Category: Retirement

To Think or Not to Think: The Financial Question

I hope you are all enjoying some crisp fall weather, wherever you are.

With my latest quarterly net worth check-in, I discovered that I have nearly doubled my net worth in the three years since I started tracking my progress! The beauty of compounding is at play here: The more money I have invested that is making me money, the more money it continues to make. It’s that simple!

Other than that, I want to update you on what I have been thinking about vs. what I have been (choosing) not to think about when it comes to my money lately. This is sometimes by design, as a behavioral finance trick. Each link in this list will take you to a category of articles on this blog for you to explore further.

  • Bank accounts—I think about them weekly, but don’t always check them that often. My checking account and regular savings account are my most visited; my two high-yield savings accounts are reviewed quarterly for my net worth update, and are regularly invested in whenever I have savings from a biweekly paycheck ✅
  • Budget—I don’t think about it as much as I used to; I have regular payments that aren’t accounted for in my budget ❌
  • Credit cards—I think about them a lot, sometimes multiple times per week. This is the primary focus of my finances: What am I spending and—when it comes time to pay the bill—how much do I owe? This is also a good way to prevent fraud, but your credit providers should be alerting you to any unusual activity ✅
  • Investments—I don’t think about them, but I check my Charles Schwab brokerage account periodically during market shifts (thanks for the heads up, AAII!) and review them for performance and potential deletions twice per year ✅
  • Retirement accounts—I don’t think about them because I check my progress quarterly, I have a system in place ✅

The aspects of my personal finance that regularly haunt me are my bank accounts and credit cards. These are top of mind since I handle them on a short-term basis, whereas my investments and retirement accounts are for the long term. The one area I need to improve is my budget, hence the “x” instead of the checkmark. At this point, it’s next year’s problem!

The state of my retirement accounts

My retirement accounts are doing well, especially when I don’t think about them! I still have my first 403(b) plan account with Vanguard from AAII, and it remains invested in the mutual funds I chose at the start of my retirement savings journey. My second retirement account is with Fidelity from my current job at Red Ventures. It’s a straight up 401(k), so now I have a fun collection of all these letters and numbers!

I’m actively contributing 5% of my salary to my Fidelity account on a biweekly pretax basis, meaning the money comes out of my paycheck before I even get to see it. Meanwhile, with my employer matching most of that contribution, I’m sitting on nearly $6,500 after over a year of steady contributions and positive returns!

I invested my Fidelity account in these mutual funds that were available to me, using the same weights I applied to similar funds in my Vanguard account: 30% invested in the T. Rowe Price Large-Cap Growth fund (TRLGX), 20% in the Fidelity Mid Cap Index fund (FSMDX), 20% in the Fidelity Small Cap Index fund (FSSNX), 20% in Emerging Markets II (ticker not listed) and 10% in the Principal Real Estate Securities Fund Class R6 (PFRSX).

When I invested in these funds back in fall 2024, two of them had higher expense ratios than I would like for my investments: the real estate fund’s was 0.81%, and the large-cap growth fund’s was 0.70%. My investing strategy is to find mutual funds or exchange-traded funds (ETFs) with expense ratios under 0.60%, otherwise we’re getting dangerously close to 1%, which is way too much to be giving any fund or money manager. Thankfully, the large-cap growth fund’s expense ratio has since decreased to 0.55%.

My petsitting venture

This year, I started petsitting cats and dogs. It took off when I started networking through the dogs, finding more animal friends to hang out with. My closest human friends also have some of the cutest cats ever, so I can’t resist spending scheduled time with them when they are required to pay attention to me 😂.

So far this year, I have made over $1,600 from this venture! Since I haven’t been as regular with saving this year as I would like, at the end of 2025 I plan to match the amount I’ve made from petsitting and move it into my emergency savings account.

When I initially drew up my rules for this savings account, I wanted to keep $10,000 in it at all times. However, I’ve learned since that I don’t really need that much money available, even for emergencies. I settled on maintaining my emergency savings at $7,000. In the current market environment, it makes more sense to keep money in my high-yield savings accounts so they can make more than the measly 0.01% interest my emergency savings will.

Some other financial decisions I made since we last talked:

  • I signed a two-year lease for my current apartment so I could lock in the increased rate of $1,450/mo. for the next two years to save myself another $50/mo. increase down the line
  • I chose my health insurance plan for 2026, and went with the lowest tier for around $30 per paycheck

I’ll be back in early 2026 for another portfolio review! Wishing you all a wonderful and safe holiday season.

More articles on rethinking retirement:
Retiring Early: Memoir or Fiction?
Should Young People Still Save for Retirement?
How Much Should I Contribute to My Retirement Account?

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Financial Goals to Accomplish by Age 30

If you’re reading this on the day it comes out, I have officially turned 30. I’ve been ambivalent about turning 30 for a while now, wanting to stay 27 forever (unfortunately, I never found a vampire to make that happen). The last time I felt I hit a big milestone was when I turned 19. At the time, I was in college and co-running a YouTube channel with my best friend Ilana. I filmed a video about what people can do when they turn 19, the most exciting of which was being able to drink legally in all of Canada! Inspired by this, I looked at the most common financial goals people should achieve by the time they turn 30. Of course, everyone will be on a different trajectory, but I always find benchmarks helpful when it comes to money.

1. Build and Replenish an Emergency Fund

The decade of my 20s was all about saving, and I’m so thankful I was able to focus on this goal. Building an emergency savings fund is the first step you can take to achieve financial independence. A common guideline is to have at least six months of living expenses saved in this fund, but you can work up to this. I have my emergency fund in my regular savings account that is attached to my checking account. This means it’s not earning me much interest, but that’s quite literally the price I pay for this money to be easily accessible in an emergency. If you end up tapping your emergency savings, be sure to set up a plan for building that fund back up to the amount you maintained before. Whenever your financial situation changes, you should reassess this amount to make sure it will still cover six months of expenses.

2. Pay off Debt

Once you have money saved up for emergencies, you have increased your net worth and also your ability to pay off debt. If you were trying to pay down debt before building up your savings, you would slip further into the red, and it would be difficult to get yourself out of debt in the future. It’s best to focus on your high-interest debt first—anything above 6%—since that interest will compound and add more to your debt if you don’t get it under control. Examples of high-interest debt could be on credit cards, personal loans and private student loans. Federal student loans are usually lower-interest debt, along with mortgages.

3. Maintain a Good Credit Score

Not only do you need to get yourself into a good credit score range (above 670), but you also need to keep that credit score up while you live your life. Your credit score can change at least once a month, but this can vary depending on how many lines of credit you have. You can keep your credit score up by paying your credit card bills on time, keeping your card balances low and only applying for lines of credit that you need. Over the last year, my credit score has stayed within the range of 770 to 780, which is considered “very good.” Maybe I’ll try to sneak into the “excellent” range (800 to 850) during my 30s 😉.

4. Start Saving for Retirement

I know most of us young people don’t even want to think about retirement half the time, but if you are actively contributing to a retirement account, you shouldn’t have to think much about your balance. The best thing to do once you choose your investments for your retirement account is to rarely check it. I know this sounds counterintuitive, but unless you have concerns about your account not making enough or you want to reconsider how your portfolio is allocated, it’s best to just let your investments ride their gains and only periodically check your balance.

One rule is to have at least half of your current income in your retirement account by the time you turn 30, but I’m not sure how achievable this is in practice. Especially with inflation, millennials and Generation Z are struggling to even hit what is considered the minimum. It might be more reasonable to shoot for having one-third of your income saved for retirement by age 30. For example, if you’re making $45,000, this would equate to $15,000 in your retirement account. I can honestly say that I have less than one-third of my income in my retirement account right now, but I have multiple savings and investment vehicles that together would cover this amount.

5. Know Where Your Money Goes

This is just a looser way to say “budget,” but by age 30 it’s important to know how much money you are spending relative to how much you are making. You probably have a general idea when you look at your bank account and credit card statements, but if you still feel a dark cloud over your head when you think about your finances, it might be time to break out the spreadsheets and take a closer look at the numbers. I yo-yo between finding my budget helpful and hurtful, but the truth is there’s no emotion that I’m not projecting onto these numbers. On their own, they’re just numbers. The sooner you face them, the better off you and your money will be.

6. Begin Investing

If you haven’t started investing, there’s no time like right now! For me, the hardest part of investing so far was the beginning. If you’re struggling to figure out where to start, it’s helpful to determine how much money you have available to invest. If you want to go for something easy that won’t take much of your time, put that money into an index mutual fund or exchange-traded fund (ETF). It won’t beat the market’s return, but it will ensure that you have investments making money for your future.

How Do You Score?

By age 30, I have pretty much everything I need for financial stability. Out of the six goals, I would say I have achieved five and a half, for 91.7%, or a grade of A–. This means I have places I can improve in my 30s, so I’ll be focusing more on my goal of saving for retirement and optimizing my budget. If you’re turning 30 soon or you recently turned 30, how many of these goals have you achieved? What has been the hardest one? Let me know in the comments!

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Reprioritizing My Goals With High-Yield Savings Accounts

About one year ago, I began my journey through the AAII PRISM Wealth-Building Process. Created by AAII Journal editor Charles Rotblut, PRISM is a five-step method for aligning my investing decisions with my goals. Though I went through the entire PRISM Process, I have recently been thinking about how I want to spend my money next year. This caused a shift in my goals, so in the words of Ron Weasley: “She needs to sort out her priorities.”

When I last performed the first step of PRISM, my short-term goals included amassing enough for ongoing lump-sum investments in my portfolio of index exchange-traded funds (ETFs) and saving up for international travel. My intermediate- and long-term goals were eventually buying property and funding my retirement.

I revisited the Prioritizing Your Goals worksheet, which makes it easy to visualize and plan for how much I’ll need for each of my goals.

In an exciting turn of events, my favorite band the Kills is releasing a new album this week, which means a tour next year! In their words, “it’s been a long time coming.” I’m planning to travel to see some shows so I can visit friends. International travel is still folded into the estimated cost, but I’m not sure if it will be as extensive as I previously planned.

At the beginning of 2024, I plan to do another portfolio assessment to see where my investments are at. If I make any changes, I will invest another $2,000 in my Charles Schwab brokerage account. However, if I don’t need to make any changes based on my strategy, I will be leaving my portfolio as is. That’s what makes this goal a lower priority than traveling, it’s more flexible. Sometimes the best thing to do with your investments is nothing!

I’m also planning to move next year. My current one-bedroom apartment has served me well for most of the pandemic, but I’m ready for a change. A new place in a new area (with a dishwasher 🤞) is in order. My estimated cost for moving includes first and last month’s rent, a security deposit/move-in fee and what I’ll need to pay the movers. I’m inflating this estimate a bit to account for the ridiculous rent prices I’ve been seeing.

Buying property in this economy has proved to be extremely difficult, so I changed my time horizon for this goal from three to five years to a range of five to 10 years from now. Who knows what the future holds, I could be living on the moon in 10 years! But I’m sure someone will still figure out how to charge me property taxes 😅.

My high-yield savings accounts are the primary investing vehicles for funding my short- and intermediate-term goals. My SmartyPig account is designated for my short-term goals: travel, investing and moving. I’m currently earning a 4.25% interest rate on my savings in this account, and SmartyPig has a goals feature that helps to gamify the saving process. I keep rounding up on what I think I’ll need just in case. So if I have money left over after paying for my highest-priority goal, it’s like a little gift I’m giving my future self, and the money will go toward my next short-term goal that needs to be funded.

The other high-yield savings account I have with LendingClub is for my solitary intermediate-term goal: buying property. With an interest rate of 4.50% on this account, I’ve saved about 25% of my goal. Though it’s designated for buying somewhere to live, I’ve been thinking of broadening the category for this account. If I choose down the line to not buy, I could use the funds saved up in this account for paying my rent. I could also use it to buy or rent a studio space for making art that’s separate from where I live.

I didn’t change anything to do with my retirement goal. For now, it will sit there looking at me like a joke until I can allocate more of my paycheck to my retirement account. Technically, my investment portfolio is also going toward funding my retirement since I’ll need all the help I can get. Even though this long-term goal feels so far away, I don’t want to lose focus on it just because I’ll always have more short-term goals. Hopefully, everything I’m doing to save while still being able to live my life and enjoy what I have will result in a retirement I don’t have to fear.

Check out AAII Retirement Investing for planning insights at every life phase.

Retiring Early: Memoir or Fiction?

AAII just launched a newsletter called AAII Retirement Investing, so I’ve had “retirement brain” for a few weeks. Specifically, I have been thinking about how people could possibly retire early, based on the Financial Independence, Retire Early (FIRE) movement. Back in 2019, the AAII Investor Conference featured a presentation by a couple, Tanja Hester and Mark Bunge, on how they retired around age 40.

Why retire early?

One of the benefits that draws people to retiring early is being young enough to do all the things you would otherwise be doing when your knees and back are in worse shape than they are now. If you want to travel the world, why wait until it’s more difficult to breathe and move? It’s a nice idea, but when I think about the possibility of retiring early, I could see myself taking a “retirement break” and choosing to work when I’m older and sitting down is more the vibe. (Although it would be more difficult to reenter the job market at an older age.)

If you have a lifestyle in mind for your adult years that doesn’t involve working full-time, there are ways you could “fake” an early retirement. You could work part-time for a while or do some other kind of work that requires less commitment, like freelancing. This is something that many parents do when they have kids, splitting their time between life and work. The hard thing about working part-time in the U.S. is that no employer is required to provide health insurance to part-time employees. There are some companies that offer health coverage at the part-time level, usually large corporations like Starbucks and Costco.

How do you retire early?

The first thing you have to do for anything close to an early retirement is save—big time. Many in the FIRE movement suggest saving up to 70% of your income. This is no easy feat, especially for people early in their career just starting to make enough money to make ends meet. Essentially, you will be uncomfortable and living below your means as much as you can for a while so that you can be comfortable for the rest of your life. It’s up to you to decide if it’s worth it.

But it’s not just saving that gets you to an early retirement, you have to invest those savings wisely. Those who retire early likely make a large salary from the start of their careers, but it’s not necessary. Like any financial goal, if you can stick to a disciplined plan, you can make it happen. You have to really want it, and you would have to forgo the majority of everything else you could possibly want in the meantime. What do you really value? It might help to look around your dwelling and determine what you would save in an actual, non-retirement-related fire. I would grab the linen sheets off my bed and my poetry collection (some of the books are out of print and would be hard to replace). OK, I would probably also bring a laptop and my phone, but we can pretend 😂.

An article by AAII Journal editor Charles Rotblut discusses “Five Major Considerations for an Early Retirement.” One of the more complicated parts of retiring early involves having health insurance even when you’re too young to qualify for Medicare. The Affordable Care Act (ACA) is something of an answer to this problem, but some have struggled to keep their plan with turnover and health care reform. Especially now that we are living in a world where viruses can spread anywhere and anytime, making sure you have health coverage prior to age 65 is more important than ever.

Retiring early means that everything in your finances and life has to shift. If one thing is happening earlier, everything else has to accommodate for this change. If you crunch the numbers and decide you’d rather ride it out with your 9-to-5 job, then so be it. An early retirement isn’t for everyone, and some following the FIRE ideology also own multiple properties to maintain a steady cash flow. Being a landlord and exploiting people certainly isn’t my dream, but if I figure out a more sustainable way to retire early, I’ll let you know!

Back to Investing Basics: On the Road Again

For the August 2023 issue of the AAII Journal, I revived the Beginning Investor column with the article “Starting on the Road to Investing.” If you’ve been following along with me but haven’t started investing, I hope the article serves as a helpful distillation of what I’ve learned about my own finances so far!

Writing the article forced me to go back to basics and determine how each stop on the road to investing built the foundation for the next one. My investing journey was nowhere near as linear as the article’s order suggests, and yours doesn’t have to look perfectly tidy for you to start now.

I discuss each step, the tools required and the difficulty level below, along with my own experiences. Each section has a link that will take you to my first blog post on the topic. None of these are destinations, but ongoing processes you’ll have to revisit as you make progress.

Tools required: Pen, paper, computer

Creating a budget, though I long dreaded it, is an easy place to start. Not everyone has a budget or sticks to it, but it helped me demystify where my money was going and how much I truly had to play with. It also doesn’t require you to speak to a professional, unless you really want to, so this is a step that can be taken entirely on your own or with your partner. When I first started budgeting using the percentage budget, it was a huge relief to know that my fixed expenses were less than 50% of my monthly income. If I hadn’t started a budget, I would still be living in the dark, not understanding how much I was spending until it came time to pay the bills.

Tools required: Computer, savings account, discipline, time

Building up my emergency savings fund was the first thing I did when I graduated college and started working. Before I even heard the adage “pay yourself first,” I was saving as much as I could in a kind of competition with myself. (I’m not usually competitive, but I guess my worst enemy is myself!) Whenever I wasn’t spending money at Sephora was a good time to slide some of my leftovers into savings. Your emergency savings fund should have three to six months of living expenses—for the good, the bad and the fun things you’ll need it for in the short term.

Tools required: Computer, government-issued ID, Social Security number

I can’t tell you much about opening my regular savings account, but I believe it was done in person at an actual bank. This isn’t necessary, but if you’re unsure about opening a savings account, there are professionals who can help you virtually as well. When I opened my high-yield savings accounts, it was simpler than I thought it would be, but required a lot of front-end research on my part to find the right account for what I wanted to do with my savings. Interest rates are still increasing, so this is a great time to shop around for savings accounts with higher yields than your regular bank savings account, if you have one.

Tools required: Computer, materials from your employer, your budget, some mutual fund knowledge

Starting to invest in my retirement account wasn’t just hard logistically, it was also a very difficult decision to cough up the money from my paycheck. My employer-sponsored 403(b) account was eligible for contributions when I filled out the paperwork and chose which mutual funds to invest in. Except I made all those decisions without factoring in my own contribution. I couldn’t afford to live and save for retirement at the same time, so I put it off. When I created that budget I was talking about, I realized I could finally make it work.

Tools required: Cold hard facts, your budget

Only you can determine how much you need to start investing, based on what you decide to invest in and what you have available to spare. You could start with $5 if that’s all you have, but it would limit you to fractional shares or very small stocks. If you have $1,000, you could potentially invest in a mutual fund or a few exchange-traded funds (ETFs).

First and foremost, you have to invest in yourself, which means building up your savings and thereby your net worth. When you have your financial foundation of savings, any excess can be allocated to your investments and other goals. You can do hard things! Go forth, invest!

Should Young People Still Save for Retirement?

Retirement has been on my mind lately, and not in a romantic way. When I picture my retirement, I don’t necessarily think of what I’ll be doing or where I’ll be—I think of the air quality I’ll be living in and imagine that the vibes will be, generally, bad. I promise I’m not catastrophizing here; I’m just trying to be realistic about the way the world could turn out so I can prepare for the worst. The worst, in this case, would mean that there would be no retirement for my generation and other young people.

I read an article on MarketWatch that discusses how young people should wait to start saving for retirement, in some cases until middle age. The logic comes from the life-cycle model, which is an economic theory of how people consume based on their income. The theory holds that people will save more when they have higher income and borrow more when they have lower income—seems pretty simple, right? Someone who has just started working likely doesn’t have the income to start saving for anything. The usual financial advice given to young people when they start working is to begin contributing to their retirement account as soon as possible, max out their contributions and ensure they are getting their employer-matched contribution (free money!). The article states that, instead, this could do a lot of harm to young people who are just getting on their feet financially and might not be able to afford any level of retirement contributions until they are making a higher salary.

I found this to be a validating point, as I certainly couldn’t afford to start contributing to my retirement account when I was first eligible. Instead, I prioritized building up my emergency savings until I could move out on my own and made decisions based on the kind of life I wanted to have in the present. (Trying fancy artisan cheeses was definitely a higher priority than retirement during this time!)

We save for retirement because we want to maintain a certain standard of living once we are no longer working. This sounds a lot simpler before you decide to crunch the numbers, factoring inflation into your future. Not only are young people worse off financially in the current economic environment, but the latest I’ve found is that millennials now need to save between $3 million and $4 million for retirement. Yes, I laughed out loud when I read that! When I first started working at AAII, the magic number was $1 million for retirement. Six years later, a threefold increase from that number seems to be leaving a huge chunk of the point on the table: Wages have not and cannot keep up with inflation and likely never will. So if millennials are supposed to be saving three times the amount our parents thought they had to save for retirement, how on earth are we expected to keep up with that? (Seriously, do we need to get the aliens involved?)

The MarketWatch article also touches on low-income workers and Social Security, saying that Social Security should be the main source of retirement savings for them: “In essence, the more Social Security replaces of your preretirement income, the less you’ll need to save.” The only downside here is that Social Security may be significantly depleted by the time low-income millennials need to retire.

Much like a minimum wage, I think there should be a baseline salary that everyone deserves to make in order to survive. This could vary based on the cost of living in your area. If we work in order to live under capitalism, then we need to be able to actually live on what we are making from working. The baseline salary wouldn’t necessarily have to be entirely provided by the company you work for, but it could be provided from other sources that are meant to help people, like the government (in a perfect world where there’s no debt ceiling).

Trying to imagine myself with $3 million at the time I retire is harder to believe than many of the works of fiction I’ve consumed. If the cost of living continues to skyrocket with no accountability in other areas of the economy, people won’t even be thinking about retiring, they’ll be too busy trying to survive!

So where does this leave me and my retirement plans? Right where I left them: My 403(b) account slowly increasing with each paycheck contribution, me still not sure where or when I will ever retire and the peace of mind that I still have time to see if the world doesn’t end before then.

PRISM Step 2: Recognizing Your Risk Tolerance and Allocation

Before we dive into the deep end of what the big words in the title represent, if you missed my blog post about the first step of the AAII PRISM Wealth-Building Process, you can read it here.

PRISM is a five-step method for aligning my investment decisions with my goals, created by AAII Journal editor Charles Rotblut. The second step of PRISM contains nine lessons and three worksheets for discovering my risk tolerance for each of my investing goals and how I need to diversify my investments to correlate with the level of risk I can handle.

Charles discusses many types of risk, but the most important seem to be financial and psychological. How much money and sanity can you handle losing on your investments? But risk isn’t just about losing money, it can also lower the purchasing power of the money you already have. This was an argument I heavily relied on when I opened two high-yield savings accounts instead of letting thousands of dollars sit pretty in my joke of a regular savings account. The interest rate on regular savings accounts is far too low to keep up with inflation, so over time that money has less value.

Though risk sounds like a bad thing, Charles says that some risk can be an opportunity if you know how to use it right. For instance, when the market is down (like it was for most of last year) that lowers the price of investments, which in turn gives individual investors more options to buy stocks and funds at a discount.

The Assessing Your Risk Tolerance worksheet can be used for each of my investing goals that I outlined in my walkthrough of PRISM Step 1. For instance, my risk tolerance for retirement is high due to the long-term timing of the goal.

Allocation is the other big word in this step; it refers to how your portfolio is divided among different classes of investments. These include stocks, bonds and cash. AAII has three asset allocation models for different goal time horizons that correspond with how to diversify your investments for each goal.

With my retirement’s long investment horizon, it lands me in the aggressive investor column. This correlates with an allocation of 10% to fixed income, or bonds, and 90% to diversified stocks. My retirement portfolio is 100% invested in stocks, but I think it’s still too early in my investing journey to add bonds to the mix. I will need to do a lot more research before I feel comfortable investing in something I currently don’t understand.

I can apply these lessons to each of my investing goals to ensure that the allocation I have in place supports the investment’s time horizon and level of risk.

Follow along with me as I venture through the PRISM Wealth-Building Process and solidify my financial plan for the future!

PRISM Step 1: Prioritizing Your Goals

Now that I have something of an investment strategy in place, it’s time to take a closer look at how my money will be allocated to my financial goals. The AAII PRISM Wealth-Building Process, created by AAII Journal editor Charles Rotblut, is a five-step method for aligning my investment decisions with my goals.

The first step of PRISM supplies seven lessons and three worksheets to help determine what my goals are, why to start with them, the key components of my goals—including the timing and wealth required to fulfill them—and the importance of prioritizing goals as a jumping off point for building wealth.

I learned that in order for a goal to have any standing, it has to be personal to me. Though it doesn’t need to be the highest priority in my life, it has to be something that I care about and am willing to achieve. Otherwise, I could spend the rest of my days in bed watching the sun go up and down (just kidding, there’s no sun now that it’s December!).

Once I define these goals, they will begin to drive the decisions I make with my money. Charles suggests starting with life stages. What do I want to do with my money at different stages of life? I have a mix of short-term and longer-term goals, but I’m not really sure about the intermediate term.

I’ll admit, some of the worksheets went a bit over my head, but the main Prioritizing Your Goals worksheet was the most helpful. Here I was able to enter my goals, the number of years away each goal is, the amount of time I will need to spend on the goals, their priority, estimated cost and any comments I have about these goals.

My goal that is most imminent is making another $2,000 lump-sum investment into my Schwab brokerage account. Since my plan is for this to occur on the first trading day of January 2023, this goal is my highest priority and will depend on me sticking to my savings schedule.

Next on my list is a little heritage tour of Europe I’ve wanted to go on for years. Germany, Hungary and a little village in what is now Poland where my great-grandfather grew up before he left for the U.S. are high on the list. It will probably also include eating my way through Italy—my true motherland even though I’m 0% Italian! I haven’t entirely planned out the trip, so my cost is super estimated here.

Buying a house or piece of property somewhere, somehow is my third goal. To be honest, I’m not even sure if I want to own property (blog post on that coming soon), but I know that I don’t necessarily want to pay an increasing amount of rent for the rest of my life either. After some very vague number crunching, I came up with an estimated cost of $35,000 for this goal—but it will depend a lot on inflation and the housing market’s status whenever this goal is realized.

My longest-term goal is also my lowest priority: retirement. The upside-down smiley emoji attached to it means that this is probably an unachievable goal, but it’s on there anyway! I did some calculations involving inflation to figure out how much I would possibly need in the year 2062 when I might retire (that’s not a real year!). Charles discusses how some of these goals will be more realistic and others more aspirational. Retirement is a fever dream at this point for millennials and younger generations, but AAII’s lessons always keep it in the back of my mind. One thing that lessened the pain of just how aspirational retirement is for me was when Charles noted that even long-term goals don’t need to be fully funded by the time they are met. Retirement is an example of a goal where I could still be in the accumulation stage of building savings but be able to retire with what I have at the time.

Follow along with me as I venture through the PRISM Wealth-Building Process and solidify my financial plan for the future!

How Much Should I Contribute to My Retirement Account?

I know, a millennial talking about retirement—in this economy? I must be a fool to think I could ever retire at some point in the future. Will there even be a world when I retire? If there is, will there be enough Social Security left for me and the other elder millennials when our bodies are falling apart? (Who am I kidding? My body is already falling apart!)

Let’s talk logistics here: If you work at a company with an employer-sponsored retirement plan in place, you probably have either a 401(k), a 403(b) or a 457(b). Apparently, whoever came up with the numbers for these things thought they would be easily distinguishable, but let’s be honest, they all look like the same thing. Thankfully, that’s because they are similar vessels for your retirement savings with different labels on them.

If we think of the 401(k) as the generic version of an employer-sponsored retirement plan, the 403(b) is the version for nonprofit employers, charities and other public education organizations, and the 457(b) is for local government employees.

At AAII, we have a Vanguard 403(b) plan account that is eligible for employer-matched contributions after two years. When my two-year anniversary at AAII came around, I was faced with the decision of which Vanguard mutual funds to invest my future in. I recall reading very helpful commentary from our editor Charles Rotblut about his own Vanguard retirement account, and I looked for similar funds that would give me the proper diversification. (Remember the lessons Daniel Crosby and Michele Cagan shared on diversification?)

My 403(b) is currently invested in five mutual funds: the Vanguard 500 Index Admiral fund (VFIAX), the Vanguard FTSE All-World ex-US Small-Cap Index Admiral fund (VFSAX), the Vanguard Growth and Income Admiral fund (VGIAX), the Vanguard Mid-Cap Index Admiral fund (VIMAX) and the Vanguard Real Estate Index Admiral fund (VGSLX). But picking the funds was just the first piece of the puzzle.

Next, I had to determine the weight I wanted to give each of these funds. Following guidance from AAII, I chose to allocate 30% of my retirement plan to the large-capitalization asset class (this just means big stocks) via the Vanguard 500 Index Admiral fund, 20% to mid caps (medium-size stocks), 20% to small caps (the little guys), 20% to growth investments (they’re supposed to grow I guess!) and 10% to real estate (just for fun).

Here’s a breakdown of the funds and their weights:

Though there is money in my retirement account, I haven’t properly set up my pretax paycheck contributions. Up until now, I wasn’t able to afford the contributions. Everyone and their mother have told me I need to “max them out,” but this might not be possible for some young people just starting their retirement contributions.

So how much should I be contributing to my retirement account?

AAII matches up to 3% of my retirement contributions, so let’s start with 3% and see how that will affect my monthly income. Three percent of my biweekly paycheck comes out to $43.33, leaving me with about $1,400 per paycheck. This seems like a reasonable place to start. And when inflation takes a break, I can increase this percentage to make the most of my future money.

There’s so much more about retirement accounts that I have to learn, including how the taxes work, so stay tuned for more of my investing discoveries!