Skip to main content

money & life

How to Plan Your Financial Future

Lesson 16 of 18

Setting Up Your Retirement Account

Erin Lowry/Broke Millennial

How to Plan Your Financial Future

Erin Lowry/Broke Millennial

buy this class


Sale Ends Soon!

starting under


Unlock this classplus 2000+ more >

Lesson Info

16. Setting Up Your Retirement Account

Lesson Info

Setting Up Your Retirement Account

So how do you pick? Figure out what feels best for you in the moment. If you do have access to an employer offering and you get a match, I recommend going with that. If you can only put away about 55 hundred bucks, the simple plain vanilla IRA, Roth or Traditional is a great way to go. If you wanna put more, SEP or Solo, if you're self-employed. Another little hack also, is if you are traditionally employed and also have a side hustle, you might also be eligible to open up a SEP or a Solo 401(k), if you wanna triple down, if that's your jam. But definitely speak to an accountant about it. But it is a possibility. Now how much do you actually wanna save? I shared some really bleak numbers at the beginning of this entire segment. So part of that also does tie back to this idea of what's your FI number, what's your goal, what are we working towards? But in the beginning, the goal is pretty simple, if you are traditionally employed, save enough to at least get the match. You can put more t...

han the match in. That's actually something that I misunderstood when I started saving for retirement. I thought you could only put in the 4%, the 5%, whatever it was to get the match. I didn't realize I could put 10% away if I wanted. My employer was just only going to give me a contribution up to 4%. So when you're starting out, even if you have debt, I highly encourage you to try to get the employer match because again, this idea of free money. Now if you're self-employed, my recommendation is to set a goal for yourself. How much money in a year do you wanna be putting into retirement? Divide it by 12. Put that amount of money aside every month. Another easy option, is putting 40% of your paycheck, each time you get paid, aside. The remainder goes right into retirement. But in terms of actionable goal setting, this is a much better strategy. Now, what type of investments do you want? This is when it gets tricky. Goes back to this idea that I mentioned, when I logged in and got very overwhelmed by the terms of small-cap, large-cap, Dodge & Cox, what does this mean? I'm very overwhelmed. But when you are starting to pick your investments, keep those key factors of time horizon and risk tolerance in mind. How long until I need access to this money? How much risk can I take right now? But hold up, how do I even pick the investments in the first place? Now a lot of this comes down to research. And the idea of building your portfolio in line with your asset allocation. What percentage is going to equities? Which percentage is going to bonds? Are you putting some, if any, in cash? Now, a really easy way to get started id with something called a target date, or all in one fund. Totally depends on your actual investment brokerage that you're using. Some of the time they call it a target date fund, some of the time you hear it referred to as an all in one fund. It is a very simple concept, where basically they are investing for you in a year that is correlated to around the time you would retire. So let me break that down, if you think you're gonna retire around 2055, you pick a target date fund that says, target date: 2055. So in the beginning, it's gonna automatically in a more aggressive portfolio and then automatically you get more moderate to more conservative as you near your retirement year. Target date funds sometimes get some backlash in the financial community, and there are a couple of reasons why. One: they tend to have some higher fees. So this comes back to the idea of, every dollar that goes towards a fee is one less dollar that's compounding for future you. Another reason is, it's a very generic thing. It's not actually customized specifically to you and your personal financial situation, which means that it could put you in a more conservative portfolio a decade before you actually need that more conservative portfolio and therefore it's not compounding in the way you want it to. So, that's some of the negative backlash that people will talk about when it comes to target data or all in one funds. But what I recommend them for is just a simple way to get started. If you have picked. You've decided to save and invest for retirement. You have a 401(k) or an IRA. You just wanna get started but you're so overwhelmed, just dump some money into a target date fund for now and in the future, you can always come back in and rebuild your portfolio and put that money elsewhere. At least it gets you started and it removes that confusion and fear barrier that I was talking about earlier. You can always go back in and tinker around with your retirement plan at any point. You can reinvest in other ways, maybe it's 10 years down the line, and you've hired a planner and they can go back in and help readjust it for you. Or you've gotten super into this stuff and you've done your own research. So please just keep that in mind. A target date fund at least just gets you started. And it's not that horror story of you are 40 years down the road and you've only been investing, quote unquote, in cash. I have heard horror stories from people that work at major brokerages. People call up at 60, 65 years old to find out they've only actually really been putting their money into savings, cause they never picked investments in the first place. So this removes some of that risk for you, and just gets you started. Now, what if you have access to buying company stock? This can be a really great perk for a lot of people, and sure go ahead and put some of your money in company stock. Put some of your retirement in company stock if you want, but not all of it, and not too much of it. Coming back to that idea of diversification and asset allocation. There's one thing that can be very nerve racking about this, is if something happens to your company, your salary is already tied to it. You don't want your whole retirement account tied to it as well. Cause you don't wanna lose your job and your salary at the same time, that your retirement account takes a nosedive because you were over indexed into company stock. So just make sure you have some balance there. Sure go ahead and buy into the company stock, but don't put all of your eggs in that one basket. Be diversified. And what are the costs of these different funds? So just kind of running down. Remembering the idea of expense ratios and administration fees. How much are these funds costing you? Again, coming back to the thought that every extra dollar in fee is one less dollar you have in the future. It's okay to pay some fees, but you just wanna make sure that you're not paying too much in fees.

Class Description

Short on time? This class is available HERE as a Fast Class, exclusively for Creator Pass subscribers. 

According to the experts, millennials won’t be able to retire until they’re about 75 years old, and that’s if they’re lucky! And some data shows that three-quarters of Americans are not ready for retirement at all. No question about it, people of all ages and backgrounds are woefully unprepared for their golden years.

Most of us are too busy worrying about our current debts and daily costs of living to even think about retirement. But Erin Lowry shows you that putting just a small amount aside each month as early as possible will yield great results. She’ll give you solid advice about how to avoid excessive fees, costly financial instruments, and shady financial advisors.

Erin will also address how to talk about money with the important people in your life, especially those with whom you’ll be sharing your finances. It’s the best way to determine your financial compatibility and help you achieve your financial dreams.

In this class, you’ll learn how to:

  • Make compound interest work for you so you can retire at a reasonable age.
  • Find the right retirement account for your specific needs.
  • Figure out your level of risk tolerance and time horizon.
  • Choose an honest, helpful financial planner or advisor to help you reach your goals.
  • Navigate awkward conversations about money and feel less vulnerable.
  • Decide if you want to work as a team to achieve your financial goals.
  • Identify red flags about people’s financial habits and lives.

Class Materials

Free Bonus Material

Planning Checklist

Ratings and Reviews

Student Work

Related Classes


Chris Sundell

Amazing course!! Great instructor! Everything that's essential is covered. This has been the kick starter to my new year. Thank you!