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Smart Money Podcast: Saving for Your Dream Retirement

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Welcome to NerdWallet’s Smart Money podcast, where we usually answer your real-world money questions.

But in this episode, we continue our series on financial dreams, with conversations with Nerds who have accomplished their financial dreams and interviews with outside guests about what they want to do with their money in 2022.

Check out this episode on these platforms:

Our take

To save for your dream retirement, project how much you’ll need by the time you’re ready to leave the workforce so you can plan how you’ll reach this goal.

While it can be difficult to predict exactly how much you’ll need in your later years, you can get a rough estimate. Start by knowing your current monthly expenses. Then multiply that by 12 to get how much you need a year. That gives you an idea of how much you’ll need to save for each year of your retirement. To save that much, many financial advisors recommend saving between 10% to 15% of your income for retirement.

Also, look into the various retirement accounts available. If you’re self-employed, you have some unique options, like the SEP IRA and the SIMPLE IRA. And if you are a W-2 worker who has a 401(k) from your employer, you may also want to look into opening a Roth IRA, which could provide a tax-free pot of money in retirement.

Our tips

  • Know what you want from your money. List your goals and make a plan of attack.
  • Prioritize retirement, even as you pursue other financial dreams. You can’t get back lost opportunities to save.
  • Consider having multiple retirement accounts to help diversify your tax obligations in retirement.

This article is meant to provide background information and should not be considered legal guidance.

Have a money question? Text or call us at 901-730-6373. Or you can email us at podcast@nerdwallet.com. To hear previous episodes, go to the podcast homepage.

Episode transcript

Liz Weston: Welcome to the NerdWallet’s Smart Money Podcast, where we, usually, answer your personal finance questions and help you feel a little smarter about what you do with your money. I’m Liz Weston.

Sean Pyles: And I’m Sean Pyles. To send the Nerds your money questions, call or text us on the Nerd hotline by calling 901-730-6373, that’s 901-730-NERD. Or email your questions to podcast@nerdwallet.com. Also, be sure to subscribe to get new episodes delivered to your devices every Monday — and occasionally on Thursdays. And if you like what you hear, leave us a review and tell a friend.

Liz: This week, we’re continuing our series of episodes about financial dreams, where we talk with Nerds who have accomplished their financial goals and interview a few special guests about what they do with their money. And since we’re NerdWallet, we’ll also discuss the steps that you can take to accomplish your own financial dreams, whatever they are.

Sean: This time around, we’re talking with personal finance YouTuber Marissa Lyda about her passion for budgeting, motherhood and her financial dreams for 2022. So, hey, Marissa, welcome to the Smart Money Podcast.

Marissa Lyda: Hey, guys, thanks so much for having me on. I’m so excited to talk with you today.

Sean: It’s great to have you. Can you start by talking with us about how you got interested in personal finance and started making YouTube videos?

Marissa: About six and a half years ago, my husband, Jacob, and I got married and we got married really young, right out of college. We had entry-level jobs in business, but we went to a private school and we ended up with a combined $80,000 of student loan debt. When we got married —

Sean: That was a lot.

Marissa: It was a lot. And I love that you guys are talking about dreams because when we got married, we had all these dreams for our future. We wanted to be able to have a family and be homeowners someday. And we just knew that we couldn’t do all of these things with having so much student loan debt. We then got started on trying to pay it off as soon as possible. And that’s when I found this passion for budgeting and realizing that setting a plan for our finances every month enabled us to see how much we could put to our debt each month. And then we were able to eventually pay off that debt in two and a half years, after a lot of work and sacrifice there.

Sean: Yeah, I bet.

Marissa: Definitely. But that really got us started on our personal finance journey and got us interested in budgeting. I actually then started just sharing a little bit of our journey with friends, or I’d make a post on Facebook or something: “We just paid off another student loan.” And people began messaging me, friends from college who also had student loan debt, were messaging me, “What are you doing? How are you paying off this debt?” So I just had this thought, I was like, “Maybe there’s other people out there who would be interested in this as well.”

It definitely started out as a hobby and I started making some YouTube videos just with my iPhone. And I would record a couple things about budgeting and paying off debt, and started uploading that to my YouTube channel. And it’s really just grown ever since. And so now, I have over 55,000 subscribers and post weekly videos on my channel about budgeting. Equipment has been upgraded as time has gone on, I’m no longer filming on my iPhone anymore. And it’s just been really cool to see the community grow of people who are interested in budgeting and want to better their personal finances.

Sean: And you do this as a full-time job now, right?

Marissa: I do. Yes, I do. So I had my son in May 2020. And before that, I was working full-time in accounting, but once I had my son, I was like, “Maybe I can do this full-time,” because it was providing some sort of part-time income. And when I had my son, I was like, “I’d love to be able to stay home with him and see if I can make this work.” And I am excited to say that it has just continued to grow since then and it does provide a full-time income, which I’m really grateful for. So you can find me doing YouTube at night and during nap time while my son is asleep. It’s been really good. I feel like I get to really enjoy the best of both worlds with that.

Liz: And we skipped one of the milestones, which is you guys bought a house as well.

Marissa: Yes, that we did. Yeah, we eventually did buy a house. We bought our house in September 2019 after paying off all of our debt and saving for an emergency fund and a down payment, and all those things. I feel like we bought our house at the right time, right before the pandemic and everything, so it worked out

Sean: You’re based in the Portland, Oregon, area, right?

Marissa: Yes.

Sean: So my partner bought a house in Portland. And so I used my time between here in Portland, Oregon, where I am filming right now and recording a podcast right now, and I have my own place in coastal Washington. So we’re kind of back and forth and I understand how important it is to get into the market when you can because it’s so very competitive up here.

Marissa: Definitely. Definitely. That’s cool. Pacific Northwest representing.

Sean: Yeah. Yeah. I love it. It’s a very cloudy day out there right now as I’m sure you’re experiencing.

Marissa: It is.

Sean: Very cool. Well, I want to talk about your financial dreams for 2022. What are you hoping to do this year?

Marissa: I feel like our biggest dreams and goals that we have for 2022 are mostly investing-related. Because we have finished these goals, we’re just now really focused on investing and want to see if we can continue that goal or maybe stretch it, maybe invest a little bit more than we did last year. So that, I think, is our big goal for 2022, as well as some other fun things that we have scheduled. Like we’d love to be able to take our family vacation in 2022 as well, which is another thing that goes in with finances.

Sean: When you say investing, do you mean having a brokerage account or are you thinking more retirement savings?

Marissa: We’re definitely looking more at just retirement savings right now, looking more for long-term.

Liz: What do you visualize when you’re thinking about retirement? Is this something a long way off? Do you guys want to retire early? How are you thinking about the timeline here?

Marissa: The concept of financial independence and early retirement — but we also just really enjoy our jobs and the work that we do. And we’d love to be able to keep living that lifestyle that we enjoy the work that we do and we aren’t just counting down the days until retirement. I definitely would love to get to the point where we can make work optional. And maybe by early 50s, if that could be an option, or then pursue more passion projects and things that wouldn’t be as necessary for larger income at that time in our lives.

Sean: It seems like you’re maybe not hoping to have that life of austerity you had when you were first paying off your student loans. It’s a different approach to saving for retirement.

Marissa: Yeah.

Liz: Although, even with the austerity, I noticed you guys took some nice vacations.

Marissa: We did once we were debt-free. We have been able to go a few places. We’ve been to Hawaii a couple times — Pacific Northwest, we all vacation to Hawaii, that’s the place to go. So we have been to Hawaii a few times since becoming debt-free. We actually took a Caribbean cruise right after we paid off all of our debt and even Disneyland, we’re big fans of Disneyland as well. So those are some fun vacations that we definitely value and have been doing more of since we have been debt-free, which has been fun.

Sean: How are you guys currently saving for retirement? What types of accounts do you have and how are you thinking about contributions?

Marissa: So we, at the moment, are currently working on maxing out two Roth IRAs each year, so one for myself and one for my husband, Jacob. We started maxing that out in 2020 — that was the first year that we were able to max this out. And so now, that’s just an annual goal is to continue to max out one for each of us. And then my husband has an employer and so he has a 401(k) through his employer that he contributes to as well. So those are our methods of retirement savings right now.

Sean: Maxing out your accounts is an incredible goal. And in general, a lot of retirement experts will recommend putting 10 to 15% of your income into retirement accounts.

Marissa: I love that guidance.

Liz: Does your husband have a match with his 401(k)?

Marissa: He does. They match, I think, it’s up to 5%.

Liz: Nice. And he’s getting that?

Marissa: Definitely. Yep. Always taken advantage of that match for sure.

Liz: Very good. I thought since you had an accounting background, you would’ve picked up that you don’t want to leave free money on the table.

Marissa: Oh, definitely. And actually, even when we were working on paying off our student loan debt, our employer at the time matched 4%. And so we still put in that amount to get the match, because looking at that as part of our benefits package, we didn’t want to leave that money on the table. We definitely still did save for retirement during those years. And at this point, I’m really grateful that we did start that even while we were paying off debt.

Liz: Now, a lot of people put it all off for too long thinking, “Oh, it’ll be easier later when I make more money.” It’s really smart to get started when you guys did, which is basically right away and do it no matter what. Now, how are you thinking about college and paying for your child’s college education?

Marissa: We have started a 529 for our son and we have automatic contribution set up for that, that we put $200 a month into his 529. And we started that a couple months after he was born. As soon as we got his Social Security number, we opened up that 529 because we want to start as soon as possible knowing that time and compound interest is on our side there. So we just have that as a habit and just something that gets automatically deducted out of our account to go to his 529 each month.

Liz: Now, what are you doing in terms of self-employment income and retirement? Are you taking advantage of any of those options?

Marissa: Currently, I’m not. And that is something that I would love to learn more about in 2022. And especially, when we come around to tax time, I’d love to speak with our CPA [certified public accountant], too, and see if there’s any other things that I can take advantage of as being self-employed.

Sean: Yeah, there are a lot of things you can do. The solo 401(k) might be a good option because you don’t have any employees in your own business, you’re just the sole employee basically, but there are also SEP IRAs and SIMPLE IRAs to look into as well.

Liz: I think the SEP is probably the easiest one to do and it’s one that you can contribute to after the end of the year. We do this every year. My husband and I have a business and we just look at what the net income is and slicing off that chunk for the SEP reduces the income we have to pay taxes on and puts more in our retirement funds. So you’ve probably heard of them, it’s a pretty easy way to get some more money into your retirement.

I like the fact, though, that you’re doing both the Roth and the pretax, because when you get to retirement, it’s nice to be able to pull from different buckets so that not everything that you are pulling out of your retirement is taxable. And it’s not something that people think about a lot of times, they’re trying to max out and put as much away so they can reduce their taxable bill now, but it’s really nice to have that option in retirement.

Sean: I feel like tax diversification is something that people hear and then their brains just turn off because it sounds so jargony.

Liz: Exactly.

Sean: But it is shockingly simple and it will help you a lot when you’re in retirement. All right. Well, now, I want to hear about your vacation plans. Do you have any thoughts around where you want to go this year?

Marissa: We have one thing planned already, and that is to go to Disneyland. Like I said, we are big fans of Disney. And with the pandemic, we haven’t been in so long. We’re excited to go again and also take our son for the first time. He’ll be around the age of two when we’re planning to go.

Sean: How do you approach paying for a vacation? Are you guys points hounds or do you have a designated savings account? What do you guys typically do?

Marissa: Kind of a mix of all of that. I love using different credit cards for travel benefits. So one that we have is with Alaska Airlines. I love that you get an annual companion fare, which has been so helpful for us with traveling. We plan to use that for our flight to go to LA. And then I also have a Hilton credit card with points there, so we love to use points with that for booking hotels. My husband and I recently went on a trip to Dallas and it was, basically, almost all paid for with our Alaska miles and our Hilton points. We love taking advantage of that.

But then there are also additional costs associated with vacation. We plan to spend money on, obviously, food and entertainment, Disneyland tickets and everything. So we actually love to set aside money every month in our budget, in a sinking fund, for vacation. We’ve been setting aside money there and planning to have all of that ready to go by the time we go on our trip to Disneyland.

Liz: Marissa uses the term “sinking fund” the way we use “savings buckets.” It’s basically labeling an account for a specific goal so that you know not to tap into it for other things, right?

Marissa: Exactly. Yes.

Sean: And do you have automated deposits of a certain percentage of your income into those accounts or do you allocate it monthly and make transfers?

Marissa: I don’t. I just allocate it monthly. And I know everyone does this differently and I know some people who love to have a specific savings account for each thing they’re saving for, but I personally just use my budget spreadsheet and I can see how much I have in each fund. And then I just take the total of each of those and just have it in one bank account. And that’s what seems to work easier for me, but I’m all about “do whatever works best for you.” Personal finance is personal, right?

Sean: Great example of how different people who are really into personal finance can approach the same thing in very different ways, but get practically the same result.

Liz: And the great thing about having a little one, the one who’s your age, is that you can go anytime. You can go to Disneyland in the off-season when the hotels are cheaper, when the flights are cheaper. You’re not trying to go during school holidays with everybody else on the planet. So take advantage of this time and travel as much as you can.

Marissa: Definitely. I think of that often. It definitely gives a bit more flexibility versus I know what it’ll be like in several years when he’s actually in school.

Liz: At some point, we should do a whole podcast about how to do Disney, because there are some great tips about how to save money and there’s some YouTubers out there that are doing a good job of planning it out, but it has changed a lot since the pandemic. So the last time you were at Disney was when?

Marissa: We went for Christmastime at Disney in 2018, which was one of my bucket list things. I always dreamed of going to Disney for Christmas and it was amazing. It was the most magical thing. So, therefore, yes, it’s been a while, but Christmas 2018.

Liz: And the cool thing is the Christmas season lasts quite a while. It goes from early November until early January, so you don’t necessarily have to go right around Christmas when it tends to be a little bit insane. The other thing is, now that they’re doing the reservation system, it is less insane. You don’t spend three hours waiting for a ride, even though FastPass is gone … and now, I’m really getting into the details.

Sean: I know. I was just going to say, for those who don’t know —

Liz: I’m geeking out.

Sean: Liz lives in LA and has an annual pass. And so she is a Disney pro.

Liz: Oh, yeah. Some people are not Disney people at all, it will totally turn them off, but if you are, knowing how to kind of work the system is really important.

Sean: Well, that sounds like so much fun. Do you have any other things in store for 2022 that you’re looking forward to?

Marissa: With having a small child, we kind of just roll with whatever’s going on for the year. So we’re just excited to have a fresh start for a new year and continue on with our investing goals, and see where the year takes us.

Sean: Great. It sounds like you guys have a lot of exciting things in store. Well, I think that about covers it. Thank you so much for talking with us, Marissa.

Marissa: Of course. Thank you guys for having me on today. It was really fun getting to chit-chat about money and this new year.

Sean: I know, totally nerd out about it. Now, let’s get to our takeaway tips. First up, know what you want from your money. List your goals and make a plan of attack.

Liz: Next, prioritize retirement even as you pursue other financial dreams. You can’t get back lost opportunities to save.

Sean: Lastly, save for vacations and other fun stuff in advance. Set up a dedicated savings account or a sinking fund so you can enjoy your time off without worrying about debt.

And that is all we have for this episode. If you want your money questions answered on a future episode, turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-N-E-R-D. You can also email us at podcast@nerdwallet.com and visit nerdwallet.com/podcast for more info on this episode. And remember to subscribe, rate and review us wherever you’re getting this podcast.

Liz: And here’s our brief disclaimer thoughtfully crafted by NerdWallet’s legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes, and may not apply to your specific circumstances.

Sean: And with that said, until next time, turn to the Nerds.

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The article Smart Money Podcast: Saving for Your Dream Retirement originally appeared on NerdWallet.