How To Save For Retirement

which is so interesting. Yeah, this is definitely the text space. This is where it's all at. Yeah, Like I feel like crypto and n f t s those are like only fans like those are that's that's too a little too far. But investing in retirement, like that's what's really sexy. And so I am super I'm always super excited to do a retirement episode. It doesn't feel sexy to me, to each his own, but I am glad to be talking about it and dreaming about days when I don't

have to work. Although, let's be real, Jen, we're gonna set our hands to something always and forever. Yes, well, and we're going to talk about that in the episode. Yeah, I'm very excited about it. But first, our sponsors sponsors spring break that was recorded in St. Petersburg. Not that, not that spring break that one, but kind of spring break is coming and if you are lucky or have kids home from school, you will get a few days off. We know you'll be twiddling your thumbs thinking, gosh, I

wish I had something to do. Don't worry, We've got you. We wrote a free e book for you with over two hundred things for you to do that will help you save money. So grab your copy at Frugal Friends podcast dot com slash e book again, that's Frugal Friends podcast dot com, slash e book. Right it on your to do list so you can immediately mark it off. You're welcome. Yes, and this episode is also brought to

you by your roth Ira. We are recording this pretty early, so the I R S has probably changed the tax deadline again. But let's like for a second, pretend it's April four. This means you have less than three weeks to invest in your roth Ira. This is important because you can only invest a max of six thousand dollars per year, so if you miss this year, you do not get it back. So if you're able to take a three week detour on your financial goal and take

advantage of this amazing tax sheltered retirement account. Do it. And if you don't know what I'm talking about, listen to the rest of this episode. And if you want more on this topic of retirement, queue up episode ninety four, which is Retirement one oh one Everything frugal people need to know about saving for retirement, and or episode one fifty eight where we talk about roth iras with Barbara Guinty. She is a gem and explained so many things in a way that did not make us feel stupid. So

we loved that. So get those ready for after this episode. Yeah, this episode is like a follow up to episode ninety four, so we talk a lot about how to figure out how much to save and stuff like that, and here we're kind of really getting into nuts and bolts and like a little bit of how to do those things, so a little bit deeper. But I love these articles. They're really good, and I, for one, for one, love talking about investing in retirement and I think it's sexy.

So which is great. Now, Jen, because I remember you've shared a couple of times on the podcast that when you first got into writing about personal finance. This was the topic that you said you would not write about, and then they said, yes you will, here's your assignments, and then you did it and then became an expert, and now you love it and you think it's sexy, which in my opinion is like a little too far. But the evolution, I will be honest, Jill. That wasn't investing.

That was insurance. And I am still not an expert in insurance, but I do know a whole lot more about it and I can't hold a conversation with an insurance agent should I ever need to at a party, and I can say that's probably not too far off. But let's get into our first article. And it is actually named how to Say for Retirement, because if that's what you're searching for, this is going to be the first article to come up. And I actually know the

writer of this article, Cat Triutina. She is super smart, and so I knew it was going to be a good article and I read it and it was So what did you think about it, Jill? Yeah, Well, it goes through seven steps, which we will go through all steps because they kind of go in order. It's not one of those like pick your favorites. You kind of do need to go in order of the seven steps that are listed out, And I like how it starts off with describing kind of where does this sit for

most people. That's always an interesting perspective for me of how many people are thinking and talking about investing in retirement. And she mentions. The writer mentions that according to the Federal Reserve, about a quarter of Americans have no retirement savings at all, and almost two thirds of non retired adults are concerned about being able to meet their retirement savings goals. So if that's you, please rest assured that you're not alone. There are plenty of people also in

that boat. But also well done for engaging in some of this content because we don't have to stay there, We don't have to remain in a concerned place about what is retirement going to look like for us? So this episode certainly for you. And um, I'm excited to get into the steps because I think as I was reading through it, after about step three, I feel like

is where your typical basic information stops. Where people will kind of give you a little bit of a snippet of how to invest and this article feels like it keeps going and gives you the full picture of the steps to take the safer retirement. So let's go through them, because it's not a destination, essentially, like saving for retirement is the journey, so that kind of leads us into the first one is set your retirement savings goal. So

this is what we talk a lot about. We are very much focused on step one of this whole investing journey because people so often think about paying off debt or investing in terms of like, Okay, I'm well, I'm old enough, I need to get my finances in order, or this is a burden weighing on me. I feel anxious about money, so I need to figure it out

to alleviate that anxiety. When really we cannot do our finance as well, and we cannot feel confident about them unless we know why we're doing it, and it can't be to alleviate some kind of shame or guilt or

societal obligation. It has to be because you know what you're looking for in life, not just in retirement, but all the years leading up to it too, Because again, saving for retirement is the journey, and so we have to not just look at the destination, which is actual retirement, but we have to look at designing our dream life and not the life that the media or our family or social media is telling us should be our dream life.

We have to do the hard work of figuring out what that is and then figuring out how to afford it while still saving for that destination. That's just a long way of saying Number one is set your retirement saving schools. So once you design that, then figure out what it costs and know that it will change. You'll have to revisit this every five years at least you'll have to revisit step one and go through all seven

steps again. So never feel like you're behind either because just because you're doing it now, I mean you should have done it five years ago. Yeah, but like you'll be doing it in five more years, So don't wait just because you want to put it off, Like, do it now. So yeah, that is that step one. Set your retirement savings goal the amount right. Well, I like how you're pairing both, not you're pairing both the what

do I want life to look like? And so there's some intangible goals and desires that we might have for retirement and what our journey likes to get looks like

to get. They're kind of like the why, but then also with real hard, concrete numbers, and so the article does give a breakdown of how do you figure out how much money you're going to need in retirement to pay for the lifestyle that you're hoping you can have, And so there's a lot of formulas and different rules that can be followed, So feel free to dig into the article more to learn how to calculate how much

you need to save. I will say one thing that was mentioned in a separate article as we were doing some research for this episode, where a lot of people think that they can live off of maybe seventy five have to maybe even fifty percent of their current expenses in retirement because they think they're spending is going to

be less, but in reality it's not. So definitely keep that in mind and even go at least ad of of current spending, if not more, because a lot of times that is when extra travel is happening, or bucket lists or medical concerns or greater desires to be generous. So just keep that in mind that this isn't the time to be like oh, I'm going to really cut my expenses in retirement if we've got time to plan for it. Yeah, and the end number is really arbitrary.

You don't know how much money you're going to need in retirement. I think the main thing is to design the life that you want throughout that journey, and that's cut your expenses, raise your income so you can have you can focus on the month to month, how much you're investing, that's the really important thing. If you want a formula is the most common. We talked about it in episode, but you just multiply your annual expenses by and that's essentially what you would need to save to retire.

So like, if you spend fifty dollars a year and that's not with your investment, you just spend fifty grand a year, then times fifty grand is one point to five million. So that's kind of what your goal should be. And so that's nice to figure out to see, but sometimes that number can be intimidating. Don't let it intimidate you.

Focus on the month to month savings, right. That's another thing that this article points out is that we just need to focus month to month and make sure we're investing every month of every year from now on till we retire. And so once you figured out how much you need to save, paired with the reality that you're going to be really looking at it every five years at least, you want to open a retirement account that

stuff too. And so, of course a retirement account historically investment accounts in the stock market, you're going to have a significantly better return on your investment than just throwing your money into a savings account. So this is what we're talking about, investing in retirement, putting it into some sort of account that's going to grow to a higher percentage. And so there are two main types of retirement accounts.

There's employee sponsored retirement accounts like a four oh one K and individual retirement accounts like I R A s and so in general, both are available in traditional and RATH varieties. Both offer tax advantaged growth of your investment money. But you pick whether you'd prefer an income tax break now or in retirement. So yeah, choose which one you want to do or both. But that's that is going

to need to happen. You need to open that account to have someplace to put that money that you're putting a way every month. Yeah, and ideally you will have both because I think if the last two years have taught us anything is that we you cannot rely on what was to plan for what will be. And so you don't know what taxes are going to be like when you retire um, but you do know what taxes

are like right now. So if you are in a city where you are triple taxed and you want to pay less in taxes now, then maybe that means prioritizing more in traditional the four oh one K or the traditional IRA. If you are like us and you are in a state where there's no state tax, no city tax, like just you know, it's a free for all, then rapha as are really great. If you plan to make more money in the future but are at the beginning

of your career, rapha a great. So again, this is why you reevaluate like every few years, because you're going to be in a different place in five years than you are now. So you can make your plan now, do it, execute it. Stop worrying that it's not the

best plan, and just execute the plan. I have this this quote from The Flash, the TV show The Flash, and I is in my book and I just rediscovered it when I was doing um the updated edition of No Spend Challenge Guide, and it was from one of the villains, like one of the villains that turns good. He's played by um Wentworth Miller from Prison Break and he's just great. But the character says, make the plan, execute the plan, expect the plan to go off the rails,

throw away the plan. And I thought it was the most insightful quote. I have lived my life by that quote. And that is what I mean. That is saving for retirement to like you make these plans of you do rule to figure out how much to say you break that down monthly. We tend to use like a seven to ten interest um when we plan because SMP five

hundred typically returns ten percent. But if you're including bonds in your portfolio, which we'll get to that later, it's better to more be more on the conservative side because those do not yield ten. So you know, you can do the numbers, and you can make the plan, and you can use the accounts, the four one K, the I R A, and plans will still go off the rails. And that doesn't mean you failed. That means that the plan has gone off the rails and you throw the

plane away. You make a new plan, so so good. It doesn't mean don't plan, just keep adjusting, keep pivoting. Yeah, all that to say I do. I mean I have both a four oh one K like traditional and tax divert and tax now like benefit plans and currently our own contributing to roth iras that's us. But I like both, and I think having both, if you have the option, really important, really good. So I already talked about this a little bit, but number three is choose your investments.

So we were just talking and I don't know if it was the last episode of the episode before that our rerun where we talked about Jill opening her roth Ira and what a great step that was, and then she forgot to invest it the money in the account. That's what I'm saying, Like most most advice stops at step two in this article, and then I love that. I love that this author added this step three. Now

you've got to choose your investments. Even still though it was not an easy process, after watching you do it, Jen, I'm like, I bide, I am still very lost. Okay, So yeah, and because I you, is this something you only do one time if you're lucky. So I forgot, like it's been years since I've done it, So even I forgot had to because I don't do it all the time. It is a confusing process, especially if you're

using Vanguard or Fidelity. UM. I think Fidelity's website is a little more user friendly, but we were using Vanguard, and it's super easy if you use UM like an m one where you're doing a robo advisor and they will choose the investments for you and they will make sure that you are invested once you put money in. That's what a robo advisor does. So if you don't want anything to do with choosing investments, you just want to open the account, put the money in, and just

let it go. You don't want to do that like tiny step three that you will do you will spend thirty minutes on one time. Then it it would have taken me hours looking up all of these acronyms. Yeah, I think every few years I try to recreate it so I know what to do, and it confusing every single time. But choosing your investments is not a hard thing. We have our episode, UM, I can't remember what it is, but it's Minimalist Investing. It wasn't too long ago if

you if you scroll through, you should see it. But where we talk about how to compile a minimalist portfolio. So if you are specifically thinking about what investments do you want in your portfolio, check out our Minimalist Investing episode. We are not licensed stock brokers or certified financial planners, so we can't tell you exactly what to invest in, but there are some very common selections that you will see everywhere, and we kind of go over those common selections,

but we can't tell you that it's right for you. Essentially, and well, I will have that episode linked the Minimalist Investing episode in the show notes. Yeah, essentially, you're just you have to get in there and buy funds, so you're and honestly, I can't even tell you if I'm right on that one, because again it's been probably a year and a half since I last tried it. Well,

here's here's real talk. I still have yet to open one for Eric because when I first did this, I didn't realize that each one of us could have our own rath Iras. I know it sounds silly out loud, I just never really put much thought into it. I'm like, we, as a married couple opened up a roth Ira and then you and I were talking. You're like, well, you

both can have one. You're both individual people. I'm like, oh my gosh, and I just still haven't done it because I'm still so confused by the first time that I did it. So I'm waiting to come over to your house and you open one for Eric too. We will. Okay, So we're recording this pretty early, and so let's set a deadline of by the time this airs, Eric will

have a rough and maybe we should keeping. I mean, obviously we can't tell people what to do, but maybe that could be a our own learning process of redoing it. If there's anything that stands out, we can share that with you in our Frugal Friends Facebook group. Absolutely alright. Number four, once you've done steps one through three is set up automatic recurring deposits. This is the key. Do not skip this one. There's not much more to be said about this, but make it automatic. We love paying

bills automatically, we love saving automatically. And when you set up that monthly withdrawal to go into your retirement accounts, you don't have to think about it, so it's not dependent on you remembering doing it manually. And oftentimes when we get in the rhythm of it and we are not accustomed to having that money in our accounts, we don't miss it. We put away a couple of hundred dollars monthly to our rath. I ra a my up

her right. It's not joint one, and I love that I don't have to be a part of it constantly. It's happening for me that I'm investing. Of course, each one of us has to decide what we have a budget for, so there's no shame if it has to be a low amount for you. You're doing it, which is better than twenty five per cent of Americans. So just do it. It's get it on monthly. Mm hmm. Yeah. And so that at least in Vanguard is a separate

place from buying the funds. You have to buy your funds first and then go into a separate place to create automatic investments and from there on, that's why choosing your investments is just a one time deal. From then, when you set up automatic recurring deposits, everything is done for you. You set the amount, you tell it where you want it, like which funds you want it to buy?

Which are the funds you've already chosen. You do have to say the percentage that you allocate to it, which again we talked about centages in our Minimalist Investing episode. And that's it. That is it. So it's not difficult. It is confusing. I will not lie. You get in there and you there will be a lot of words you don't understand well. And that was my problem because everybody online is like, I do this for entertainment. I'm not an advisor, so I can't tell you how to

do it. There is just like zero information on on that step three of how to do it because everyone's telling you. I can't tell you what to invest in. So there is some sort of gap there in an ability to be able to d I Y this. But hopefully you can phone a friend who's done it before.

You've got someone in the financial space who can help you. Yeah, And we we have are a place in our Financial Freedom Mentorship where we actually have like a walkthrough video at least how to do it for Vanguard and UM with like sample savings templates up to like a d K and a million, but it can be a bit confusing, but there are examples on YouTube. You can see walkthroughs of buying index funds and setting up recurring deposits on YouTube. Those are there good? Yes. So number five is regularly

increase your retirement savings rates. So I think traditional wisdom has said fifteen percent of your income. When you set a minimum, people are always like, oh, does my employer match count towards part of that fifteen when really it is as much as possible and honestly is probably better, I say, especially because people plan to retire at sixty sixty five beyond. But statistically most people will have to retire before sixty four just due to health things or

family taking care of family member or whatever. So a lot of people have to retire before they're planning to. And so you want to have your retirement savings I would say by sixty maybe even earlier. And so if you can increase, the earlier you increase your retirement savings, the less overall you have to save. And so that's where frugality comes into. This whole thing is we love to save money. We want to get as much as we can for as little money as we can expend

it for within reason. And this is one of those places where if you spend more upfront, you will save more in the long run. People who save in their twenties and thirties will spend less money put less money into savings then somebody who starts in their thirties forties and get to the same place. So it's you save money. Like if you're trying to become a millionaire, you the earlier you start, the less money it takes to get there easier. I should have just said that in the beginning.

So yeah, do as much as you can, as early as you can. But I think the real thing is every month of every year for the rest of your working life, and it doesn't matter what what amount. And I like some of these tips that they mentioned within step five of how you can increase your retirement savings rate.

Some of it, hopefully is just that you're able to increase what you contribute monthly, but also if you have a raise or a bonus, or you happen to come across money you weren't anticipating, or a tax return, or you paid off debt, now a lot that amount of money that you were paying to debt to this retirement

savings avoiding lifestyle inflation. So yes, there's the monthly, but then we can also have our sights on when I get a large sum of money, either expected or unexpected, to be keeping that in our minds as well, to put it towards retirement, not just a cool new gadget for my immediate self, but to also be thinking about future self. And that's a training of the brain. All right.

Step six open an additional retirement accounts. So once you've done all of the other things and you're moving and grooving your max amount that roth ira, consider another one. So of course many people might have both a four oh one K and a roth IRA. Certainly if you are if you've got a side hustle or you work for yourself, you could consider a step I RA or a solo for oh one K. This is where I do have a question though, Jenn, if you can confirm

they talk about that. If you do, you can open multiple I ra s. But the contribution limit counts across all accounts. So is that to say that like I could have under my name to rath I ras, but the limit both combined is still going to be six K a year. Yeah, And So the reason they do that is, like I said before, balancing post tax and

pre tax protection. And this is the one thing where I go against the one thing where it's usually I'm just like, focus on one thing and then you know, once you've mastered that, go on to the next, or once you've maxed that out, go on to the next. I really believe in balancing unless you have a really good reason to do only wrath or to do only traditional, which you will know if you're that special, you're either

not working or you're really highly taxed. But I think for most people it's very beneficial to kind of just be putting your your apples evenly into both baskets. And I can't tell you what's good. You know best for you, but I just I hedge my bets because I don't know what taxes are going to be like when I retire, so and I'm in a tax bracket and situation or that makes sense for me. But yeah, I would say have both accounts if you can. Not everyone has access

to an employer sponsored account. If you have a side hustle where you can get a solo for a one k, great, but not everyone will. So that means you may have to divvy up between a traditional ira and a roth ira, and again you can put three k in one and three k in the other. But yeah, you can have two roth iras. But there's really no point in doing it.

It's just an account and you would have the same investments in each or you could have different investments in one single roth ira, so there's not really a point to doing it. I will say here that when if you ever do a four oh one K roll over and put that into a traditional ira or rath, that does not count towards your contribution limit for the year. So if you're rolling over six thousand from a four oh one k to an i ra a, the rollover

does not count as a contribution. It's considered rollover. Yeah, and if you if you have a four oh one k, definitely hit up capitalized. They will do four one k rollovers or four or three b rollers, etcetera. Are actually really complicated as well, and so you can go to Frugal Friends podcast dot com slash capitalized and they will help you with that for free. They're an amazing company.

So Frugal Friends podcast dot com slash capitalized to do that and um don't be worried about the rollover being considered a contribution. So the next one is number seven, last one on the list, and I love this one. Uh it's keep things in perspective through good times and bad And we saw bad times in January of this year in the stock market. If you were paying attention, you saw it went pretty much back down. I wasn't paying attention because I'm a long term investor and like,

this is what I mean. I've seen drops like this before. But historically the stock market sees an average return of ten but every few years we see corrections. Every I guess five to ten years, we see a crash. I don't know what the actual numbers are. There are averages, but but expect bad times, but also expect good times because there have been years where the SMP five has grown more than twenty percent. The trend has always historically been up. But if you laser focus in you will

see a lot of up and down. I mean, you have to be aware of your own risk um and we'll talk about this little in the next article. But be aware of your risk aversion. But keep things in perspective. We are investing for the long term. We're not crypto people. We are not pumping dump options and four X people. We're long This is retirement we're talking about. Those things aren't necessarily bad, but they're not for retirement. This is what we're talking about when we talk about retirement. It's

long term investing. So just keep the perspective and invest every month, every year for the rest of your working life. And I like applying this idea to us individually as well, keeping things in perspective for our own good and bad times, not just the stock markets good and bad times. It's okay if there are months or years where your contribution to your retirement account is not as much as it has been or could be. The key is consistency. Still

give something to it. But it's okay if there's other things that steal financial goals, because it is a journey to get to retirement, not just a quick thing that's happening. So the key is time and consistency, and so keep that in perspective too. Absolutely, all right, let's move to this next article, and we won't spend as much time on this, partially because it's not that long of an article,

but still worth going through. It comes from the Motley fool And it's just how to invest money, but it looks at it in a really big picture kind of way. So I think that this is helpful, especially for us newbies, for us beginners or just dipping our toe in the water. What do we need to be focusing on? What did you think, Jen, this is a good perspective to have

when you're starting to invest. So I liked every single one of these, But yeah, I really like that it's short and to the point, and there's no one, one size fits all answer, Like you have to design the life that you want to live and then say for it and spend for it in the way that's right for you. And I think the reason investing is so important is not to stimulate the economy. It's not any of that. It's that investing beats inflation. And nobody paid

attention to inflation until this year. Everyone thought two three was you know where we were heading. Even the Fed was like, oh, yeah, we're gonna keep it at you know, zero percent for a few years to get out of this pandemic. And that's nobody are anyways, Yeah, seven percent, like and that's like what we said earlier. Conservatively, that's what that's the number that we use to measure our investing growth a balanced portfolio. And so if you're not investing,

you're losing money and money that works. So working money pays less taxes than working humans. Think about that. So the money that your money makes in the stock market pays less in taxes, even in capital gains. So even in a brokerage account pays less in taxes than you do as a working individual. And if it's an attack sheltered account, it pays even less in taxes. I don't know if that's encouraging or discouraging, but I'm here for it. I'm not here to I'm not here to debate it,

but I'm saying that's the system we live in. As long as you're not pumping and dumping stocks, that's that's different. But so yeah, like that's the importance. I don't know if I can get over that that illustration. Well, so, because there's no one size fits all answer here, there are some things that are worth considering and figuring out how you want to invest what that will look like. So they list off three things. We're just going to

quickly go over what that is. The first is your style, So the question to ask yourself is how much time do you want to put into investing your money, meaning on a daily, weekly, monthly, yearly basis, how much time do you want to put to this actual process of investing. There certainly are different styles to this. Primarily we're talking about active investing versus passive investing. The article believes that

there's merit in both styles. Jen, You're welcome to debate that, but certainly, if you are interested in the active investing, you do need to have time. Like it says, it's going to require lots of homework, research analysis, keeping track of things. You need to have knowledge. You're going to

have to have more than the basic knowledge. So if you're listening to this podcast and you already feel like, whoa, I've got so much to learn, I mean, if you're excited about that, then keep going, but otherwise know that you don't have to gain too much more if you choose the more passive option. If you want active, you got a lot of knowledge and the desire you have to want to spend hours researching and investing and looking into the best vehicles for your money and potentially moving

things around. But I love how they wrap up talking about this first one of your style that passive investing is the equivalent of putting an airplane on autopilot versus flying it manually. You can still get good results over the long run and the effort required is far less. So in a nutshell, you could go towards passive investing and put your money to work in an investment vehicle where someone else is doing the hard work. So that

would be like a mutual fund. So I mean, of course I don't know all of how autopilot and planes works. I do think that there's some manual to landing and taking off required of the pilots. But I think that this is accurate in general, and there's definitely a lot of research on this of what's going to give the most return in the long run, and it seems to be pretty equal of whether you're actively investing or passively investing.

So like you do you if you've got time, knowledge and desire, but also know that you're not doing yourself a disservice if you do choose the passive route. Yeah, and I think any pilot will tell you no matter how much they know about flying, or even the more they know about flying, the more they use autopilot. Whether you're driving it yourself. For putting on an autopilot, you still end up at the same place. It just the ups and downs are a little more extreme on active

investing and full disclosure. The Motley Fool, which is where this article is, makes their money selling knowledge products to active investors. So that's a you know, know that if you've got capacity for an emotional roller coaster over the next thirty years, totally active investing is great. Yeah, it's a great hobby. I would say balance it. I don't know a single active investor that doesn't also have passive investments,

so and they have score of them. The more the more money they put into active investing, the more money they have in passive investments, So I know that. But yeah, I mean, and I would say active investing doesn't just involve the stock market. It also includes real estate. So if you are like for us, we're not doing any for one case right now because we're saving for real estate investments, and so that's how we're choosing to diversify.

And that's not for everyone. Some people just want to maybe research companies that are on the rise that they want to do some active investing with So that is up to you and where your passions lie, but the vast majority will want to do passive investing. Number two is your budget. How much money do you have to invest?

So this is very important. May have heard something called dollar cost averaging, and so that is a fancy way of saying you are investing monthly versus lump some investing where you just do a big lump sum like once a year. You probably heard me say in the last episode that I lump some invested in my son's because I had the money. I didn't want to think about that investment. I just wanted to leave there and like

collect money. But we dollar cost average our raphai A because that's something we want to build a habit of. So essentially it's the six thousand. We just split that up into twelve months and then so we do five hundred for each i RA every month, and that's how we do it versus doing twelve thousand at the beginning of the year, which theoretically does yield a higher return than dollar cost averaging. But what's more important is the habit. That's why we say, look at your budget and do

things on a monthly base. This the increase the gap between your income and expenses so that you have more money for these financial goals, and that overall is going to be better for your financial goals than trying to eke out every penny of interest that you can get. I mean, I just I love I love this idea. And finally, the last and third thing to consider is your own risk tolerance. So the question to ask yourself is how much financial risk am I willing to take?

Of course, some of this is going to relate to how much time you have until retirement. The longer amount of time that you have, the more risk you could take. You still have to look at your own risk aversion levels, and the less amount of time that you have for retirement, the less risk you want to take. So of course the bonds are going to have a very low risk

but also a relatively low yield. So around two to three percent is what you're going to see on those types of investments versus stock returns, like we've said, on average will give about ten percent per year, give or take so for index funds, right, but it is going to be a little bit more risky, So that's what

you want to take into consideration. And the there's a spectrum on risk tolerance, so like if you're you can be super risk averse, but you don't have to choose I'm gonna have all bonds or I'm gonna have all single stocks. Like you can still choose index funds that are very diversified just over one sector like health or tech. Do you want tech, you might as well just get

an SMPI, but that's besides the point. Or you can choose a index fund that's just small cap companies, So those are companies that are below a certain valuation that are growing faster, so they're a little more volatile, but it's not a single stock. It's an index fund, and so they tend to have higher returns, a little more risky um, but not as risky as a single stock.

So there are different places where you you can find yourself on a spectrum, And just because you want to be a little bit more risky doesn't mean you have to go straight to single stocks. You can just go

to these index funds or real estate investment trusts. If you want to get into real estate but are not risk averse enough to buy your own property, you can look into reads like a fund Rise has a bunch of reads, so there are options when you are looking outside of and you can even put some of these things inside of your You put pretty much all of them inside of a raw ira or an ira. That's why we love ira because they're more customizable. You're typically limited on a four oh one K or four or

three B with your investment options. That's another reason to have both. If you're able, you know what's the reason to have this one thing? And we are able. Yeah, I don't have to settle for balance on this. I just go all in the Bill of the week. That's right. It's time for the best minute of your entire week. Maybe a baby was born and his name is William. Maybe you paid off your mortgage, maybe your car died and you're happy to not have to pay that bill anymore.

That's bills, Buffalo bills, Bill Clinton, this is the bill of the week. Hi lady, my name is Bunny and my buddy is close. A friend of mine invited about club Lady River, and we claimed to our closets and broader gently one item. It's just been laws are aware, and then in different ones in her house, we put them in piled camps, dresses, jackets, shoes, you name it. There was a child for it. We drank wine and

sad and to those clothes. It was amazing to have friends told us something and said this would be great on you and vice first that no costs, just friends set and new to you close. So that was my goal of the week and a fun idea idea for other people to go heaving a shunt have a great day. That is awesome. I missed so for two years when it was like not acceptable to be sharing people's things in each other's homes like I missed clothing swap parties

the most, like unreasonably the most. And I am so glad that you did that and you drink wine. Oh it sounds like such a fun frugal evening. I think I've only been to one clothing swap party, but it was life. What a great way to get new things, keep things out of the trash. I love it all right. If you want to submit your bill of the week, whether it has anything to do with a fun frugal evening or not, visit Frugal Friends podcast dot com slash bill.

Leave us your bill. We are waiting in anticipation. Now it's time for n Yes, that's so comforting. Today's Lightning Round question, how are you currently planning for your dream retirement? Love this question. It came from So our new podcast manager. She's going to be writing our Lightning Round questions now and I find I love I love the surprise, and yeah, it's less for me to do. So Jill, how are

you currently planning your dream retirement? Well, that weird dream is definitely new to me, and I can't say that I've put a ton of thought into that part of it, just retirement in general, wanting to make sure that I've got money for it. I think my mind always goes to worst case scenario, like I need to make sure I've got money for my older years because I will probably have some medical concerns. But I do like this

reframing of the question. You know, to to dream about some of the fun things that it could entail, but reality is, like you said, Jen, we don't know. We can make a plan and see. I think either way though, it's going to be good to have money at the end of that road when I'm not able to or desiring to continue to work a forty hour week job.

So with that said, for me, right now it is a roth ira A. Both Eric and I do not have four oh one k options with our work, so we're doing the best weekn and with the rath I ra s hopefully genuine, and I will have created one for Eric b and huh, there it is there, it's it's time specific, time stamped. And then from there we are putting a significant amount of money into our own home,

cash flowing renovations, but specifically trying to house hack. We've partitioned a portion of our home off to be a short term rental, and my hope with that the income that comes from that short term rental will go to a lot of these savings and retirement goals. So it's kind of when we talk about being the CEO of our own finances, when I look at where do I have options? You know, sometimes it's not an expense issue. Sometimes it's a revenue issue. Sometimes it's not a revenue issue,

it's an expense issue. And so for me, I'm kind of in that place where the expenses are kind of way as low as they can go and where they need to be to cash flow some of the things we want to do. And I'm more so looking at where can I increase revenue to get at the goals

that I want to get at. So that's my hopeless some of this, and as we talk about journey, that's where I'm giving myself some of that permission that I can't do all of the things all at once, but this is my plan of how I can get there. M hmm, wonderful. So for me, we are maxing out our rath ey raise two of them and then also

saving to invest in real estate. But I was actually listening to the Afford Anything podcast recently and she Paula was interviewing a Harvard professor about fluid and crystallized intelligence, and the interview was a gut punch to me because he talked about success addiction and how like finding value in your work is great, but being addicted to it

that will never bring true long term happiness. And so I am thinking more about how to practice more of what I preach and like designing a life that surrounds around core values that can't be bought or worked for to an extent, So focusing more on like and he he gave these like three fs and one other thing, but I like change it to be an F. So now it's for fs. So it's faith, family friendships, fulfilling work, he said, work that serves others. But I think fulfilling

work is the same thing. So like, how can I and work is last, so work should still be in there, but work is last, and so how can I put more focus onto those things and align my finances there?

So I am trying to get our business to be more sustainable and to take us kind of out of the back end and learn new skills so that eventually I can move on to new opportunity cities that allow for greater opportunity for the faith, family friendships thing, so that those are I'm always planning, and those are kind of the top ideas in my planning. Arsenal beautiful. Well, we'd love to hear also how you're planning for your own retirement, whether it's just retirement or your dream retirement

in our Fogal Friends community on Facebook. And thank you all so much for listening. We want to thank you for your kind reviews on Apple. Podcasts like this one comes from wits End five all right, Pragmatic Finances. It's five stars. I'm obsessed with financial podcasts. I have listened to Jen and jail for the last year plus. I love each of their unique perspectives on budgeting, spending wisely, living your best life, not taking yourself too seriously, and

practical no nonsense solutions for your finances. They are silly and zany and knowledgeable. They aren't afraid to admit if they don't know something or if they don't necessarily agree with the philosophy, but they still share it in hopes that it will benefit any the listeners. I enjoy their perspective as a forties something are and money nerd amazing. My favorite thing is zany who. That's a word I've not heard in a while, and I won't take it. Yes,

thank you so much. Wits end. We also want to thank our friends who share these episodes on social media, So when you share the latest episode on Instagram, we are adding you to our monthly drawing. For every five tags and reviews we get every month, we're giving away fifty dollars for you to spend in the Frugal Friends shop. So keep leaving us reviews wherever you listen to podcasts and send the screenshot to reviews at Frugal Friends podcast dot com. And don't forget to tag Us on social

See you later. Frugal Friends is produced by Eric Sirian. All right, Jen, yeah, tell me when? When? Where? How are we opening? Erica Roth Ira It's Operation Ira and Ira. Um. Whenever you want to come over, My house is always open. That's it. That's all I have to say. All right, I always want you to come over to my house. And you're always doing something, Oh my god, with me. Sometimes it's not well I would have we're doing things too. Don't act like, you know, have a now dope life. Gosh,

it's the problem is our lives are so dope. Like it's just we can't make time, you know. Yeah, yeah, so dope, so dope. Well, looking forward to Eric and Ira joining forces two K twenty two