Over the last decade Millennials have gotten a lot of attention (good and bad) for their “slacktivism,” job hopping, mountains of student debt and FOMO culture. But Millennials are growing up, and many of them are prioritizing financial independence and thinking seriously about their path to retirement. Perhaps unsurprisingly, and in contrast to the generations before them, they have different ideas about what that path and the ultimate destination will look like.
According to a new Schwab study, Millennials are more likely to prioritize travel over homeownership in retirement. They want the freedom to use their savings to pursue their desired lifestyle and passions more than chase financial stability. They want flexibility and new experiences more than traditional retirement pursuits.
The Millennial Road to Retirement
As for the path to reach these non-traditional goals, Millennials are looking for flexibility on that front too. They are less focused on a specific retirement savings amount. Instead, they see the accumulation process as more of a continuum, and they want to pursue their passions along the way toward retirement – not just in retirement. Additionally, they are less interested in preserving their wealth in retirement and will not spend as much time managing their investments as Boomers.
Some of these Millennial preferences may seem out of line with responsible retirement goals, but this is a generation of action. Millennials, to their credit, are already starting to save much earlier than their predecessors and over the course of the pandemic, many have stepped up their engagement and focus on financial planning.
It’s also worth noting that Millennials aren’t simply re-writing the script for retirement because they can. Major economic and societal shifts are driving these changes in how younger people approach money, careers and life. They have encountered challenges that are different from the generations before them. The cost of homeownership has risen, pensions plans have dwindled, student debt has risen dramatically – just to name a few.
Tips to Help Millennials on Their Path
The road to retirement has only gotten more challenging over the course of Millennials’ lifetimes. The good news is that many timeless financial planning strategies can be readily adapted to fit their needs.
Here are the top tips I share with Millennials for reaching the retirement of their dreams:
Stash some cash: The first step to planning for the rest of one’s financial future is creating a financial cushion to fall back on in preparation for the inevitable disruptions life will bring. A few months’ worth of savings is a good place to start an emergency fund.
Focus on your financial state, not your retirement date: Don’t think of retirement as an arbitrary date when a switch is flipped and retirement begins. Instead, target a financial state that would provide for the flexibility to make work optional. That could look like saving enough by the time you are 60 to be able to stop working if you needed to, but with the idea that you will continue working and saving until you are emotionally ready to retire. It is important to crunch the numbers to figure out how much will be needed to feel comfortable. From there, adjust your savings accordingly to grow that nest egg.
Grow it and protect it: We all want to grow our savings and investments to sustain us through our lifetimes. But don’t lose sight of protecting what’s already in place. There’s no such thing as a “sure thing,” and that means that diversification is important to potential growth along with stability. Don’t risk more than you can afford and be ready to re-evaluate your risk tolerance over the course of your investing journey.
Don’t be derailed by FOMO: Hot new investment trends can be very enticing, but getting caught up in the rush toward shiny possibilities can lead to setbacks that limit future potential. Remember that investing is about helping grow money over time to reach your goals and not speculating or chasing fads.
Think long and short: Retirement planning is a long process that requires time and patience. It also requires flexibility to adapt to changing circumstances. No one can predict all the challenges that lie ahead, or if their future self might look at things a bit differently than their present self. Create a plan and revisit it at least once a year, knowing that there will be changes along the way.
The Bottom Line
Just like Boomers and Gen X’ers, Millennials have distinct generational characteristics that set them apart, but at the same time they are not a monolith. Millennials will take many different approaches and paths to retirement. Their personal lives will take unexpected twists and turns that may change some of their goals along the way.
Sound financial planning that begins early is the key to success no matter the desired destination. That much never changes.
Diversification strategies do not ensure a profit and do not protect against losses in declining markets. Investing involves risk, including loss of principal.
(0522-25L6)
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
Schwab Intelligent Portfolios Specialist, Charles Schwab
Amy Richardson is a CERTIFIED FINANCIAL PLANNER™ professional and Schwab Intelligent Portfolios Specialist. Amy focuses on providing internal teams, clients and prospects with education, updates and information about Schwab’s investment offerings and philosophy, including Schwab Intelligent Portfolios (Schwab’s automated investing service) and Schwab Intelligent Portfolios Premium (combining automated investing with a comprehensive financial plan and unlimited guidance from a CFP® professional).
The Baby Boomer generation broke records for its size and have dominated American business, culture, and politics since they reached adulthood in the ’70s. Last year, their children and grandchildren, the Millennials, overtook the Boomer generation as their numbersswelled to 73 million. The two “mega-generations” are so large that the combined size of both generations limits opportunities in areas like employment and housing.
Without the savings to retire during and following the Great Recession, many Boomers stayed in their jobs after they turned 65. The combination of a shrinking economy and reduced retirements slowed the careers of millions of Millennials which led to them taking longer to make enough to buy their first homes. Compared to Baby Boomers, only 37% of Millennialsbetween the ages of 25 and 34 own homes.
The strain on America’s real estate markets is so great that even one minor change in Boomers’ homeownership patterns can significantly affect Millennials. Traditionally, after children leave home, their parents “downsize.” They sell the family home, cash in the equity they have accumulated in their homes, and move into a retirement community or buy something much smaller to reduce their living expenses and chores.
Not the Millennials. Seventy-seven percent of people over the age of fifty want to stay in their homes as long as they can. This process of “aging in place” has helped to increase the average tenure to ten years. Despite the increase in equity, median tenure length jumped ten years in September 2018, and by last October, median tenure length reached its highest level in 18 years.
“Aging in place” Delays the Inevitable
“The recent dramatic spike in tenure length is reflected in the growing performance gap between market potential and actual existing-home sales, which is up 48% since the end of 2017,” said Marc Fleming, Chief Economist at First American. “Homeowners are staying in their homes longer than ever, limiting supply and slowing home sales.”
Despite the cost of retrofitting a home for seniors, a Freddie Mac studylast year estimates that approximately 1.6 million more senior households are staying in their homes than what would have been the case if they “behaved like older generations of homeowners.”
However, aging in place may be just delaying the inevitable. “More than half of all existing homes are owned by Baby Boomers and the Silent Generation, who will eventually age out of homeownership,” says First American’s Fleming. “When that occurs, the problem may not be a lack of supply, but the exact opposite.”
The oldest Boomers will reach 75 this year and it will take a few more years for the bulk of their homes to be sold. When it does arrive around 2025 and last through the end of the decade, some economists anticipate that over the next twenty years the flood of Boomer homes will reach upwards of 21 million, more than a quarter (27.4%) of the nation’s current owner-occupied housing stock. Over the next 20 years, homes are likely to hit the market as their current owners pass away or vacate their homes.
Not all of these will end up on multiple listing services and real estate sites like Homes.com right away, if at all. Many Boomer homes will require significant repair and remodeling and rather than pay to get their houses in shape to sell, many Boomer homes will be sold to “cash for homes” companies like HomeVestors or “iBuyers.” Both of these options are attractive because families can sell quickly to settle estates or use the proceeds to pay for long-term care. They also avoid paying brokerage fees. Once they are fixed up, then these homes may eventually end up on MLSs.
Millennials Don’t Want to Live in Boomer Houses
Boomers will face a big problem when they try to sell to Millennials. Their homes are large, expensive, and out of date. Young buyers prefer open living spaces, roomy bathrooms and kitchens with enough space for family gatherings.
A recent analysis of Boomer Zip Codes found that most live in major cities, not necessarily suburbs or retirement hubs. New York City is a serious contender for the title of the most popular place to live for baby-boomers. The urban districts of San Francisco, El Paso, Houston and Chicago make price the primary reason Millennials won’t be buying from Boomers
Sixty-five percent of owners ages 64 to 72 and 56% of those over 73 own homes worth $200,000 or more. Source:Statista.com
Move-up Buyers Can’t Move Up
As large numbers of mid-to-upper priced Boomer homes come to the market, they will still have a positive effect on real estate inventories. First-time buyers looking for starter homes aren’t the only ones suffering from inventory shortfalls.
The inventory epidemic has become so severe that it is moving up the real estate ladder. Supplies of mid-priced homes are now declining, and their prices are rising. “There are many Gen-X buyers who are still trapped in their first home and that’s because they can’t find the home that they want to trade up. And so, you get this ratchet effect that occurs with the lack of construction, which is not just impacting entry-level, first-time home buyers, but even trade-up buyers,” says Sam Khater, Chief Economist for Freddie Mac.
In normal times, real estate agents counsel their clients to sell their current home before making an offer on a new one to avoid being stuck with two mortgages. In today’s seller’s markets, however, it’s much easier to sell a house in the mid to lower price tiers than to buy one.
In November 2019, for homes priced below $100,000, inventory was down 15% annually. For those priced between $100,000 and $250,000, supplies were 7% lower annually. In December, usually the slowest month to sell a house, properties remained on the market for just 41 days. Forty-three percent of homes sold in December 2019 were on the market for less than a month. In these conditions, move-up buyers will be safer if they buy before they sell.
Steve Cook is the editor of the Down Payment Report and provides public relations consulting services to leading companies and non-profits in residential real estate and housing finance. He has been vice president of public affairs for the National Association of Realtors, senior vice president of Edelman Worldwide and press secretary to two members of Congress.
Often with dangerous jobs, the pay doesn’t come close to compensating for the risk. In fact, plenty of perilous jobs pay paltry sums compared to other options. Take fishermen and loggers. They can expect median salaries of under $35,000 a year, $23,000 less than the mean for all workers. Yet the fatality rate for fishermen is nearly 39 times the rate for all occupations, the highest of any profession, in fact. Loggers, at nearly 28 times the overall fatality rate, rank second.
The COVID-19 pandemic shook up the risk scenario in the workplace. Overall, workplace injuries and illnesses were down 5.7% in 2020, compared to the previous year. But a closer look at the numbers reveals that while injuries dropped significantly, illnesses went way up.
The pandemic also made a new group of low-paying jobs among the riskiest in the nation. Nursing assistants had the highest number of days of any profession away from work in 2020, the most recent year available, according to the Bureau of Labor Statistics. They had 1,024 days away from work per 10,000 workers in 2020, an increase of 14 times the rate in 2019. Yet nursing assistants make a mean wage of just over $30,000.
Going back the last few years before the pandemic, there were generally between 10,000 and 11,000 respiratory illnesses among U.S. workers each year. In 2020, however, there were nearly 429,000. Conversely, the days away from work decreased slightly for heavy and tractor-trailer truck drivers, whose mean wage was just over $50,000, between 2019 and 2020.
As perilous as work has become for many during the pandemic, fewer people were injured on the job in 2020 than in any year since 2013, according to the most recent data from the Bureau of Labor Statistics. Still, those data showed an American worker died every 111 minutes from a job-related injury. The most common cause of death on the job was transportation-related incidents, which resulted in 1,778 deaths that year, more than 37% of all work-related deaths.
Not surprisingly, workers in jobs that involved transportation and moving material accounted for the biggest proportion of occupational deaths at a total of 2,258, accounting for more than 47% of the total work-related deaths in the U.S.
We believe that if you’re going to take a risky job, you should at least get compensated handsomely for it. So we crunched the numbers on injuries, fatalities and salaries to identify eight occupations offering paychecks that make up for the elevated risks by paying more than the national median of about $58,000. Top earners in many of these fields can enjoy six-figure salaries, in some cases even without college degrees. Plus, many of them won’t be replaced by technology, which spells job security.
Take a look at these risky jobs that pay well.
Data sources: All data provided by the U.S. Bureau of Labor Statistics, unless otherwise noted. Most statistics from 2020, unless otherwise indicated. That year, the fatality rate for all occupations was 3.4 deaths per 100,000 workers.. “Top pay” represents the annual salary of a worker in the 90th percentile of an occupation, unless otherwise noted. We used the most updated data provided by BLS. In some instances, that was as far back as 2019 or older. Also, in some instances, the bureau provided median salary information, while for other occupations, it provided average salary information.
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Airline Pilot
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Number of workers: 42,770
Rate of injuries/illnesses: 34.3 (3.4 for all workers).
This represents a decrease of the 2019 rate of 61.8 per 100,000 FTEs
Median annual salary: $115,080
Top pay: $197,400*
Annual fatalities: 4
Flying may be safer than driving, with crashes exceedingly rare, but pilots still manage to get hurt. The most common injury to pilots is back strain, no doubt exacerbated by countless hours spent in flight decks. Still, the pay might well make the risks worthwhile. Annual median wages for airline pilots, copilots and flight engineers are the highest of all our risky jobs.
You can save yourself the cost of college by heading straight to flight school, though most airlines prefer to hire degree-holders. You’ll need the edge. Competition for openings can be fierce, given industry consolidation and the job market’s overall weakness. You’ll also have to clock the flight hours necessary to even apply for an airline job. The Federal Aviation Administration requires applicants for pilot and first officer positions to have a minimum of 1,500 hours of total flight time.
But if you rack up enough experience and airborne hours, annual pay with the major airlines can soar to $200,000 or more, according to AirlinePilotCentral.com. Similarly plump salaries can be had if you land an offer from one of the flying freight giants. FedEx and UPS pay their captains at least $212,000 and $233,000 a year, respectively, starting in just their second years. Bonus: no whiny passengers.
*According to Airline Pilot Central, United offers its 12th year captains of Boeing 777 planes the highest minimum annual salary of all the legacy airlines.
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Private Detective
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Number of workers: 33,700
Rate of injuries/illnesses: 122.6 per 10,000 workers
Median workdays missed due to injury/illness: 43
Mean annual salary: $60,970
Top pay: $98,070
Annual fatalities: 1
Digging up information can be pretty strenuous work. Gumshoes sustain most of their injuries in car accidents and physical altercations. But even those tallies are relatively low, so the above-average pay for private eyes may be worth the slightly elevated risk.
Most detective work does not have an education requirement, but the ability to learn on the job is a must, and previous related work experience is a plus. You’ll also need a license in most states; requirements vary. And if you specialize in certain fields, say insurance fraud or computer forensics, a related bachelor’s degree might be necessary for some corporate investigators.
That expertise can not only help you solve whodunits but also push up your pay. Investigative agencies, both large and small, are by far the biggest employers of detectives. Distant runner-ups are law firms and state and local governments.
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Registered Nurse
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Number of workers: 3 million
Rate of injuries/illnesses: 1023.8 per 10,000 workers
Median workdays missed due to injury/illness: 8
Median annual salary: $75,330
Top pay: $103,000
Annual fatalities: 12
Registered nurses were among those most affected by COVID; they endured a whopping 78,740 injuries and illnesses in 2020, an increase of more than 290% over 2019 when there were 20,150 injuries and illnesses among registered nurses, according to the Bureau of Labor Statistics. In 2020, the number of cases in which registered nurses had days away from work increased by 58,590 cases (290.8 percent) to 78,740 cases, according to the Bureau of Labor Statistics.
The states with the largest increase in cases among nurses who had days away from work were Michigan, where cases rose more than 1,000% and Iowa, which had an increase of more than 900%. .
Typical wages about 88% above the national median might help compensate for the pain. California registered nurses earn a particularly comfortable wage, into six figures in nine West Coast metro areas.
You need a bachelor’s or associate’s degree in nursing or a diploma from an accredited nursing program in order to become an RN. If you extend your education to a master’s degree, you can earn even more; median annual pay for nurse practitioners is nearly $90,000, and top earners make $120,500 a year.
According to Indeed.com, the average base salary for a registered nurse is nearly $89,000 as of May 2022. That ranges from $80,266 for nurses with less than a year of experience to $104,907 for those with more than 10 years of experience. New York is the highest paying city where registered nurses earn an average of nearly $103,000 a year. But Iindeed says just 62% of registered nurses in the U.S. think their salaries are enough for the cost of living in their area.
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Professional Athlete
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Number of workers: 16,700
Rate of injuries/illnesses: 1,542.1 per 10,000 workers
Median workdays missed due to injury/illness: 10
Median annual salary: $77,300
Top pay: $107.5 million
Annual fatalities: 10
When your job is to exercise and physically compete on a regular basis, your body is bound to get a little run down. More than half of the injuries reported by athletes are sprains, strains and tears. But what’s becoming a little worse for wear when you get to play the game you love for a living?
The above-average pay doesn’t hurt, either. It would behoove players to save that extra income. Athletic careers offer little stability and are often short-lived. According to Indeed.com, the average professional athlete base salary as of April 20222 was $115,429, including $222,275 for the NFL. The highest paying city for professional athletes was New York, where the average salary is $133,762.
According to the job website Ladders, the top-paid American athlete is Dallas Cowboys quarterback Dak Prescott who earns a jaw-dropping $107.5 million a year.
But just 45% of professional athletes in the U.S. report being satisfied that their salaries are enough for the cost of living in their area.
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Police Officer
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Number of workers: 665,000
Rate of injuries/illnesses: 121.7 per 10,000 workers
Median workdays missed due to injury/illness: 15
Median annual salary: $64,610
Top pay: $102,530
Annual fatalities: 105
Police work is truly risky business. Exhibit A: The number of work-related deaths for cops is the greatest of all the occupations on this list. Still, the fatality rate is just 18.6 per 100,000 workers, about on par with taxi drivers.
If you don’t mind mixing it up with the occasional physical altercation or high-speed chase, paychecks 59% higher than the national median may be worth sustaining some sprains, strains and tears (the most common injuries for police officers). You can enter the police academy after graduating from high school or getting your GED, though many agencies require some college coursework or a college degree. But you have to be at least 21 years old to become an officer (younger recruits can be cadets and do clerical work until they’re of age). A college degree can help fatten your paycheck, however. A B.A. in criminal justice can push salaries into six figures, according to Payscale.
Indeed.com reports the average base salary for a U.S. police officer is $55,390. This ranges from $46,900 for officers with less than a year of experience to $76,650 for those with more than ten years of experience. The highest paying city is San Jose, California, where officers make an average of $131,000. According to Indeed, 53% of police officers report being satisfied that their salaries are enough for the cost of living in their area.
Note that while the Bureau of Labor Statistics data for wages for police officers refer to 2021, the most currently available injury and illness information dates to 2018.
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Railroad Conductor/Yardmaster
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Number of workers: 48,030
Rate of injuries/illnesses: 180 per 10,000 workers
Median workdays missed due to injury/illness: 22
Median annual salary: $63,960
Top pay: $82,460
Annual fatalities: 11 in 2019
Train-track tragedies are as uncommon as they are heartbreaking. Overall, railroad safety has improved dramatically over the past decade. Heading the crews of freight and passenger trains and rail yards, railroad conductors and yardmasters have the highest rates of injury of all rail transportation workers, but they have the potential to score the biggest paychecks, too. You need just a high school diploma or the equivalent to get started, and you have to be certified by the Federal Railroad Administration to become a conductor. Most employers require one to three months of on-the-job training. Amtrak and some freight companies offer their own training programs, while smaller railroads may send you to a central facility or community college to prep you for the job.
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Mining Machine Operator
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Number of workers: 14,740
Rate of injuries/illnesses: 248.0 per 10,000 workers
Median workdays missed due to injury/illness: 23 for surface mining, 46 for underground and 60 for continuous Median annual salary: $60,300
Top pay: $78,060
Annual fatalities: 5 for surface mining, 7 for underground
Not surprisingly, pumping the Earth for its resources can really suck the life out of you. Extraction workers, a broad category of workers who mine and drill for oil, gas, coal and the like, recorded a total of 92 deaths and 3,990 injuries in 2011. And while some extraction jobs offer scant compensation for such risks, pay for certain mining machine operators is more tempting.
Education requirements are minimal to get started (some jobs don’t even require a high school diploma). But if you go into mining with a college degree, you stand to earn a fatter paycheck and added safety as a mining engineer. Indeed says mining engineers, who inspect mining areas and design underground systems of entries, exits and tunnels, make an average national salary of more than $97,000 as of April 2022. Their job is also dangerous as they are often close to heavy machinery and are exposed to air pollution and in danger of being hurt in a cave-in.
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Electrician
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Number of workers: 729,600 in 2020
Rate of injuries/illnesses: 122.2 per 10,000 workers
Median workdays missed due to injury/illness: 15
Median annual salary: $60,040
Top pay: $82,930
Annual fatalities: 68 in 2019
With high demand to plug in our various devices at home and work, electricians are practically guaranteed prosperous careers.
But this profession comes with its stumbling blocks — literally. Electricians’ injuries are most often caused by falls. That’s not surprising, considering they often spend lots of time at construction sites and on ladders. If you watch your step, you typically stand to enjoy paychecks 43% higher than the national median.
You can start your career as an electrician with a high school diploma (or the equivalent) and a paid four-year apprenticeship, which you can find through the U.S. Department of Labor. But having a Bachelor’s degree can help boost your income; according to Payscale, a college-educated electrician can earn up to about $93,000 a year. Most states also require you to be licensed.
According to Indeed.com, the average base salary for an electrician is about $56,800 as of May 2022.
Save more, spend smarter, and make your money go further
While a handful of women have appeared on coins and special-edition bills throughout the years – Susan B. Anthony, Sacagawea and Helen Keller, for example – the number of women featured on U.S. currency is about to be significantly expanded.
Beginning in 2022 and continuing through 2025, the U.S. Mint will issue up to five new quarter designs each year featuring historically prominent women. Here are the women being honored in 2022.
Maya Angelou
Celebrated author and poet Maya Angelou is most well-known for her autobiography, “I Know Why the Caged Bird Sings.” The book was named as one of TIME Magazine’s 100 best and most influential non-fiction books.
A recipient of the Presidential Medal of Freedom, Angelou also worked with Dr. Martin Luther King as a coordinator for his organization, the Southern Christian Leadership Conference. She was also the first African-American woman to read an original poem at a presidential inauguration.
Dr. Sally Ride
The first American woman in space, astronaut Dr. Sally Ride inspired generations of girls to pursue careers in science and technology. Ride flew on the Space Shuttle Challenger in 1983 and 1984.
In 2013, President Barack Obama awarded her a posthumous Presidential Medal of Freedom. After her death, it was revealed that Ride was a lesbian, making her the first LGBTQ person to appear on a US quarter.
Wilma Mankiller
As the Principal Chief of the Cherokee, Wilma Mankiller is the first woman ever elected chief of a major Native American tribe. She oversaw the growth of the Cherokee nation from 68,000 members to 170,000.
Ms. Magazine named Wilma Woman of the year in 1987, President Bill Clinton awarded her the Presidential Medal of Freedom in 1998.
Nina Otero-Warren
One of the few Hispanic suffragists in history, Nina Otero-Warren helped publish suffragist literature in Spanish, encouraging Hispanic women to vote. She also served as chairman for the Board of Health in New Mexico, was a board member for the American Red Cross and was the Inspector of Indian Schools for Santa Fe County, overseeing the schools for Native American children.
Anna May Wong
As the first Chinese-American movie star in Hollywood, Anna May Wong paved the way for countless other Asian actors. She acted in Broadway plays and both American and European films. Anna was also a fashion icon and was once named the world’s best-dressed woman.
She appeared in movies and plays with acting legends like Laurence Olivier, Douglas Fairbanks and Marlene Dietrich. Though Hollywood remained a hostile environment for people of color during her time, Wong stood up against Chinese stereotypes and advocated for fairer portrayals.
Save more, spend smarter, and make your money go further
Zina Kumok is a freelance writer specializing in personal finance. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, DailyWorth and Time. Read about how she paid off $28,000 worth of student loans in three years at Conscious Coins. More from Zina Kumok
Save more, spend smarter, and make your money go further
In a world with stagnating wages and an increasing cost of living, many people are looking for a way out of the rat race. That’s why radical investment strategies and risky business ventures are so popular.
Believe it or not, there actually is a reliable way to achieve financial independence – but it’s far from a “get-rich-quick” scheme. Financial Independence, Retire Early (FIRE) is an increasingly popular strategy to break free from the daily grind and build your ideal future. Here’s what you need to know about how it works.
What is the FIRE Movement?
The FIRE movement encourages consumers to save and invest aggressively while they’re young in order to retire decades earlier than normal. There is no specific FIRE timeline; that depends on your particular goals and financial situation. Many people who work toward FIRE try to retire in their 30s and 40s.
The FIRE movement isn’t always about retiring early, however. Some people may reach their FIRE goal and keep working, because they enjoy what they do or because they’re not sure about the next steps to take. For them, FIRE provides the peace of mind that comes with not relying entirely on your job to make ends meet.
Some people choose to work toward FIRE so they can take a sabbatical, switch careers or become digital nomads. Others want to reach FIRE so every extra penny they earn can become a legacy they leave behind.
Types of FIRE
There is no one way to reach FIRE. In fact, there are many schools of thought. Here are the most common types of FIRE and how they stack up:
Fat FIRE
People who don’t want to worry about budget limitations when they retire may opt for Fat FIRE, where your investments greatly exceed your annual cost of living. Fat FIRE may be appropriate for those who don’t believe in penny pinching and want to enjoy the luxuries that life has to offer.
Barista FI
Because health insurance is one of the biggest expenses for those without access to an employer plan, some FIRE devotees will retire from their regular job and work at a company that provides health insurance to part-time employees – like Starbucks. This is known as Barista FI.
Coast FI
Coast FI is a financial independence movement where the goal is to have enough invested that you can afford to stop making retirement contributions. Once you reach Coast FI, you can either keep making contributions in order to retire early or focus your resources on other goals like starting a business, contributing to a child’s college education, traveling abroad and more.
Slow FI
The Slow FI movement believes in reaching financial independence, but not at the crushing pace of traditional FIRE. Slow FI is a more conservative path, avoiding the huge sacrifices that come with traditional FIRE strategies.
How to Retire Early
Lower your expenses
If you’re trying to retire early, one of the most important things to do is lower your expenses. This will free up more money to invest and save. Track your expenses with a budget and find a balance between saving for FIRE and continuing to enjoy your life.
Increase your income
While lowering your expenses is key to achieving FIRE, increasing your income is another crucial aspect. There’s a limit to how much you can save by being frugal, but there’s no limit to how much you can earn.
Increasing your income can include asking for a raise, switching industries, starting a side hustle and more.
Understand your numbers
One of the main reasons that people fail to meet their FIRE goals is that they don’t properly identify how much they’re saving, how much they’re spending and how much they’ll need to retire early.
Start by tracking your expenses to get an average of how much you typically spend a month. It’s important to be realistic – not optimistic – when you calculate your average expenses. To get a baseline estimate of how much you need to save, use one of the many FIRE calculators.
You’ll have to input how much you spend annually, how much you save annually, when you hope to retire and how much you currently have saved. The calculator should show if you’re on track to meet your goals or way off course.
Talk to a financial planner
Deciding to retire early is one of the biggest financial decisions you can make. And before you take that leap, you should talk to a third party to ensure you’ve thought of everything.
A financial planner can point out potential problems with your plan, like whether you can afford huge health insurance premiums or annual property tax increases. They can also recommend the best types of investment accounts to open and how to lower your tax liability.
Create automatic savings
Saving money is hard, but saving money to retire early is even harder. You can make it easier on yourself by automating your savings.
If you have a 401(k), you can increase your contributions by talking to your HR or payroll department. The money will automatically come out of your paycheck. If you receive a raise, then your 401(k) contributions will also automatically increase.
If you invest in an IRA, then you’ll have to set up automatic contributions through the investment company. Determine how much you can afford to save automatically every month.
Find inspiration
When working toward FIRE, it can be hard to find like-minded people around you. That’s why it helps to get inspiration from outside sources like FIRE blogs, podcasts and forums. Some popular resources include the Choose FI Podcast, the Mad Fientist blog and the 1500 Days to Freedom blog.
Some of these communities even have local meetups, where you can spend time with real people who share your financial priorities and dreams for the future.
Save more, spend smarter, and make your money go further
Zina Kumok is a freelance writer specializing in personal finance. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, DailyWorth and Time. Read about how she paid off $28,000 worth of student loans in three years at Conscious Coins. More from Zina Kumok
Sources
Financial Independence, Retire Early (FIRE) is a popular strategy to build your ideal future. Here’s what you need to know.
In our budgeting series we’re covering all the basics, including how to create a budget, how to manage a budget, and how to account for living expenses. Living expenses are an inevitable part of adulthood, but knowing how much basic expenses cost will ensure you’re prepared to tackle them.
You’ll also want to prepare for the unexpected. For example, your income might be lower than you expect while some of your expenses may be higher than you anticipated. Without a solid budget in place, you may run into financial trouble or even debt.
That’s why we put together this guide to living expenses — both the expected and unexpected. We’ll cover what’s considered a living expense and how much you need. We also provide expert tips on how to reduce your monthly living costs.
With a solid budget, you’ll have enough for living expenses, unexpected situations, and plenty of fun, too. In this chapter, we’ll be going over what a living expenses budget is, how much of your income you should be spending on your living expenses, how you can make more money to afford these expenses, and more. Keep reading or use the links below to navigate through the article.
In the previous chapter, we discussed how to budget and the various items that you should include in a budget, so if you need to review those concepts before diving head first into living expenses, check out Chapters 1 and 2.
What Is a Living Expense Budget?
A living expenses budget is a budget that is based on your living expenses and your income. Your living expenses are expenditures that are necessary for your daily life and basic living, such as rent and groceries.
Having a living expenses budget will ensure that you can address your major expenses based on how much you make and what your cost of living is. It can also help you make a plan if you’re currently spending more than you’re making and need to reduce your spending so that you don’t end up in debt.
This cost of living budget will differ for each person depending on where they live and what their salary is. Cost of living varies by state, but you can try our free cost of living calculator to get an idea of how much it may cost to live in other cities. Before making any big lifestyle changes, like moving, it’s important to have an idea of how much it’ll cost to live in a particular place so you can figure out if moving is a realistic choice.
Keep reading to learn how to budget for your living expenses.
What Is Considered to Be a Living Expense?
Living expenses are expenditures necessary for basic daily living and maintaining good health. They include the main categories of housing, food, clothing, healthcare, and transportation. Understanding what’s involved in each of these areas will help you to budget for them.
Here’s a complete living expenses list that you can use when trying to decide how much to budget for living expenses:
Housing: Whether you rent or own, there are regular expenses, including some you may not be aware of.
Mortgage payment or monthly rent
Utilities (i.e. electricity, gas, trash removal)
Insurance (i.e. homeowners or renters)
Property tax
General maintenance (i.e. lawn mowing, snow removal)
Food and grocery: Besides your daily meals, consider other living necessities.
Food and beverages
Personal care items (i.e. shampoo, toilet paper, bandaids)
Cleaning supplies
Clothing: From your work clothes to pajamas, ensure you account for everyone in your family.
Daily clothing
Formal wear
Undergarments
Boots, shoes, and coats
Healthcare: Remember to include expenses for your primary doctor, dentist, and other specialists.
Insurance premiums
Office copays
Pharmacy copays
Over-the-counter items
Transportation: Depending on whether you take the bus or drive a car, add up your regular transportation costs.
Car payment
Car insurance
Gas
Public transportation tickets
Taxi costs
Parking fees
Miscellaneous: Some living expenses don’t fit a specific category, but still need to be in your budget.
Cell phone bill
Internet
Baby or child necessities
What Is Not Considered a Living Expense
So we discussed how to budget living expenses, but what about discretionary expenses?
While there are likely other recurring costs in your life, they might not be considered as a living expense. These expenses are called discretionary costs, and they include things like recreational activities and entertainment. That means your gym membership and Netflix subscription should be accounted for elsewhere. You’ll also want to ensure your budget includes any debt repayment, such as for a student loan.
There is a lot to include in your budget, but it’s important to take the time to break down all of your expenses so you can figure out where you can cut back. Some other costs that are not considered living expenses include:
Pet costs
Personal care
Holiday gifts
Birthdays
Donations
How Much of My Income Should I Spend on Living Expenses?
Based on your salary and the cost of living in your city, the exact amount you spend on living expenses will vary. How much you spend on rent, for example, is dependent on location and your standard of living. For instance, rent is higher in Los Angeles than it is in Detroit. A three-story home will be more than a one-bedroom apartment. Figuring out your grocery budget will depend on how often you eat out and if you use coupons at the store.
No matter your preferences or where you live, you can come up with a rough estimate for your living expenses. Focus on the main categories of housing, food, clothing, transportation, and healthcare. Look at each component and write down roughly how much you spend in each area.
In general, experts recommend using the 50/20/30 rule to create your budget, especially if you’re a young adult. The 50/20/30 guideline offers a basic financial strategy for your spending and saving. The rule says that you should spend 50% of your income on your living expenses, like your rent and car payment. You should put 20% of your income in savings, whether that’s for a rainy day fund or a down payment on a house. For the remaining 30%, put it toward personal expenses like a night out with friends or a weekend getaway.
Because the 50/20/30 rule is a guideline, there is some flexibility. You can adjust the percentages based on your unique circumstances. The main idea is to limit your living expenses to roughly 50% of your income. That way, you’ll have enough leftover for your savings and fun expenditures.
make money online by working as a freelancer or tutor and even completing online surveys. There are countless easy ways to make money at home, if you want to earn some additional income but don’t necessarily want to leave the house to do so.
Seek a Salary Increase
If you’re struggling to cover all your living expenses, it might be a good idea to ask your employer for a salary increase. If you can’t get a raise at your current job, you may want to try looking for a new job in the same field where you can actually get a salary bump. There are also many high-paying jobs that don’t require a degree, so even if you didn’t go to college, you can still achieve professional and financial success.
What You Should Avoid Doing If Possible
In times of financial distress, it might be tempting to do things like run up your credit card or take out a short-term loan so that you can pay for your expenses. However, doing these things will only make it harder for you to catch up to your expenses and they can even land you in debt.
Running up your credit card or taking out a short-term loan should be a last resort option that you should only do after you’ve already tried all of the above options. You’re better off taking a different route and either cutting back on some of your expenses or taking up another job so that you can make more money.
Planning for Fluctuating Income
If you have a fluctuating income, creating a budget might seem daunting. However, having a budget is crucial to ensure you don’t spend beyond your means, especially in a month where you may be making less than normal.
If your income varies from month to month, here are some tips for how you can make sure you’re able to meet your budget:
Figure out what your basic monthly living expenses are: This includes necessary expenses only, like housing, food, and transportation.
Calculate your monthly average spending on discretionary expenses: This includes expenses like clothing, birthday gifts, and gym memberships.
Figure out your average income: Although your monthly income may fluctuate, try to figure out your average income and use that as the standard for your budget.
Cutting Expenses to Fit Your Budget
There are numerous easy ways to save money that just require you to make a few lifestyle changes. Here are some easy ways to cut down your living expenses in each major category so that you can feel more financially secure:
Housing
Food and grocery
Scale back on eating out
Plan your meals to stretch your food budget
Limit trips to the coffee shop
Buy in bulk
Purchase store brands
Clothing
Shop at consignment stores or online marketplaces
Build a capsule wardrobe
Reduce unnecessary purchases
Healthcare
Buy over-the-counter or generic brands
Check to see if your employer offers flex spending or a health savings account
Transportation
Shop around for a better car insurance rate
Consider selling your car if you live in a city with great public transportation
Buy a used car instead of a new one
Use a gas rewards card
Try carpooling
Figure out whether buying or leasing a car is more economical for you
Miscellaneous
Downgrade your cell phone service plan
Use coupons and coupon codes
Shop at discount stores
Be Prepared for Possible Living Expense Adjustments
Some living expenses are fixed and won’t change often, such as your monthly rent. Other expenses are adjustable, such as food and clothing. That means that your spending and savings might differ from month to month, and that’s okay. Having a budget ensures you’re prepared and in a good financial place for whatever comes your way.
Consistent saving is especially important. You’ll be ready just in case a necessary expense comes up. For example, if your car breaks down or you have a hefty medical bill, you can use your reserve or emergency fund. Rather than charging the expenses to your credit card or taking out a personal loan, you’ll be able to cover the bill.
To ensure your plan is working, revisit your budget monthly and make any necessary adjustments. For instance, you may realize you need to allocate more for groceries and less for transportation. After all, financial plans aren’t meant to be static. Life changes, and so can our budgets.
Figuring out your living expenses is a key element of financial planning. With a solid understanding of your recurring costs, you’ll be able to create a more accurate budget. You can ensure you have enough to cover both the expected and unexpected. You’ll also benefit from more financial security and peace of mind.
Stop Living Paycheck-to-Paycheck with a Good Budget
Having a good budget is one way you can stop living paycheck-to-paycheck and actually feel secure with your finances. There’s nothing worse than waking up every morning with a pit in your stomach because you don’t know if you can afford to leave the house that day. But having a budget is a good way to prevent that.
There are various ways you can go about creating a budget. You can use a template for tracking your budget, you can try out the envelope budgeting method, or you can use the 50/30/20 rule. We will be discussing more in-depth these various methods in more depth in the remaining chapters in the series.
So now that you know what a living expenses budget is and how much of your income you should be spending on your living expenses, we can now move on to the next chapter in the series: How to create a budget.
We’ve rounded up the answers to the most commonly asked questions about how to accrue Society Security credits so you can get retirement benefits.
How many credits you need — the full 40 or something less — will determine if you need to work full-time or part-time in the limited time you have to accrue credits. Here are some possibilities from our list of part-time jobs for retirees that will work for anyone. It’s imperative, though, that you work for a company that is taking out Society Security taxes or you are paying them yourself if you are self-employed.
For whatever reason, you do not yet qualify to receive Social Security benefits, but you are old enough to begin thinking about your retirement. What can you do about that?
As stated above, as long as you are making ,040 in a year, you are going to earn your four credits for Social Security in that year. The more you earn, the more money you will get back in Social Security benefits when you are ready to access them.
How Social Security Credits Are Accrued
What kind of job can you get after age 50 that will build up your credits? The simple answer is any job where the employer pays Social Security taxes, and we will give suggestions on that later in this post.
If you have accrued enough credits, you will not be denied benefits except under some circumstances. You will be able to collect Social Security benefits even if you move to a foreign country after you retire. Cuba and North Korea are currently the only two countries where you will be denied benefits if you move there. If you are serving time in prison, your benefits may be suspended during that time, however, the general rule is that felons can receive their benefits after being released.
Social Security taxes are taken out of your salary to fund the Social Security program. You must have 40 credits to qualify for Social Security benefits when you reach 62½ years of age.
Almost Any Job Can Build Credits
Can I Get Social Security if I Never Worked?
Can I Buy Social Security Credits? Kent McDill is a veteran journalist who has specialized in personal finance topics since 2013. He is a contributor to The Penny Hoarder.
If you are or were married for at least 10 years, you are eligible for spousal benefits assuming your spouse is or was eligible for Social Security. Spouses and ex-spouses generally are eligible for up to half of the spouse’s entitlement. Widows and widowers can receive up to 100%. If you have not been married for 10 years or your spouse or ex-spouse is not eligible for Social Security, then you should begin a retirement savings plan (Individual Retirement Account) that will accrue interest and
What if I Have Been Self-Employed?
Social Security benefits are earned through your work history. To be eligible for benefits, you must work full time for 10 years, earning a maximum of four Social Security credits a year. (You could also work part-time over a number of years and earn enough credits.) In 2022, a worker gets one credit for each ,510 earned, so that earning ,040 in one year gets you the four credits for the year.
Can I be Denied Social Security Retirement Benefits?
Jobs That Will Hire Employees at Age 50+
One of those reasons you haven’t paid enough into the system to qualify may be that you stayed home to raise children. That’s a big job for sure, but an unpaid one. Now that the children are grown, you might want to get back into the workplace to earn Social Security benefits.
No. There is no way to make up for lost time with the Social Security program. You get 1 credit for each quarter in which you earn the qualifying amount up to 4 credits per year, and you need 40 to be able to someday receive your Social Security benefits.
Self-employed people (freelancers, gig workers, contractors, etc.) earn Social Security credits at the same rate as others, up to the four credits per year.
Online tutoring. Use your skills to teach others in academic subjects or English as a second language. Many tutoring jobs are online.
Patient advocate. The job of a patient advocate is to assist someone who is struggling to cope with the healthcare system. A patient advocate deals with paperwork and appointments, and communicates with healthcare providers to get information on diagnosis, treatment and follow up procedures. These positions can be full- or part-time. Check with insurance companies or hospitals for opportunities.
Virtual assistant. If you’re the kind of person who loves helping others get organized, you can start a virtual assistant business. Now, you will be self-employed but as long as you are paying those Social Security taxes out of your income, you will accrue credits.
Security guard. While many large businesses like Target or Wal-Mart hire security personnel from a service, small employers such as charitable or service organizations are likely to hire someone who is reliable and gives the appearance of authority. Find these jobs through searching job sites such as Indeed or Monster.
Frequently Asked Questions (FAQ) About Social Security Credits
Because the salary to qualify for Social Security credits is so low (,510 per quarter), most part-time jobs that take out Social Security taxes will qualify you for Social Security credits.
When you indicate your earnings on your tax return from self-employment, your earnings are taken into account and you earn Social Security benefits. Your taxes to pay for your Social Security benefits are taken out of your taxes at the time you file your tax return.
Keep in mind, though, there are jobs — such as state, county or municipal positions, and some teaching jobs — that have opted out of the Social Security program. That means jobs as public school substitute teachers or part-time work at your local City Hall will not likely earn you any credits.
What Happens if I Don’t Earn 40 Credits for Social Security?
If you never had a job for which you paid taxes, then you cannot receive Social Security benefits on your own, however, you still may qualify to receive benefits after a qualifying spouse’s death. If you were self-employed and made enough money for at least 10 years, you are eligible for Social Security as long as you filed a tax return for those years. The Social Security system is an investment plan which accrues interest on your investments and then pays you back when you retire.
However, most every other job that takes taxes out of your paycheck is paying into Social Security. So, the key to earning Social Security benefits is to get a job. If you are talking to an employer, you can ask them if Social Security taxes are taken out of your paycheck since that is one of the main goals of your working.
The good news is that what credits you have earned over the years are still in your account even if you didn’t work for a number of years. You can add to your account by acquiring a job that takes Social Security taxes out of your salary. Go to ssa.gov to find out how many credits you already have in the system. You’ll need to set up an account first.
Or, perhaps you worked for a public entity that had its own retirement program and did not pay into the federal system. You could retire from that job with 25 years experience and if you’re in your early 50s still have enough time to work to qualify for Social Security benefits.
Jobs where the employer takes money out of your salary to pay into the Social Security system will build your credits.
Many people today begin new careers at the age of 50+. The days of passing over older workers are long-gone because of remote opportunities and perceptions of increased reliability for older workers. Also, there are many job opportunities because of the pandemic-caused Great Resignation. Source: thepennyhoarder.com
Jobs that help pay off a portion of student loans are becoming more common and for a good reason. The average student loan borrower has around $37,000 in student loan debt.
Companies that help to repay a portion of student loans are in the minority, so you may have to do some research to get student loan assistance as a benefit. To help you, here’s what to know about what’s available, companies that offer this perk, and what you can do to try and negotiate for it.
Types of Job-Based Student Loan Assistance Programs
There are two types of student loan assistance you may receive through an employer: repayment assistance programs where your employer is a participant and repayment assistance benefits your employer offers directly.
Repayment Assistance Programs
Depending on your chosen career, you may be eligible to receive student loan assistance through a federal – or state-based program. There are several programs for those working in public service careers, like the Public Service Loan Forgiveness and Teacher Loan Forgiveness programs.
That said, these programs typically require you to commit to working in a specific job or a certain area (like medicine, law, or military service, for example) for a set number of years, which can be challenging if you don’t enjoy the job or want to pursue a different career path somewhere else.
But if you fulfill your service obligation, you may get as much as your full student loan balance forgiven.
Repayment Assistance Benefits
About 8% of employers in the U.S. offer student loan repayment assistance as a benefit, according to the Society for Human Resource Management . The terms of a repayment assistance benefit can vary by employer. For example, some may offer it as a match of the employee’s payments and others may simply pay a set amount toward an employee’s loan balance each month.
The amount you receive from a repayment assistance benefit may be less than what you might get through a government repayment assistance program. But you may not need to commit to a service obligation to qualify, and you may be able to negotiate how much you’ll receive.
Types of Jobs That Offer Student Loan Forgiveness
In order to qualify for certain types of loan forgiveness, borrowers may need to meet certain employment requirements. Here are some of the jobs that could potentially allow someone to qualify for federal student loan forgiveness programs.
1. Federal Agency Employee
Federal agencies may be allowed to offer student loan assistance as a perk to appeal to candidates. In order to qualify for this student loan repayment assistance, the employee is required to sign onto a three-year contract with the agency. The benefit may be up to $10,000 per year, but cannot be more than $60,000 per person. Additionally, the benefit is only available to for federal student loans.
2. Public Service Worker
If you work in the public service sector for a qualifying organization, such as the government or a non-profit, you may qualify for Public Service Loan Forgiveness (PSLF). To pursue PSLF, borrowers are required to make 120 qualifying payments while certifying their employment with a qualifying employer. After this period, any remaining amount is forgiven. PSFL is only available to borrowers with federal student loans.
If you have a Perkins loan and work in public service, you could potentially qualify for loan cancellation.
3. Medical Field
The Association of American Medical Colleges maintains a database with information on loan assistance programs for doctors by state.
Medical professionals who work in underserved areas may also qualify for loan forgiveness through the National Health Service Corps Loan Repayment Program . In this program, medical professionals must commit to working for at least two years in a Health Professional Shortage Area.
Refinancing medical school student loans may be another option to consider for medical professionals who are not pursuing any loan forgiveness programs. While refinancing would eliminate loans from any federal forgiveness programs, it could potentially allow borrowers to secure a more competitive interest rate.
4. Automotive Professionals
Professionals in the automotive industry may qualify for loan forgiveness through the Specialty Equipment Market Association (SEMA) Loan Forgiveness Program . In 2021, SEMA awarded funds to pay for student loans to 22 working professionals.
5. Lawyer
Lawyers may also be able to qualify for PSLF. In addition, there are other lawyer-specific programs that provide assistance to lawyers paying off student loan debt including the Department of Justice Attorney Student Loan Repayment Program or John R. Justice (JRJ) Program .
6. Teacher
Student loan forgiveness for teachers is available. Teachers who work in special education, are considered highly qualified teachers, or work in underserved areas may qualify for the Teacher Loan Forgiveness Program . The amount of loan forgiveness available is dependent on the teachers area of specialty and can be either $17,500 or $5,000.
7. Peace Corps
Peace Corps volunteers may be eligible to defer their loans or pursue PSLF.
8. Veterinarian
Veterinarians who work in underserved areas may qualify for up to $25,000 in student loan repayment assistance through the U.S. Department of Agriculture’s Veterinary Medicine Loan Repayment Program.
8 Major Companies that Repay Student Loans
Hundreds of large and small employers offer jobs that pay off student loans, but it’s not always easy to find out which ones provide the benefit. To help you get started, here are 10 well-known companies that repay student loans.
1. Abbott Laboratories
The company’s Freedom 2 Save program functions a bit differently than other repayment assistance benefits in that it combines efforts to pay off student loan debt and save for retirement.
Full- and part-time employees who qualify for the company’s 401(k) plan and contribute 2% of their pay toward student loan repayment, will receive a contribution of 5% of their salary in their 401k account. Employee 401k contributions aren’t required.
2. Chegg
Full-time employees of the education company receive an annual contribution to their student loan payments.
3. Estee Lauder
The beauty company provides employees with $100 per month in student loan assistance, up to a total of $10,000.
4. Fidelity
As an employee of the investment brokerage firm, you’ll may be eligible receive up to $15,000 toward your student loan payments.
5. Nvidia
If you’ve graduated within the last three years, Nvidia will match your student loan payments dollar for dollar up to $500 per month. The lifetime cap is $30,000.
6. Penguin Random House
Employees who have been with the publisher for at least one year can receive up to $1,200 in student loan repayment assistance each year, for a total of $9,000 over seven-and-a-half years.
7. PricewaterhouseCoopers
As a participating associate or senior associate, you can receive $1,200 in student loan payments each year.
8. SoFi
As an employee with SoFi, you’ll get $200 each month in student loan repayment assistance.
Negotiating a Student Loan Repayment Benefit
If you’re looking for a job, keep an eye out for companies that repay student loans as an employee benefit. If you can’t find one, you can still try to negotiate the benefit for into your total compensation. Here are some ways to do it.
Doing Your Research
Resources like Payscale and Glassdoor can help give you an idea of the salary and benefits that may be available from various companies. Look at what the company you’re interested in typically offers as well as what you might get with a similar position somewhere else.
If anything, this process can give you a better idea of what you’re worth. But it will also give you a benchmark that you can use to negotiate for student loan repayment benefits, along with other aspects of your compensation.
Making Your Interests Clear
Helping a potential employer understand why student loan repayment is important to you can help set the stage for the entire conversation.
In addition to salary, employers can consider several other factors to make up your total compensation. So knowing what’s most important to you can help them make a more attractive offer.
Asking for a Signing Bonus Instead of Monthly Payments
While a signing bonus isn’t specifically designed as a student loan repayment benefit, you can use it that way. In fact, making a lump sum payment toward your student loans could help you accelerate your student loan debt repayment timeline.
Asking for the Opportunity to Revisit the Request in the Future
If you can’t manage to persuade a potential employer to provide you with student loan assistance, that may not be the end of it. You could ask for the chance to talk about your compensation again in six months or a year.
During that time, you may be able to prove to your employer that it’s worth the investment on their part. Or you may have planted a seed for the employer to create a student loan repayment benefit for all employees.
Making Student Loan Repayment a Priority
Whether or not you can find jobs that pay off student loans, you can still make it a priority to eliminate your student debt as quickly as possible. A student loan repayment assistance benefit can help you achieve that goal, but it can’t do it on its own.
As such, it’s essential to consider other options to save money, such as refinancing your student loans. While refinancing can be a helpful option for some borrowers, it won’t make sense for everyone. If federal student loans are refinanced they’ll lose eligibility for federal programs and benefits, like PSLF or income-driven repayment plans.
If you qualify, you may be able to reduce your interest rate or your monthly payment. With a lower interest rate you could potentially save money over the life of your loan.
The Takeaway
The number of companies offering student loan repayment assistance as a part of their employee benefits package is growing. Some jobs might also offer the opportunity for the borrower to apply for student loan forgiveness. For example, there are programs available for medical professionals, teachers, and those that work in the government or non-profit sector.
Another opportunity for managing student loans is refinancing, which could allow qualifying borrowers to lower their interest rate — making the loan more affordable in the long run. If you’re interested in refinancing, consider the options available at SoFi.
When you refinance with SoFi, there are no prepayment penalties or origination fees. You can start taking control of your student loan debt and get a quote in just two minutes.
FAQ
What careers pay off student loans fastest?
High paying jobs may help borrowers repay their student loans quickly. However, some jobs may allow borrowers to pursue a loan forgiveness program. While these programs may not expedite the repayment process, they could help make student loan repayment more manageable.
What companies pay off student loans?
Companies including SoFi, Fidelity, Penguin Random House, and Nvidia all offer student loan repayment assistance programs. Specific benefits vary by company.
What kind of jobs qualify for student loan forgiveness?
The type of job that qualifies for student loan forgiveness may vary depending on the program. Jobs in the government or non-profit sector may qualify a borrower for Public Service Loan Forgiveness. Teachers may qualify for Teacher Student Loan Forgiveness programs. Some medical professionals may qualify for programs such as the National Health Service Corps Loan Repayment Program.
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Your children are your top priority when you’re a single parent.
You work hard to give them all your time, love, energy — and money.
It’s natural to put your own financial needs on the back burner, especially when it comes to saving for retirement.
According to a research study published in the Journal of Family and Economic Issues, having multiple children in a single-parent household was associated with lower motivation to save for retirement — especially for single moms. Single moms are also less likely to contribute to a 401(k) plan at work.
About 68% of married women between the ages of 25 and 44 with one child said they have a defined contribution retirement plan — like a 401(K) — at work. In contrast, just 39% of single moms with one child had a 401(K).
It makes sense: Single parents have substantially fewer resources than childless adults or married couples. They also bear enormous financial responsibility that falls entirely on their shoulders.
But planning for your own future is just as important as securing your child’s future.
Here are seven things single parents can do to plan for retirement on any budget.
1. Create an Emergency Fund and Get Your Debt Under Control
Before you start saving for retirement, create an emergency fund. This should be your top priority.
Most experts recommend saving at least three to six months worth of living expenses in a savings account.
Any money you save for retirement should be separate from your emergency fund. Think of your retirement money as untouchable and your emergency fund as a safety net.
Next, get your debt under control.
It’s easy to run up credit card debt when you’re a single parent. If you’re struggling to afford monthly payments, it doesn’t make sense to start saving for retirement.
“Debt that you can’t afford can be a huge hurdle as a single parent,” said Ann James, an accredited financial counselor and founder of Financial Freedom Battle Buddies. “You don’t want to have to pay for debt on top of all these other obligations you have.”
2. Make the Most Out of Your 401(k)
Putting money in a retirement account is the easiest way to save for your future.
Contributing to a 401(k) at work helps reduce your taxable income, which can lower your bill at tax time or even boost your refund.
A 401(k) is an investment account, not a savings account, so your money will grow over time.
If your job matches employee 401(k) contributions, then make sure to contribute enough to get that match.
“That’s free money,” James told The Penny Hoarder. “And the earlier in life you can start saving, the better. Time is your friend when it comes to long-term investing.”
If you’re not sure how to set up a 401(k), speak with your boss or HR department.
Or Set Up an IRA
Not everyone works at a job that offers a 401(k) plan.
If that’s your situation, look into opening an individual retirement account (IRA).
A traditional IRA works similarly to a 401(k) — the money grows tax-deferred and your contributions help you out at tax time.
The big difference is you can only open a 401(k) at work and you can only open an IRA on your own.
You can open an IRA at major brokerage firms, like TD Ameritrade, Vanguard, Charles Schwab and others.
Or you can use a robo-advisor like Betterment or Wealthfront. These online platforms automatically create a diversified IRA portfolio for you, based on your age and risk tolerance.
3. Set Your Savings to Auto-Pilot
You’ve probably heard the phrase “set it and forget it.” It’s a golden rule in retirement planning.
Life will hand you plenty of distractions, including financial pressures and responsibilities.
You’re more likely to reach your financial goals if you set up automatic, regular contributions to a retirement account.
This way, you don’t have to think about whether or not to save for retirement. It just happens automatically.
Any 401(k) contributions are automatically deducted from your paycheck. You can also easily set up recurring contributions with any IRA provider.
4. Only Save What You Can Afford Not to Spend
Your retirement fund isn’t your emergency fund. Any money you put in should be money you won’t touch for the next 20 or 30 years.
Only contributing what you can afford is the best way to avoid tapping your retirement fund ahead of schedule.
Experts say you should allocate 10%, 15% or even 20% of your income to retirement. But that’s not realistic for many people, especially single parents.
“It’s important to start where you are,” James said. “Even if it’s just $25 or $50 a paycheck, it’s OK to start small.”
It’s better to start small now and never access your retirement account funds than to contribute a big amount at first, only to draw down the money in a couple years.
Remember: Set it and forget it.
You want to avoid accessing that money because IRAs and 401(k)s come with early withdrawal penalties from the IRS.
With a few exceptions, you’ll face a 10% tax penalty if you withdraw money from a traditional retirement account before the age of 59.5. You’ll also owe income tax on the withdrawal.
You want to keep as much of your money as possible — not hand it over to the government. So be honest about what you can afford to contribute and stick to it.
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5. Explore Your Insurance Options at Work
Many employers offer health insurance and life insurance to their employees.
But if you’re a single parent, there are other types of insurance you should also consider.
Many workplaces also offer critical illness, disability and/or accident insurance. These low-cost policies can help cover you if you get hurt or need to take a leave of absence from work.
This is huge. Facing unexpected medical bills or losing your job can completely derail your careful retirement planning — and the rest of your life.
The good news is these supplemental insurance policies often cost just a few bucks each per pay period and the money is automatically deducted from your paycheck.
Plus, unlike some life insurance policies, these policies are usually guaranteed Issue, which means you don’t need to undergo medical questions or tests to qualify for coverage.
Critical Illness Insurance: This type of policy pays a lump-sum benefit if you are diagnosed with a covered illness, such as cancer, stroke or coronary failure. Many critical illness insurance policies cost $4 to $5 a paycheck while providing $20,000 or more of coverage.
Accident Insurance: This insurance pays you benefits for specific injuries resulting from a covered accident outside of work. You can use accident insurance benefits to pay medical costs, everyday expenses like utilities and replace your income if you need to take time off work.
Disability Insurance: Many employers offer short-term and/or long-term disability insurance at no cost. Enrollment may not be automatic, so make sure you select this type of coverage during open enrollment. These policies pay out a weekly or monthly benefit to help replace your income if you become disabled.
Pro Tip
These policies are meant to supplement your health insurance, not replace it.
Each policy differs, so find out the rules and stipulation of the specific policy your workplace offers. For example, some disability insurance policies have a waiting period before benefits start paying out.
6. Do Everything You Can to Make More Money
Saving for retirement is going to be nearly impossible if you’re barely making enough money to survive.
Being frugal is important. But so is making more money.
Single parents already face an economic disadvantage because they can’t split the bills, pool resources or save as much money as a two-parent household.
The situation is even more challenging for single mothers because women — still, on average — earn less than men.
According to Bureau of Labor Statistics data, in 2020, women’s annual earnings were 82.3% of men’s. The gap is even wider for many women of color.
The easiest way to make more money long-term is to get a raise at work. The second easiest way to make more money is to get a different, higher-paying job.
Learning how to ask for a raise at work is important.
“No matter how long you’re at a job, you should always be open to learning new things,” James said. “Be OK with stepping outside your comfort zone, and don’t get complacent.”
Exploring educational opportunities is also important. See what certifications your company will pay for or check out free online classes.
“Always look for things that make you more competitive, no matter how small it may seem,” James said.
If you’ve been at your current job for a while and a promotion seems unlikely, start exploring other options.
Pro Tip
Each time you get a raise or bonus at work, allocate a percentage of that money to your retirement account. Apply the same concept to your tax refund each year.
You can also explore side hustles and part-time jobs.
“You can turn your passion or hobby into something that brings in income,” James said. “Especially now, there’s a lot of ways to make money online.”
Even bringing in an extra $100 to $300 a month can make a huge difference in how much money you can save for retirement.
You don’t want to hustle at a side job only to put that money toward babysitting. Here are 11 side gigs you can do from home.
7. Learn to Prioritize Yourself — Your Kids Will Understand
Many single parents want to save for their children’s college education.
But depending on your budget, it may be impossible to save for their future as well as your own.
It’s always smarter to prioritize your retirement over your kid’s education. It may sound harsh, but think of it this way.
If you don’t have any money set aside by the time you hit retirement age, you must either keep working (which may not be possible if you’re in poor health) or live off your Social Security benefits.
Those benefits might not be much, especially if you had employment gaps during your working years. You might be forced to live on $1,200 or less a month.
It’s extremely difficult to survive on that amount of money. You’d likely need to lean on your kids for help — move in with them or ask them for money.
Your kids may have less student loan debt if you save for their education — but you may become a financial burden on them if you don’t save for your own retirement.
Don’t feel guilty about prioritizing yourself. Be honest with your kids about how expensive college is and how you probably can’t afford to pay for it. Plenty of other parents are in the same boat.
You may not be able to help them out financially with college, but you can set them up for success in other ways.
Talk to your kids about how student loans work.
Explore grant, scholarship and work-study opportunities together.
Help them research affordable colleges and write their cover letters.
Look for free SAT/ACT prep courses in your community.
Stay in touch with their teachers and play an active role in their academic life.
Encourage them to take Advanced Placement, International Baccalaureate or dual enrollment classes in high school so they can start earning college credits. This helps cut the final cost of college tuition.
Not everyone needs to be college bound. Explore technical schools and trade programs, too. Many of these certifications provide pathways to lucrative careers.
If you’re saving enough for retirement and have extra money to save, then you can start building savings for your kids’ college. Speaking with a financial advisor who can help you design a strategy to save for both financial goals is a smart idea.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
Next to shopping, decluttering seems to be America’s favorite pastime. Heck, minimalist gurus like Marie Kondo have made entire careers out of helping people tidy up and let go of belongings that no longer “spark joy.”
All that conscious purging is good news for charity-run resale stores such as Goodwill and Salvation Army. But clutter-busters take note: Not every unwanted item is welcome at donation centers. Here’s a list of things most resale shops don’t want and can’t accept.
1. CRT TVs
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Old CRT (cathode ray tube) TVs have been replaced by flat, wall-mounted LCD, LED and plasma models. As a result, most American garages are storing at least one obsolete television. Even at secondhand prices, it’s nearly impossible to unload these “contemporary antiques” — and thrift stores know it.
To dispose of an old TV, don’t just put it out at the curb. Contact your local recycling center and ask if it hosts an annual e-waste event. Otherwise, BestBuy’s recycling program will take it off your hands for $29.99.
2. Mattresses
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Most thrift stores don’t accept mattresses. Not only do they take up a lot of retail floor space, the “ick” factor of a used mattress can make them a tough sell.
But there are exceptions. The Society of St. Vincent de Paul operates resale shops across the country. The locations nearest to me (in Des Moines, Iowa) accept mattresses manufactured no earlier than 2017 and with original tags still attached.
3. Sleeper sofas
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Old-fashioned sleeper sofas are notoriously heavy. In fact, I nearly broke my hand trying to move one up a flight of stairs back in the 1990s (and I have a crooked finger to prove it).
That heft — combined with potentially unsanitary mattress issues — are part of the reason they’re near the top of the Donations Goodwill Cannot Accept list.
4. Cribs and car seats
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We’ll cover recalled items later in this post, but cribs and car seats deserve special mention.
It’s impossible to know whether a pre-owned car seat has been involved in a crash — an event that could comprise its functionality. And many donation centers lack the resources to track the volume of recalls related to car seats as well as cribs. Since child safety is paramount, centers are likely to reject both items.
5. Car parts
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Used tires, wheels and batteries also made Goodwill’s Cannot Accept list. Likely because it’s tough to determine the safety of most used auto parts (oh, and battery acid doesn’t make for a pleasant shopping environment).
Instead of donating, liquidate these items on Freecycle or via free pages on Facebook Marketplace.
6. Large appliances
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Most donation centers aren’t equipped to handle stoves, ovens and refrigerators. The labor needed to move these items and the retail floor space they require make them a losing proposition. Even worse, appliances that haven’t been thoroughly cleaned may harbor unsafe bacteria.
7. Building materials
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As with large appliances, the processing and storing of building materials is labor-intensive and requires extensive warehouse space. The corner Goodwill simply can’t handle loads of sheetrock and pallets of vinyl plank flooring.
To spare these items from the landfill, connect with a Habitat for Humanity ReStore in your area. ReStores accept new and used building materials, appliances and furniture. Proceeds from sales help the organization provide affordable housing in communities around the world.
8. Torn or stained clothing
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Thrift stores are in the business of reselling clean, wearable clothing. And sadly, there’s not a huge market for stained jeans, torn shirts and coats with broken zippers.
A good rule of thumb: If you wouldn’t offer it to a friend or neighbor, don’t donate it.
So, what’s next for that pile of un-donatable clothing? The folks at Bustle can help you decide what to do with clothes you can’t donate.
See also: “9 Retailers That Will Reward You for Recycling”
9. Periodicals
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Sorry, but thrift shops aren’t interested in that stack of newspapers and magazines next to your easy chair. For their weight, periodicals have a negligible resale value.
Instead, drop off recent magazines at a local senior center. And some animal shelters accept newsprint. Shredded, it makes soft bedding for homeless pets.
10. Firearms, ammunition or fireworks
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Not surprisingly, firearms and fireworks also made Goodwill’s list of unacceptable items. Anything that poses a threat to personal or public safety should not be donated.
Without a uniform process in place across the U.S., disposing of an unwanted firearm can be tricky. Err on the side of safety by calling your local police department and asking how to legally surrender or “deactivate” a gun. (Remember, call first — never bring any weapon to a police department unannounced.)
And if fireworks frazzle your nerves more than dazzle your eyes, take them directly to your local landfill. In the meantime, store in a cool, dry place and keep them out of reach of children.
11. Recalled items
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The last thing anyone wants to do is keep an unsafe item circulating in the marketplace.
If you’re unsure about the recall status of an item, visit Recalls.gov before you donate. The site’s comprehensive search tool examines recall data across six federal agencies and alerts users to any product that’s been deemed “unsafe, hazardous, or defective.”
12. Anything damaged beyond repair
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Before you donate anything, ask yourself, “Would I buy this?” If an item is heavily damaged or in non-working condition, don’t pass the headache on to someone else.
Remember, donating isn’t a way to get rid of junk. Rather, it’s a way to share quality items, help the environment and support worthy causes all at the same time.
Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.
