As the Budget Blonde, Catherine Alford is all about saving and keeping your finances in good shape, and that includes retirement planning. She spoke to us about how younger workers should fit retirement into their sometimes tight budgets.
What are some common misconceptions you’ve seen about saving for retirement?
Many people believe that retirement is something you save for when you get older and more established. The truth is, the earlier you start, the better, even if you are 20 years old!
What advice do you have for people intimidated by saving for their retirement?
I realize that many different types of financial topics intimidate people. Most financial professionals just don’t make it easy for people to understand. My advice is to first realize that anyone can understand retirement and investing in general. It just takes a little bit of reading and know-how. Pick up an investment book or do some research online. Like anything else, the more you spend time learning about it, the easier it will be to understand.
How should younger workers, especially those with student debt to pay off, go about building a retirement fund?
There are lots of different opinions on this topic, but I personally pay off student loan debt while saving for retirement. Because my husband is in medical school with six figures of loans, we can’t afford to lose the valuable time of investing while we are young. I’d much rather pay off loans just a little bit longer if it means I’m saving for retirement earlier.
How do you recommend fitting retirement saving in your budget?
I have a category in my budget for my IRA just like anything else. I have a category for food, my two babies, healthcare and tons of other things, including retirement. The investment happens automatically on the same day each month, and it’s just like any other “bill” I pay.
If you could go back and give your younger self one bit of financial advice, what would it be?
I would definitely be more conservative with my student loans. I took out far more than I needed, and I truly regret it.
What’s changing in retirement planning that we should know about?
Pay attention to changing regulations, including increases in the amount you’re allowed to invest in various types of accounts. There are also big changes in the workplace as a whole with lots of people moving between jobs or deciding to work for themselves. The economy will be changing, and by extension, new options for retirement could be on the horizon.