Episode 37 – Saving for retirement as a single woman from Gen X
Episode transcript:
[music intro]
Jenny
Welcome back to Fund Your Future with DRS. Well, there’s been a lot of talk in the media recently about financial advice for baby boomers and millennials and Gen X. And so, we decided we wanted to explore this a little more. So, for the next few episodes, we’re going to be interviewing different DRS team members from these age groups and look at how they’re preparing for retirement and what advice they have. And we’re starting with Terri, who’s from Generation X. Welcome, Terri.
Terri
Hi. Thank you. Nice to be here.
Jenny
So, just to set the scene here. Generation X is right in that sweet spot between baby boomers and millennials. If you do a quick Internet search, it says that Gen X typically refers to those who are born between 1965 and 1980. Sometimes they’re dubbed the MTV generation because they were kids when MTV came out, and sometimes they referred to as the latchkey generation because they were the first generation of kids where it was common for both parents to be working.
And when kids came home from school, they needed a key to let themselves in. So, does that sound about right, Terri?
Terri
That’s exactly right. Yes, lots of MTV, lots of letting ourselves in and then having a few hours to kind of play around and not do any homework just yet before mom got home. So, a lot of independence in our lives growing up.
Jenny
Nice. Yeah. So, kind of applying that now to as a Gen Xer, planning for the future and retirement and everything we want to kind of look at your unique perspective as a single person who’s preparing for retirement and how you’re approaching that.
Terri
It has been a little bit of a stop start with retirement because my parents, they were not tuned in enough to really show us the ways of saving for retirement or just saving in general. So, I had kind of a slow start on that. And, you know, your workplace conversations where they come in and talk to you about your 401k.
So, I do get those every now and then, but had a very much of an automatic set up there where I would default 3% and then not think anything of it. And then I finally got to a point in my life where I just saw that account and it was very small and knew I needed to take a more serious approach.
And this was probably in my early thirties and I really didn’t know what I was looking at. I didn’t know what stocks and bonds were, and I was starting that whole take charge of my life because I’m a single woman and I just I’d have to do these things for myself. And so, I started to do a bunch of Internet searches and podcasts were starting to be like a really big thing at that point in time, too.
And there are a lot of independent groups that were all about retire early, work until you’re 35, and then do what you want for the rest of your life as long as you plan it out well enough. And so that really sparked my interest. I knew that wasn’t going to be how my life went, because I don’t make $100,000 a year.
But it takes you down this path where you really start to see all the levers that you can start to pull in your life. To set yourself up toward that retirement age. You need to think about a lot of different facets of your life. And it got me very excited. And plus, it was something that I could tune into on a regular basis.
I could touch base with this group and they could give me more and more tips and keep me excited about my future. And that was pretty much the beginning. And now I share with everybody all my little tips that I find here and there. I grab my friends. If they start talking about finances, I get super excited and sharing what I’ve learned, and I just like sharing. I want other people to start taking their retirement seriously or their financial future even seriously.
Seth
I think that’s interesting because Gen X is interesting in that there are people who are in their late fifties and people who kind of who are in their early forties or mid-forties, and that’s kind of when retirement starts to feel real for people. And it sounds like you kind of have had that epiphany at some point your life, but everybody has added a different stage in life or hopefully they have it at some point.
But I know one of the reasons we were excited to talk to you as well as I think Jenny and I both have a blind spot. When we talk about finances, we both often talk about how we’re working with finances, with our spouse and making decisions together or independently that influence each other. And you mentioned being a single woman. I’m curious how that has impacted the decisions you’re making.
I don’t like to think of my wife as a roommate, but sometimes, like, you know, there are advantages to splitting costs and sharing costs. And there’s a reason why some people have roommates to help with that cost when you’re younger. So, I’m just curious on what sort of impact that has had on you.
Terri
Yeah, I’ve really had to take a lot of even the small things very seriously. There’s no room for overspending in a lot of areas, so I have to be very diligent on my financial planning. If I want to take a trip home to Michigan, I have to make sure I’m saving up for that. I have to make sure I keep my credit card spending to a minimum where I’m paying that off every month.
And even now, with the rental prices going up significantly, that has had a profound impact. So now, even as a single person, I’m looking at getting a roommate because it just doesn’t feel affordable for me to continue to save at a decent savings rate, and my rent is kind of cheap. It’s $1135 and it used to be $300 less. Just even a year and a half ago. So that’s a huge increase for me. So, I have to look at pulling these other levers and then also changing my mindset. Like if I look at it like, I’m missing out on being that person who can live in a house and afford all of this. If I look at it like that, then I’m going to feel defeated.
But I can have this mindset of where I can find a roommate and maybe share a great single life, I guess home, you could say, with this other person. So yeah, it’s a lot of mindset, it’s a lot of diligence, but it’s all doable and nobody says that I’m actually going to make it to retirement either, so…[laughs]
Jenny
And now you’re working for DRS, so you’ve got a special kind of insight on planning for retirement. I think that’s really fascinating, though, about the whole owning a home versus renting. And even with some of the finance folks that I’ve followed online, it’s kind of this message of there is that big push for like, you have to own.
But then other people will say, hey, if you’re not owning, you’re not having to save up money for home repairs and things like that. And so, there is a little bit of that that give and take. And so, for folks that are renting, they’re like, great, I can put this extra money that I normally would have put towards a home repair and now towards like some investment stocks or something like that.
Terri
Exactly. Yeah. And I didn’t know too much about home ownership, but the more my friends talk about it, my parents talk about it. You guys have a lot of expenses when it comes to homeownership. I don’t have a water bill, and from what I understand, that’s a huge monthly expense for you. So many things that I don’t have to pay for that regular homeowners have to pay for.
And so I kind of appreciate that. I also appreciate that I can pick up and move and I can do it fairly easily. So, yeah, it is not I don’t feel like I’m losing anything other than a larger yard, so I can still garden, I can still do all these other things. It’s kind of nice.
Jenny
That was kind of just my main take away of it doesn’t have to be… we’re not proponent for like one way is better than the other, but just that as a renter, you do have these other kind of options available to you. It’s not that you have to be a homeowner, and that’s the only thing that you should do.
You know, like you said, there’s all these flexibility with it as well. Like right now, my husband and I own an older home and we’re saving up to remodel the bathroom and like put in insulation under the floors and it’s like, it’d be nice if we could, put this money towards something else.
Seth
I love what you said. It ties back to your earlier comments about mindset, about looking at not seeing everything like as a disadvantage, but seeing what the advantages are. And I mean, just the idea of having a roommate and building community around that is very interesting. It’s a perspective that a person might not have. I know we have another colleague who rents out a couple of different rooms at her house and she’s said the same thing, that for her it’s been this sense of belonging and ability to really make connections and mentor people.
I think for her she’s had some younger roommates and been able to help folks kind of transition through life. And it doesn’t necessarily mean it’s easy, but it is a different way to look at it. Yeah, I just I really love that. You mentioned that you felt like you kind of got a later start on this. I’m actually curious to talk to you more about listening to a podcast and thinking about retiring early because I have lots of thoughts about that.
But sometimes that is intimidating. People feel like they’ll never get to retirement or they don’t have that opportunity. So I’m curious what sort of steps you’ve taken. You mentioned you have a lot of tips or tactic, things like that.
Terri
Well, podcasts number one. Find some regular source that you can go to that you can constantly be refreshing your arsenal, so to speak, of levers that you can pull all the FIRE podcasts, retire early. They always have great ideas and you can see how other people are kind of winning at the same arena.
Jenny
Yeah, just as a reminder for our listeners. So, FIRE is this term thrown around. So, it stands for Financial Independence Retire Early.
Terri
Right. And it doesn’t mean you retire early necessarily. And that was one of the main takeaways from the very beginning was it was basically freeing you up to do maybe something that you were passionate about as opposed to you’re doing it because it’s earning you a check, it’s earning you a source of income. And so that was a really interesting way to look at it.
Like I said, I’m not going to be one of those retire early people unless I win the lottery, which I don’t play. But it’s fascinating to have that mindset of doing something different later in your years, something that you’re really excited about. So, some of the things that I have done over the years….
I question all my expenses and I don’t think a lot of people do. So, cell phone. I mean, the way the amount of money that people spend on cell phone and subscription services, I think a lot of that is an incredible waste of money. And so, I question a lot of mainstream things on a regular basis, and that’s has definitely saved me money over the years.
I have had roommates in the past and that has saved me money. Always having a savings account of some variety. That way, if I do run into financial hardship, I’m not as stressed, or at least I’m not stressed right away. Got a little bit of buffer there.
Jenny
Yeah. Do you try to keep it at a certain balance?
Terri
Yeah. So right now it’s a little on the low side at $5,000, but I would like to ideally keep it at $10k. Yeah. And with how expensive a lot of things are right now, definitely on the higher side, would be more comfortable.
The other thing is don’t ever pay credit card interest. Like there’s no reason for that. You get those credit cards that you are getting benefits from, like whether that’s cash back or travel rewards. There’s just so many opportunities to save money and also not getting your banking information stolen on the Internet. I was just telling my boyfriend, he pays for everything with debit and I’m like: “Oh no, why?”
So, what else have I saved on? Car ownership. So right now I have a small, very, very small car payment. But basically, for my entire life I’ve had maybe three years all in all of car payments. And it has been wonderful not having a month-to-month car payment. I don’t know how people do it with those huge car payments because that’s just too expensive and your insurance too. Like that’s really high when you have a car payment.
Jenny
Do you mind if I ask you when you bought your car, did you buy new or buy a used car?
Terri
I bought used. Yeah. And weirdly enough that my last car was an Avis rental car. So, I didn’t realize that at first until it looked back and I bought my recent one. And it also I knew going in that this one was but it had looked back at the other one. I never realized it was a previous car rental too, and it worked out fantastically for me. So yeah, always looking at what’s going to last me the longest. Like how many miles can I get out of this thing?
Jenny
Yeah. Is that kind of the tip? Do you go more for the car with the fewest amount of miles on it?
Terri
Oh yes. I’ll check all the Consumer Reports. Like what has a good history. I get really nerdy with that stuff.
Jenny
Yeah, because I think that’s honestly the biggest concern about buying a used car. My dad was always the proponent for, like, buying the brand new car because, you know, you know that you’re not going to have any trouble with it. So, there’s that concern of like, if I get a used car, is it going to break down?
Terri
But well, that’s why you go get it checked out by a car shop first.
Seth
Well, and I love that kind of from a mindset perspective. Plenty of new cars have recalls. There are pros and cons both ways, and it’s similar to the earlier conversation about renting or buying a house or where you live. There are pros and cons to all sorts of financial decisions, and you kind of have to figure out what’s the best for you and then take advantage of that.
I mean, I personally love the idea of driving the car into the ground and like never having to pay monthly payments. And the three biggest costs people have are housing, food and transportation. And if you can figure out how to lower one of those significantly, it can have a huge impact on your ability to save. And you can really put that money away for either emergency or then for later lifetime savings so you can go do other things.
Terri
One of the other things, this is probably the furthest I’ve lived away from where I’m working. It’s a 15-minute commute by car, so that’s nothing really. But before it was easy for me to hop on the bike trail and bike off to work. So that was really nice. And I still can. There’s just a lot more of an effort coming down the [road] those rainy days.
Yeah. And you have to be a little bit more careful in traffic. There’s not the bike trail between me and my house and DRS. So it’s just a little bit more caution, but that’s another way to stay healthy. Right? If you’re biking to work, then you’re automatically getting that workout in.
Seth
Our office is not located in the most bike friendly area. I will acknowledge. I used to bike to work and have taken up just walking to work because it was felt easier and safer than biking.
Yeah, those are those feel like really concrete strategies. I’m also curious what you think about life after work. What does retirement look like for you? What do you think about whether that’s before 65 or after 65? What does financial independence look like? Maybe that’s a safer way to say it for you.
Terri
It is really hard to think of being retired. It seems like I would have to save up so much more to be retired and not have to work. But I would like to stop working at least the 40 hour workweek somewhere around [age] 60. If I can swing that and then maybe do something because I’m getting more of a social benefit than a monetary benefit.
I don’t need to do big things, though. I think you kind of have to save for what you’re looking to do in retirement. So, if I’m looking to travel the world, I’m really going to need to buckle down and save up big.
But I think the biggest thing that you kind of have to plan for these days is health. Like, are you going to be able to afford if something happens to you health wise in the future? And right now, that’s very much up in the air. And I think that is for most people.
Seth
It’s fair. And part of, I think, the challenge of looking to the future is there’s so much uncertainty, like myself as a 20-year-old person was a very different person than I am now. And what am I going to be like as a 60-year-old person? What are my interests going to be? What are my passions?
What are the things, what the world is going to be like? I think for a lot of people when they think about retirement at whatever age or financial independence, it’s a, you know, discussion of family and friends and it’s more about like the people that you’re going to spend the time with and how can I ensure that I have that ability?
But then it’s also like, well, I want to do that now. Like while they’re here, while I’m here, while we have our health, like, that’s important. And so you have to figure out how to balance that. I know, Terri, you and I had talked working extra jobs to save more money. And then it’s like, how do you trade that off the time now versus the money later or the time later?
Terri
Yeah. When I had… Well, I still have my second job that I work on Saturdays and some Fridays, but I just I had that point in my life where it was more important for me to save up more at that point in time too. I was saving up just to have that savings, that buffer account. And so that was a huge drive and it was okay to buckle down and do those two or three jobs and then COVID hit.
Of course, that kind of took me back a little bit. But I feel like I was just at that point in my life where I had the energy, I had the drive to do it. At this point in time, though, I’ve backed off of that and I feel like a little bit of my free time is kind of a bit more important at this point in time. But I’m not beyond working and getting back to working one and a half jobs. If the need calls for it. You know, who’s to say that I’m going to be healthy or fit enough in two or three years and I need to be earning more and working those two jobs.
So, it is a balance. But I do want more free time down the road. So, I think it is important to stay on top and make sure that I am saving up, that I’m earning enough. And I think retirement wise, like you kind of hit it. I did most of my traveling worldwide when I was younger, so I don’t feel like I’m missing out by not planning for that high level travel in retirement years, but maybe traveling to the United States or Canada.
I think that would be fun and that’s totally attainable on a regular life I think. So, yeah.
Jenny
That was going to be my question, is I think with a lot of younger people, there’s this huge push for traveling and all these things and trying to figure out that balance between saving money for vacation versus saving money for future expenses like retirement and health care. Do you want to maybe share a little bit about your budgeting strategy or methods that you use?
Terri
Well, pay yourself first. I’m sure you guys have heard that where you’re always making sure that you’ve got your bills paid, but you’ve also got that set amount that’s going into your retirement accounts, your savings accounts, and then you’ve got probably an idea of what you’re going to do with the remainder. But you definitely have to make sure that you’re filling those buckets first and then sitting down and doing a budget at least once a year, if not more frequently, to adjust for things that come up.
You need to sit down and get very real with what you’re spending. And a lot of people don’t do that. It’s uncomfortable to see where their money goes. It’s time consuming for a lot of people don’t have time or at least feel like they don’t have time. But I think it’s really important to do that and see where you can trim things up.
Jenny
Do you have any other advice for maybe your younger self or for those younger generations?
Terri
Be curious. Be curious about finances. Talk to your friends, talk to your family, find out… ask them how they’re saving for things. Ask them what they’re spending their money on.
I always share the compounding calculator because that was one of the first things that kind of sparked my interest in finances. You plug those numbers and you’re like, my gosh, I could have saved up all this just with $100 a month or $500 a month.
Yeah, so it was amazing. And so, I’m always sharing that compounding calculator with other people to kind of get them interested in having a regular savings and really the talking, because I wish that my parents had had more conversations with us, not that we would have listened because you know how it is growing up, but we didn’t talk enough.
I know we didn’t talk enough because my entire family is like that. Nobody has saved. It’s kind of sad to see. So, other than that, keep trying to find ways to decrease what you’re spending. Don’t give in to what your friends are spending their money on. Be your own person, be independent.
Jenny
I think that’s great advice, especially in being your own person and just recognizing that there are a lot of these constant I mean, I’m in marketing, I know that there’s messaging out there that is constantly getting you to buy more stuff, whether it’s through Amazon or any sort of online website or even in the stores.
Terri
And my friends are big on gift giving and I’m working on a conversation to have with them, like, “don’t buy me birthday presents, let’s go and do something.” I don’t need these extra things. I’m kind of a minimalist. So I really don’t need these things, but I think, well, I know that they can’t afford those things either.
So, if we have that conversation of we don’t need to get each other gifts, but we can do these other things together to enjoy our company or our time together. So yeah, just keep the conversation going.
Jenny
That’s fantastic. I love it. I feel like I identify so much with this.
Seth
And it’s so much of why we wanted to start this podcast and just encouraging of conversations around money, just remove judgment and remove self-judgment and judgment of others. Everybody’s trying to do the best they can. I really appreciate your example of things you might just not be aware of. And so, talking to people and listening to people make you aware of other things doesn’t necessarily mean one is better or worse, but it gives you other opportunities in other ways to think about the world. And yeah, this has been great.
Terri
Yeah, absolutely.
Seth
Thanks, Terri.
Terri
Thanks for having me.
[music outro]
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