127. Ask Tori: How Do I Retire? | Financial Feminist

Intro

The “Financial Feminist” podcast explores how money affects women differently and advocates for using money as a tool of protest in a capitalist society. In this episode titled “Ask Tori: How Do I Retire?”, the host, Tori Dunlap, addresses various questions related to retirement planning, investing, and managing retirement accounts.

Main Takeaways

Retirement Planning and Investing

• It’s more advantageous to invest additional money instead of paying down the mortgage faster, considering mortgage interest rates are typically around three to four percent.
• Delaying investing to pay off the mortgage means missing out on the benefits of compound interest.
• Prioritizing mortgage payments over investing can delay retirement savings.
• Retirement planning should start 5 to 10 years before the actual retirement date.
• Consider slowly moving money from investing accounts to safer options like a CD ladder as retirement approaches.
• Gradually withdrawing money from investments can protect it from stock market fluctuations.
• Utilizing a CD ladder can offer higher interest rates in exchange for locking in funds for a specific period of time.
• Strategic financial planning can help in achieving early retirement goals.

Managing Retirement Accounts

• Rolling over a 401k into a Roth IRA provides more control over investments.
• It’s important to keep track of your 401k and not leave it with a former employer.
• Consider using a tool like Capitalize to find lost 401k accounts and assist in rolling them over into an IRA.
• Edward Jones is criticized for high fees that can eat into investment returns.
• Leaving Edward Jones and finding a better investment option with lower fees is advisable.
• After leaving Edward Jones, consider transferring investments to DIY platforms like Fidelity, Charles Schwab, or Vanguard to avoid high fees.
• Roboadvisors are quick and easy but may not provide investment knowledge, leaving investors feeling uninformed.
• “Stock Market School” offers a blend of DIY investing education and guidance in a supportive environment.

Summary

Retirement Planning and Investing

When it comes to paying down mortgages versus investing, the speaker emphasizes the importance of investing over paying off the mortgage faster. With mortgage interest rates typically around three to four percent, it’s more advantageous to put additional money towards investing, where potential returns could be higher. Waiting to pay off the mortgage before investing means delaying the benefits of compound interest, which is crucial for long-term wealth building. Prioritizing mortgage payments over investing can also delay retirement savings, as it’s essential to start retirement planning 5 to 10 years before the actual retirement date. As retirement approaches, gradually moving money from investing accounts to safer options like a CD ladder can protect it from stock market fluctuations. A CD ladder involves investing in various CDs with different maturity dates, providing access to money as needed while offering higher interest rates. Strategic financial planning and early retirement goals should go hand in hand.

Managing Retirement Accounts

When it comes to managing retirement accounts, rolling over a 401k into a Roth IRA provides more control over investments. It’s crucial to keep track of your 401k and not leave it with a former employer. Tools like Capitalize can help locate lost 401k accounts and assist in rolling them over into an IRA. Edward Jones, a financial services firm, is criticized for its high fees that can eat into investment returns. It’s advisable to consider leaving Edward Jones and finding better investment options with lower fees. DIY platforms like Fidelity, Charles Schwab, or Vanguard offer low fees and provide more control over investments. However, managing investments on DIY platforms requires confidence and knowledge. Roboadvisors, on the other hand, are quick and easy but may not offer the same level of investment knowledge. “Stock Market School” offers a supportive environment for DIY investing education and guidance.

Conclusion

Retirement planning and investing are crucial for building long-term wealth and securing a comfortable retirement. Prioritizing investments over paying down the mortgage faster is generally more advantageous, considering mortgage interest rates and the benefits of compound interest. Managing retirement accounts requires vigilance, and it’s advisable to roll over 401k accounts into options that offer more control and lower fees. Platforms like Capitalize, DIY platforms, and supportive communities like “Stock Market School” can provide the necessary tools and knowledge for successful retirement planning and investing.