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Pot of Gold – Saving for Retirement is Daunting


Pot of Gold - Saving for Retirement is Daunting

My money class met for the second time and it was daunting but good. Week 1, everyone was to do their no shame, no guilt budget based on what they spend today. And then we were to do our future budget, like where do we want to be.

For the second week, we talked about the “pot of gold” as they refer to the savings for retirement. Essentially, they provided another worksheet that walked you through creating a target number to save for retirement. It was a daunting number – in the millions for most people. And then they discussed what you need to do to reach that “pot of gold”.

It’s not luck of the Irish. It’s hard work, strategic thinking and smart savings and investing. I’m getting there!

It was a very grounded discussion (remember, this is targeting people like me who are entrepreneurs growing a business). The conversation was centered around what you need to live, what you need to set aside for taxes, and what you need to contribute to your pot of gold to get there.

And for this class, they indicate that your pot of gold should be enough for you to pull down 3% for 30 years. I am not sure where they got those numbers but I’m guessing it’s based on lifespan after retirement?

Anyways, it made total sense to me and really met me in a headspace where I’m comfortable. I’ve always kind of lived by “how much do I need to make?” Ok, let’s hustle and build to get there. I just settled for too little, was too comfortable with debt and frankly needed this training a LONG time ago.

It was great.

I didn’t get to attend the 3rd session at the end of last week (work got in the way) but plan on watching the replay soon. I’ve got a lot of work to do to build my “pot of gold”. This class is amazing though. Real numbers, a strategy that works with the way I think. I’m so glad I’m doing this.

P.s. if you have some spare time, consider checking out Leisure Freak.  He has a great series of postings on early retirement called “retire early and often” – brilliant.

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  • Reply Denise |

    What is your plan for getting your “pot of gold”? It is never too late to start planning and saving for retirement.

    • Reply Hope |

      Well, I started my ROTH IRA last year and maxed it out. Doing the same this year.
      And I’m contributing 13% of my W2 income this year.
      That is my plan thusfar. After this course is over, I hope I am more confident in my knowledge and relationship with money to build on this plan.

      • Reply Angie |

        Since your W2 income pays all the bills. I would consider investigating or asking a financial advisor whether you could create a solo 401k or something for all of your 1099 income. I’m not positive, but this may be a way that you can contribute more than 19,500 a year tax free. I would definitely seek out assistance with it. If you could have all your side income go directly towards retirement that would be a very nice way to catchup.

  • Reply JD |

    It would be interesting to hear how you chose the investment strategy for your retirement accounts, what your target number is and a sense of your timeline in a future post. How did you balance the advice re: being more conservative with investing IRA dollars the closer you get to retirement age with being a little behind the curve in terms of savings? How are you balancing debt payoff with investment in your future retirement needs (eg considering non-retirement investment options to make up for some of that lost savings time)?

  • Reply klm |

    I don’t recall–is your Roth IRA your only retirement savings? Or is there an additional one through work? Does your work have any sort of pension?
    For instance, I have a Roth IRA that a relative set up for me when I was 22. I am the only one who has made contributions to that from my budget/bank account after I get my paycheck (after taxes). The account is mine, and it is not tied to my job. My spouse is the beneficiary of this–if I die, he gets the pot of money.
    I have a 401K through work. I contribute to that from my paycheck (before taxes), up to $19,000 per year ($18,500? Don’t recall the limit) and work matches up to 5% of my pay. If I leave this job, I can’t make any more contributions, and work will not make any more contributions, but the account will continue to grow based on the interest it earns (or it could lose money if the stock market drops). My spouse is also the beneficiary of this.
    I will also have a pension from work. I technically contribute to this through some pre-tax deductions, but I contribute a relatively low amount. My pension, which I can start collecting when I’m around 60, is based on how long I worked at the company, and how much I made. If I retire with 30 year at the company and a “high three” average annual salary of $90,000, I’ll get $27,000 per year (.30 times 90,000) for the rest of my life. If I leave the job before I retire, I will still have access to the pension when I retire, but obviously would only have the income based on how long I worked at the company, and how much I earned. I will pay taxes on this. And–and this is important–the pension dies with me. If I retire at 60, and die at 62, my family gets no more money from the pension.
    I say all this because it is important to 1. Understand what retirement savings you HAVE and what options you COULD have access to. 2. Ensure you’re (eventually) diversifying your savings buckets. 3. Take advantage of any employer match at work. 4. See if there is a pension, and 5. Understand any vesting/minimum years at the job that you need to achieve before you qualify for the match or the pension.

  • Reply Kate |

    The 3% over 30 years sounds like a conservative version of the “four percent rule” that gets thrown around in FI a lot. https://www.investopedia.com/terms/f/four-percent-rule.asp

So, what do you think ?