere and you really have to make it a
priority for yourself. So maybe you have to skip you know,
getting your nails done or you know, getting your hair
done or whatever that may be. But you really have
(26:49):
to start investing early because you know you're so right.
SoC security is not going to do it for you,
lad us, but not least. What's a model that you
live by always do my best. I'm a mom to twins,
I'm a business owner. Not every day is a great day,
(27:11):
but I do my best. I love it. I love it.
Thank you so much for joining us today, Bola. Tell
people where we can find you on social media. It
was such a pleasure, and you can find me at
clever Gon Finance, on Instagram, on YouTube, and on Facebook.
Thank you Bowlad for stopping by Positivity Gammon talking to
(27:33):
us all about saving for retirement. Appreciate you. Thank you.
So this is my major takeaway from this episode is
that I know it sounds like a lot of money
and the average person just doesn't have it. The important
(27:55):
thing is that you've got to start to save, even
if it's just a dollar. You've got to start saving
and planning because Social Security is not going to do
it for you. Now it's time for Gams Corner, where
(28:18):
I answered band questions from my listeners. Okay, what was
your favorite thing about being a nurse? Wow? How about everything?
I absolutely loved being a nurse. I missed it so much.
I made that decision kind of late in life. I
was like maybe twenty seven when I went to nursing
(28:41):
school and I was the oldest person in my class.
But I just I loved it. My father was a doctor,
my brother in law was a doctor, and I used
to go to the hospital with my dad when he
would make grounds. Now he couldn't take me, you know,
of course, into the patient's rooms or anything like that,
but I just I liked being in that atmosphere that
(29:04):
back in the day of Provident Hospital, they had an operator,
and I would sit with the operator, the telephone operator,
while my dad made his rounds. And I just it's
kind of in my blood and I just enjoy healthcare
and everything medical. And we are a family of service.
So everybody in my family it has a role that
(29:27):
is in service to the community some way, and this
was my way and just health and healing. It's just
something that I loved. And I chose a specialty women's
health that was important to me, and it was basically
a happy place. I was a mother baby nurse and
bringing life into the world and participating in that just
(29:50):
brought me so much joy and I truly miss it.
The second question is if you could trade lives with
someone for a day, who it it be. Okay, So
this is what I'm gonna say about that you never
know what's really going on behind closed doors. You never
know the challenges that other people have to deal with.
So I am grateful for the life that I have
(30:13):
and the life that I live. So I choose to
say in my own seat, today was a great episode.
I appreciate you guys so much. You can submit your
questions to positively gam at red table talk dot com
for a chance to hear me read them on my
next episode. And that's our show for this week of
(30:35):
positively gam. You can follow me online at gammy nors
and now on TikTok at gammy Nors. Also help us
out by leaving a five star review on Apple Podcast
and by hitting the follow button on I Heart Radio.
Stay grateful, y'all. Positively Gam is produced by Red Table
(31:00):
Talks Podcast and I Heart Radio. Executive producers are Adrian Banfield,
Naris Valen Jethro and Jada Pinkett Smith. Our audio engineer
is Calvin Bailiff, and our associate producer is Irene Bischofberger.
Our theme song is produced by d Beats
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