Ep 136 | How to Invest for Retirement (After You Do This First)

Thinking about investing for retirement? Don’t skip the most important first step. Before you put money in the market, you need a plan that protects your future and your peace of mind.

If you’re wondering how to invest for retirement or where to start investing with little money, this episode will guide you through the three smart steps to take before you invest, so that your future growth is secure and sustainable.

What You’ll Learn in This Episode:

✅ Why jumping into investing too soon can backfire

✅ The saving rule that makes investing work for you

✅ How to build a strong financial cushion (and why you need one)

✅ The truth about emergency funds vs. investments

✅ What to do if you don’t have a 401(k) or match

Send me an email with your questions, thoughts, and takeaways from the podcast to: elevatefinancesllc@gmail.com

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Join the Make Retirement Possible Challenge

Grab the free Retirement Ready Checklist to begin your retirement planning journey

Transcript

 Welcome to the episode. As I said, I will be sharing about why investing shouldn't be your first step when thinking about retirement, but when it should be that step. Investing is important to retirement success, to making retirement possible, but really it's just if you have no cushion. No emergency fund and our living paycheck to paycheck.

You're building your f your future on shaky ground, especially if you jump into investing first. While we know investing is essential for growing wealth, it's important that we lay the groundwork and so we will be covering that in this episode. Saving $50 a month is great, but if it's going into an investment while you have no emergency fund, one unexpected expense could wipe you out.

It's not easy to access investments, there's some cost to getting the money out, so we've gotta make sure we have cash close without having to any cost to cover those emergencies. What are the first steps you should take before investing? I have three steps to help you effectively invest without delay and without high costs.

The first step, you start with an emergency fund. Now I say that if you've been here around a long, you know, around long enough, you know, I talk about sinking funds, same thing. It's all about preparing for ex emergencies, job loss, whatever else. Because before anything else, before sending your money to investing, you need a safety net.

It's important that you start building what I love to say, a mini emergency fund, you're going to create a certain amount where you feel comfortable and you can handle a small emergency. And while you're creating this, this is your only focus. This is your main savings. You are wanting to have this there.

To create stability so that those unexpected expenses don't leave you. Ah, you know, all frazzled and not sure, and not quite sure. Investing too early is going to cost you more than just doing things in the right order first. I know it can feel pressing to be like, well, everybody says I gotta invest now and I gotta invest early, and that is true, but how is this going to cost you?

I've already mentioned that putting money in investments, there's a cost in getting, getting it out. A lot of individuals reach into the 401k loans, for different reasons. But if it's for an emergency, you might have been running before you could walk and taking an early withdrawal, you've got a 10% penalty plus taxes.

It's not easy to make this be cash. It's going to cost you more. You've gotta make sure that you create a decent cushion first. That word decent is for you to define and can vary from individual to individual. It's all about your circumstances. It's all about. How much things cost in your world, and this is something I definitely help you explore in the retirement roadmap session.

And if you listened to my last episode, my client, she was able to save 2500, 20 $500 in three months by being able to follow this very similar plan of setting money, money aside, having it available to her and not jumping in 100% to investing. Now after you've created this quote de decent cushion, it's time to start thinking about investing.

But you're not gonna abandon continuing to build this cushion, but you're going to move some of those funds that are going there. You're gonna divert them now to retirement savings. Step two, you are going to take full advantage of your employer match. This is how we're going to take from your amount that is building your decent cushion.

We're gonna take a little bit and start hopefully gaining our employer match. Honestly, if you can only do 2%, well your match is probably between three and six, we want to max that out. But if you're only, if you only have enough to get a 2% right now. I want you to think about, well, they're matching that at a full, if that's what they're doing, you now have 4%.

Don't think, ah, it's only, you know that word. Holy cow. Don't let that creep in as you're, as you're trying to make these moves and make these shifts. Start there, start building, start moving, start growing. As your income increases, maybe as expenses, you know, kind of refine themselves. Maybe you got paid off a credit card, paid off a car, whatever.

It's going to free up some more cash flow when we can start moving in. This is not an overnight solution. This is something that's going to take some time, but stay focused. If you don't have an employer match, I want you to start saving anyway. Think of most employers. Three to 6% is what they will match.

I want you to strive for a three to six on your own because you need to continue to grow your retirement savings as well. As you think about this employer match, which is typically going to be a 4 0 1, there are different options but we're not gonna get into all of those. The option with a 4 0 1 is either a Roth or traditional.

At this point, you choose what you feel best. Don't overthink it. Don't make that delay you in actually contributing. Just choose one and get saving. Make sure you get that employer match as quickly as you can, work hard. That's your focus. Step two is to take full advantage of employer match or if you don't have an employer match, create one for yourself.

Most individuals, like I said, three to six, what is your employer match going to be? Are you wondering about the steps and how you should take these steps to start re-planning for retirement? Be sure to grab my retirement ready checklist, a printable checklist for where to start, what steps to take, and where you know all the things you need to consider.

Before retirement, such as long-term care, Medicare, social security, all of that is on there. Go grab that checklist at Elevate Finances us slash checklist. Once you've met the full match, your full match, or your employer's full match, and you've continued to grow your cushion,

hopefully you've got both of them going. You're, you're doing really well. Now you've got a strategy of. Of handling both. It's time to start evaluating other types of retirement savings. Before I dive into step three, I want you to go explore. You might wanna commit this to my memory. If you're listening while driving or write this down, if you're somewhere where you can make a quick note, go explore episodes 54 through 57, all about savings.

There's a couple others around there. But these ones are specifically about retirement savings, different savings vehicles that you can then explore and add to the mix. But step three is to begin investing outside of employer plans if it fits, it depends on what your vision is for retirement, when you're thinking you're gonna retire.

All of that is how you kind of determine whether you need to go to a broker or. Maybe you just need to diversify with, you know, a Roth 'cause you're already doing a traditional or whatever that may be. What do you need to do? You need to consider long-term goals if you're retiring early. And only saving in a 401k.

When I say retire early, most people think of social security age. Honestly, you can withdraw from your 4 0 1 at age 59 and a half. But if you're wanting to look or think, you might need to retire sooner than that, like age 55 or even 50. You're gonna wanna explore. Outside of those that have those age research, excuse me, those age restrictions.

Make sure you go and think about that. If you are gonna retire early, how does it affect that 59 and a half? How does it give you all of the flexible income? How can you diversify? There's a lot of things there, but it really is what your vision is. You don't have to invest everywhere. Invest where it fits.

Like I said, your vision and your lifestyle. I remember back before my really, really dialed in budgeting journey, money journey before I got focused. I remember going to the Human Resource Department and guess what I was doing there? I was reducing the dollar amount of contributions going to my 401k.

Because we didn't have enough money coming into the household. Honestly, I was trying to run before I could walk, and when I was experiencing this pinch of not of enough money to cover the bills and the spending, for me, that was the quickest way I knew how to fix it, and I'm sure I'm not the only one who has done that.

But when I stepped back and I built my savings in the right order and I got clarity around where my money was going, I then knew how much money I could confidently contribute to my 4 0 1 without taxing my need for emergencies. Or you know, life, enjoying life. As I said, it's important to gain clarity with your money.

Don't do like I did and run before you can walk. It's just, ugh. You'll find yourself in all of these messes and not quite sure what to do or do, like I did and head to hr. Don't. I want you to prevent that from happening. If you're unsure how much savings you have available or where to prioritize your savings, this is exactly what we cover in the Retire retirement Roadmap session.

I'll help you get crystal clear on number one, how much you have available for saving. We'll look at what are your expenses doing to support or sabotage your retirement goals. And I'll help you create a personalized savings priority system that gives you control, gives you the plan so you have the peace of mind.

You know exactly what you should be focused on. If this interests you, book your Clarity Connection, call over at Elevate Finances U as back slash connection, and let's chat about working together, how this could support what your challenges and your concerns are. If you are just starting your retirement journey, the first step isn't jumping into investments, it's creating a solid foundation.

That means, number one, building an emergency fund slash cushion slash sinking funds, whatever you call it. You've gotta be prepared for those unexpected expenses. Number two, grabbing your employer's match, getting that free money. Or creating your own quote match just so that you're now investing in a retirement vehicle.

And then number three, invest additional with intention and clarity. How is that can support your vision? What are you wanting to do? What are you desiring to reach? Again, that is episode recap. I would love for you to email me your biggest takeaway from this episode. You can reach me at hello at Elevate Finances us.

And again, just let me know what was your aha moment, what resonated with you? What more support can I give you? Reach me at hello at Elevate Finances us, or the link is always down in the show notes. I want you to remember it's not about doing everything at once, it's about doing the right thing at the right time for you.

So thank you for listening and be sure to tune into the next episode.