
Retirement - Starting from Scratch
I am self employed, with no retirement savings. Hard to swallow at 39yo. I want to get started next year but I don’t really know where to begin. Let’s hear all the recommendations and advice for retirement newbies!
-
Here's some recent info from a podcast I listen to about IRAs and SEP-IRAs. You can do a SEP because you are self-employed. It's most important just to start!
-
Hey Silver ! I'm in a similar boat, 39yo but have saved but not invested well or smartly (or at all! so no growth). In the two books I've just finished reading, what the authors say about the subject is 1. Pay Yourself First 2. The best time to start saving is now and 3. 10%-15% of your paycheque should go into your retirement savings, and aim for around 6% interest to grow your savings. There are more fine details that are regional (they are Canadian authors so there's lots about auto-deposits into your RRSPs pre-tax etc.). I'm *NO* expert, just learning too, and honestly super excited about it haha! 🙌
-
We're in a similar situation. My husband is self-employed and for many years we were just scraping by; putting money away for retirement seemed impossible. Two years ago I started YNAB and everything changed. Last year I started Betterment Roth IRA for each of us. I started with just $100 a month and after a while, I started increasing the auto deposit. We're not maxed out yet, but each of us now has several thousand dollars earning interest.
-
I second the notion of reading, "The Simple Path to Wealth". Of all the personal finance books I have read, this one LITERALLY makes it simple: goo.gl/taUC3u
The author, Jim Collins, has a fantastic blog. If you do decide to dabble in the dark arts (aka stocks) he has a very good series about investing: http://jlcollinsnh.com/stock-series/ -
"Easy" way to retire is save 50% of your income for 10 years. Once you can live off 4% of your savings a year you can basically live forever. So depending if you are truly living paycheck to paycheck due to low income, or if you just spend WAY too much on things you don't actually need to, this is harder or easier. I myself am only at about 40% due to lifestyle creep, though I make plenty where I could live on less if I truly cared to. Put 3 months cash into a high yield savings, another 3 into a low risk Betterment or Wealthfront (I use WF). Max the remainder into 401k, IRA, then a high risk (90/10 stock/bond) B or WF account. Check out Mr Money Mustache. He is a little extreme in his frugality, but he makes a really inspiring case for cutting back on expenses in the name of financial freedom.
-
Congrats! You are thinking in the right direction. I would suggest you start today.
I see below I'm not the only one who will say this. Here are the books and blogs I strongly suggest you should read. Read anything and everything on Financial Independence because there is a wealth of information in that community. The key is to spend less and then save now. The higher your savings rate the better. Which is why I love YNAB because it makes it so much easier.
My hubby and I are 38 and we have been fortune to have saved a lot early. We are working on a few more years to be FI and then retire early. (FIRE - Financial Independence Retire Early)
I wish I had learned some of this in my teens or 20s. I learned this thanks to the YNAB community. I'm happy to pass it on.
1. JL Collins - The Simple Path to Wealth - http://jlcollinsnh.com/stock-series/
2. Your Money or Your Life - Vicki Robins
3. The Little Book of Common Sense Investing - John Bogel (The founder of Vanguard and index funds)
4. The Bogleheads' Guide to Investing - by Taylor Larimore (Author), Mel Lindauer (Author), Michael LeBoeuf (Author)
5. Then dig into Bogleheads forum to learn more about investing if that interests you. - https://www.bogleheads.org/wiki/Getting_started
6. The Millionaire Next Door by Thomas Stanley
7. The Richest Man in Babylon – George Clason
8. Then dig into the blogs of Financial Independence like:
Choose FI podcast - http://www.choosefi.com/
Mad Fientist - http://www.madfientist.com/
Mr. Money Mustache blog - https://www.mrmoneymustache.com/
Good Luck and keep us posted!
-
I know how hard it is to get beyond the paycheck-to-paycheck, feast or famine, problems of self employment. I agree with everyone - don't wait until next year. Start today. It matters less *where* you put your money or even *how much* as that you *consistently* put money *every paycheck*. Unless you have some specific ideas in mind, Vanguard or Fidelity are probably good places to go with some kind of IRA. If at all possible, set up the money to go automatically every paycheck. Or every month. Just some mechanism so you're not having to write a check/actively make the deposit. Because it's too easy to say "oh, I'll do twice as much next month" and skip this month, and then 3 years later realize you kept doing that. Good luck!
-
Assuming you run payroll. set up a SIMPLE IRA. They are NOT the best, but they are a 1 page document, can be setup in < 1 hour, and let you put away $12,500. Set one up NOW. Then, spend time figuring out what you want long term, but you can get the SIMPLE IRA up and running "right now" while you decide on something "better." The main problem with the SIMPLE IRA is the "low contribution limit" -- $12,500 employee side with a fixed 3% match. With a Solo-401K you can do cool things like match 3:1 on your 16,800 limit and put around 50k away.
If you are 39 and have nothing, I'm going to recommend a SIMPLE IRA plus a normal IRA (if deductible), a Roth IRA (if eligible) or a non-deductible backdoor Roth. Get yourself started, don't worry about the "best" option... Just get going.