Part 1: Retirement Planning for Entrepreneurs with Sarah Becker

[00:00:00] Emily Thompson: Welcome to Being Boss, a podcast for creatives, business owners and entrepreneurs who want to take control of their work and live life on their own terms. I'm your host, Emily Thompson, and in this a first part of a two part conversation with my friend Sarah Becker, who you first heard from recently in episode number 318, we are chatting about retirement for bosses.

[00:00:24] In this half of the chat, we are diving into Roth IRAs, setting your retirement vision and giving you the first really easy step every boss needs to be taking to start planning for retirement. You can find all the tools, books, and links we reference on the show notes at www.beingboss.club. And if you like this episode, be sure to subscribe to the show and share us with a friend.

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[00:01:49] After 10 years as a wedding photographer, real estate investor, and small business owner, Sarah kept hearing the same story from her bus besties over and over again. While outwardly successful in their businesses, they were utterly failing in their financial goals. If they even had financial goals. Sound familiar?

[00:02:08] She started asking every business woman she knew about their money. Sarah learned that less than 2% of the creative entrepreneurs in her network were happy with the state of their finances. That's when she started her career as a financial educator. She believes that money doesn't have to be scary, that curiosity is more important than correctness, and that everyone can become an expert of their own money.

[00:02:30] Yes, financial freedom is possible. Sarah, welcome back to Being Boss. I think you might be the fastest return guest in the history of the show.

[00:02:41] Sarah Becker: And I feel so honored and we should make this a monthly thing, you know, I'll just recurring calendar invite.

[00:02:50] Emily Thompson: Right. What is this? Like the second, third? Last Tuesday of every month we'll have a Sarah Becker episode.

[00:02:55] Sarah Becker: The quality might decline. Suddenly subscribers are fleeing, you know your numbers are going down cause it's just me talking about whatever I feel like that month.

[00:03:03] Emily Thompson: Right? This is actually now the Sarah show. I hope you all enjoy.

[00:03:07] Sarah Becker: What a smooth coup. Sorry, Emily. You can, you can go to the store, you can go buy some rocks. We're good here.

[00:03:12] Emily Thompson: Perfect. Would love to, would love to.

[00:03:14] Sarah Becker: But seriously, thank you for having me back.

[00:03:15] Emily Thompson: Of course. Of course. And really, I'm, I'm so excited to have you back. Maybe a little bit of a, maybe your listeners deserve some reasoning here.

[00:03:26] Sarah Becker: This chick again, explain yourself.

[00:03:28] Emily Thompson: As to why you're back so soon. So, Sarah was here for a recent episode of Being Boss.

[00:03:34] Hold on, I gonna get the number for you. Um, can I find this quickly? Yes, I can. Episode number 318. Sarah Becker here was here for this podcast, um, in an episode called Saving and Spending Money in Your Business. So one of those, usually our money episodes are incredibly popular, so I'm gonna call it that popular episode,

[00:03:56] Sarah Becker: Yes, yes.

[00:03:58] Emily Thompson: That came out back in September. As of you listening to this now, even though it's still September for us here, but that's just the magic of podcasting.

[00:04:08] Sarah Becker: It is.

[00:04:09] Emily Thompson: Whenever we were done with that episode, I was like, I got a job for you. Basically, because one of the things that has made this show so successful over the years that is that.

[00:04:22] I am here before it was Kathleen and I here and our guests talking about business topics in a way that was easy to understand for two reasons. One, none of us came from business backgrounds. Like I'm not talking from an MBA, right? I'm talking from like, experience where I just call things, the things I call them, and that makes sense to me in a real world kind of way that creatives connect with.

[00:04:47] And two, I'm here talking to creatives who I know don't have MBAs and also need to be spoken to in a way that just makes sense for folks who don't have those MBAs. And listening to you talk about money and the way that you were, made me realize that you are just the person that I want to come in to have a conversation that I've needed to have on this show, probably for the past five years and haven't, and that is around retirement.

[00:05:16] Yes, I get pitches all the time from, you know, buttoned up. Yeah. Really buttoned up white dudes.

[00:05:24] Sarah Becker: Yeah.

[00:05:25] Emily Thompson: Wanting to come talk about it. I'm like, but you can't. You literally, I don't think you can in the way that our people need to hear it.

[00:05:33] Sarah Becker: Yeah.

[00:05:34] Emily Thompson: You can, I know you can.

[00:05:36] Sarah Becker: Thank you, I'm honored.

[00:05:38] Emily Thompson: So you're here to talk about retirement with us. Um, we have a couple different things we want to go through. Over the course of this episode. There's a chance this could be a two-parter. Just gonna throw it out there.

[00:05:51] Sarah Becker: There's always the chance with us.

[00:05:52] Emily Thompson: Always the chance goes on. That this could just keep going. But what I really hope for everyone listening to this is that you can gain some understanding around retirement.

[00:06:01] Because in the Being Boss community or in the conversations that I'm having one-on-one with bosses, the topic of retirement comes up a lot in the world in America these days. Retirement comes from the man.

[00:06:17] Sarah Becker: Indeed it does.

[00:06:18] Emily Thompson: It is your corporate father.

[00:06:20] Sarah Becker: Yes.

[00:06:20] Emily Thompson: Who is supplying your, your retirement to you. And for those of us who have not chosen that path, who have decided to go at business on our own, retirement is usually one of the last things we think about because we're dealing with all the other things, but it's not that hard. It's not impossible by any means. It is something we should be thinking about, but because we've never had to think about before, we don't even know where to start. So yes, Sarah, show us the beginning.

[00:06:51] Sarah Becker: Enter me. Yes. Ok. So retirement is definitely one of those things that we put off, right? Like, we know it's important, but it's never urgent until you're, you know, 30 years down the line. So I totally understand why people put it off. But one thing I really wanna start out with, which I hope is really motivating, is that due to compound interest and the way the stock market works, the earlier you start, the richer you will retire.

[00:07:16] So, even if you are starting that Roth IRA and putting 50 bucks a month in it. When you're first starting out, you can expect a 7% return of growth every, you know, every year. That's very conservative. So as this is able to grow and compound that's when your money starts literally working for you. That's when you literally can just check it once a year.

[00:07:37] You know, print that statement for your CPA and be like, wow, like I am setting up. So getting started as soon as you can and automating are two huge things that you can do. And currently in the United States, only 13% of self-employed people are saving for retirement.

[00:07:54] Emily Thompson: Are you kidding me?

[00:07:54] Sarah Becker: I am not kidding. 13% That is, and that's like the latest like CNET stat.

[00:07:59] I mean, they just did a study about this right before pandemic, so that's like a 2020 figure, and let me tell you why I think that is. Yes. Okay. I think that a lot of people go into entrepreneurship after having a corporate job for a little bit, right?

[00:08:14] Emily Thompson: Mm-hmm.

[00:08:15] Sarah Becker: So in the back of people's minds, I see this all the time with my clients. They're like, I have a 401K somewhere. I have a Roth I need to roll over at some point. And I think because they have the account, they're like, I'm good. You know, there's a few grand in there, but if you're not actively contributing to that account, then it's not actively growing. Right. So I think a lot of people have stagnant accounts and then I think.

[00:08:41] For a lot of other people, retirement can be kind of gatekeep-y and it seems so much more complicated than it actually is and that's why when I work with people who are starting their business, so it's like, okay, you know what to do. Get your LLC, get your EIN, get your business bank account. I add on a fourth little to do and I'm like, open a Roth IRA.

[00:08:59] If you can only put $50 in this year, that's fine. But start it so that it's there. You know, you can contribute anytime. It takes literally 30 minutes to start one. Again, I think in our minds, we make it this, well, if I'm gonna do it, then I need to research the best stock possible. I need to research the best plan possible.

[00:09:18] And that's, you know, it's something you've talked about on the show is like perfectionism as you know, kind of like it's against progress sometimes. You just need to start.

[00:09:28] Emily Thompson: Yeah. Perfectionism as procrastination.

[00:09:30] Sarah Becker: As procrastination. That's it. I was like, yeah. Yeah. It's a P. It's a P. Yeah. It's procrastination and you know, there are a lot of things you can procrastinate that don't harm you financially in the future, but retirement absolutely is one, because the earlier you start, the richer you will be.

[00:09:45] Emily Thompson: Amen to that..

[00:09:45] Sarah Becker: If you were, if you were listening and you're like, I'm 50 and I haven't started, do not despair, but that just means we need to be more aggressive. And we need to think about alternate methods that aren't just the stock market, because you're not gonna be able to save enough if you start at 50, unless you were, I mean, unless you're really putting back.

[00:10:03] And that's when we start talking about real estate is a great option. You know, we talk about all sorts of different things for cash flow and retirement. And I also think that because creative entrepreneurs are like, I'm taking this different path. And like you said, retirement just feels like something, the man, it just feels like capitalism, you know, like it just feels like this thing that we're not a part of. So I would really challenge, like if you are listening today and you're like, Ugh, yes, exactly. I would really challenge you to look at retirement instead of thinking about it as retirement. Think of it as freedom. Like how can you plan for your future freedom?

[00:10:38] Because that's what creative entrepreneurship is all about. And none of us wanna be doing this when we're 70. I don't think.

[00:10:45] Emily Thompson: Yeah, I think even those of us who like really love the thing. I mean, you look at 70 and you're like, no, no, I don't think I want to be really then.

[00:10:56] Sarah Becker: Right?

[00:10:56] Right. I think you would have options, you know, like when you were young and you have a hundred percent of your health and you have, you know, just a couple young children or no children, like again, you have, you don't realize how many options are available to you and every decade your options can slim if you're not prepared..

[00:11:13] Ah. Yeah.

[00:11:15] Emily Thompson: Okay. I love it. So it's important.

[00:11:17] Sarah Becker: It's, guys, let's do it. It's important. Yeah. Yeah. It's important.

[00:11:22] Emily Thompson: Okay, so boiling it down, it's important, and I love that you were literally making this one of those first steps of, of starting your business.

[00:11:29] Sarah Becker: Yeah.

[00:11:30] Emily Thompson: That like. Yeah, that should be a thing. I love the idea of doing that, and one of the things that I most love about it is that, one, this sort of habit forming thing, and two, the mindset of it, of like if you, you know, we've talked about how it's hard to start paying yourself three years down the road.

[00:11:48] Sarah Becker: Yeah.

[00:11:48] Emily Thompson: If you've never paid yourself, because you're used to all of that money staying in your business and all of the things like, it's hard to start cutting yourself that check. You have to do it, but I feel like the same is to be said about your retirement. You know, five years into your business, you start a retirement account and you're just like, eh.

[00:12:04] Like if you start your business though, paying yourself and submitting to your retirement, then it just is a part of what you do and you are taking care of yourself. Like future you is gonna thank current you for doing this thing.

[00:12:19] Sarah Becker: Oh my gosh, so much. Yes, absolutely. And I see a lot of people be like, well, I wanted to wait until I made 50k profit a year to start a retirement account.

[00:12:28] I wanted to wait until I hit the, and again, I just wanna reiterate, the sooner you start the richer you'll be like, this is not something we wanna wait on. And just like you kind of have to have health insurance. You kind of have to save for retirement. Fortunately. Yeah, it can be cheaper than health insurance a lot of the time.

[00:12:45] Emily Thompson: Isn't, oh my God. If I were putting what I paid to the health insurance that I do not use into my retirement, I would retire a bajillionaire.

[00:12:55] Sarah Becker: You. You would. I literal bajillionaire and that would be amazing for you.

[00:13:00] Emily Thompson: It would, it would be amazing. Um, okay, so then let's talk about what this looks like.

[00:13:03] So you're talking about like one of the first steps is to do the thing, but what if you didn't? What if you didn't do it? And maybe let's even.

[00:13:12] Sarah Becker: You mean, what if you're 87% of self-employed people and you didn't do it? Yeah.

[00:13:16] Emily Thompson: Basically.

[00:13:16] Sarah Becker: Let's talk.

[00:13:17] Emily Thompson: If you're everybody else.

[00:13:18] Sarah Becker: Yes.

[00:13:19] Emily Thompson: And you're not doing yet, you've been in your business for six months, a year, five years, 10 years, whatever.

[00:13:24] And you're like, I know it's been on my to-do list for like 14 years.

[00:13:28] Sarah Becker: Yes.

[00:13:29] Emily Thompson: I'm well aware that I need to do the thing. Where does someone even start..

[00:13:33] Sarah Becker: Okay, so I always recommend starting with a Roth IRA that stands for Independent Retirement Accounts. So if you're listening to this and you're like, I hope to own a business one day, but I don't even have my LLC yet, you don't need one.

[00:13:46] A Roth IRA is attached to your Social Security number, so you can get started now, if you're a 1099er, you're a freelancer. Does not matter. I recommend people start with that because I love the way that that account works and because the maximum, it's easy to work up to over time, the max year is $6,000. I know that sounds like a lot, but if you think about other things that you're spending on, it's a really good way to kind of get started.

[00:14:09] And again, you do not have to max it out. Now at this point, I write a check, literally the first week of January to my Roth IRA. Six Grand, I max out every year right away. But when I was starting out, I was putting like a hundred dollars a month in there. You know, I, it was like a, like an internet bill. Okay. So just get started.

[00:14:27] Emily Thompson: Yep.

[00:14:27] Sarah Becker: So that is always what I recommend doing. And you can do that. You do that through an institution, just like you would have a bank account through a bank. So I recommend Vanguard or Fidelity. Betterment is also a newer one that's really great. You could open up a Roth IRA in there. And that's something really important to remember is that once you put some money in, you have to actively invest it or it will just sit there.

[00:14:50] Can't tell you how many people I know who have a Roth account have put money in there but never clicked the little button at the bottom that says invest. So then it's just been sitting there. Cause it is an extra step. So a Roth IRA, it is like a bank account where it holds your money, but you need to, to actively invest that money in your Roth IRA to be in the stock market.

[00:15:10] Emily Thompson: Okay. Okay.

[00:15:11] Sarah Becker: Okay. Yeah. Do I think we need this step? I do not. It'd be great to eliminate, um, but, you know, I don't make the rules, so we're just, we're doing what we can. And when people ask me, I really love Apple, so I'm gonna buy a few stocks of Apple and I love Costco, so I'm gonna buy, okay. No, no, no, no.

[00:15:30] That is not a strategy. You can shop at Costco, but we're not gonna invest in Costco. Right. Okay, we're gonna invest in index funds and what is an index fund? It is an amazing fund that is basically taking little bite sized pieces of the entire market so that over time you are averaging out what the market is averaging, which is what you want.

[00:15:50] If you, if you get started and you're like, oh, this is fun, you can give yourself a little money to play around. But that is not a retirement strategy. Um, and I wanna say a shout out to my friend Jordan, if you're listening, who was like, I like Crocs. So I bought a stock of Crocs. I was like, no, we're, we're not gonna, we're not gonna buy the stocks that we're wearing on our feet.

[00:16:07] That's not, it's, we're not doing that. Um, so unfortunately, like that's a little boring. But also fortunately it's a little boring, right? Because it literally is set and forget. Now people also ask, how much money do I need when I retire? And I think that is such an important question. It's literally we gotta reverse engineer just like a budget.

[00:16:31] And if you are looking at the stock market and that is your retirement plan, which I mean it is for me, like 80% of the way, you can count on drawing down after retirement, 4% of what you have in the market every year and never touching the principal. So it's a really safe, so, so if you wanted to draw down 40 grand a year, you would need a million dollars.

[00:16:52] Okay? So that's a really easy way to think about how much you wanna save and how much you want to be able to draw down and. When calculating that number, you know, a lot of us hopefully will have paid off our houses by the time we retire, so we're not gonna have a mortgage. But there's also a lot of question marks about, well, what's social security gonna look like and what's healthcare gonna look like?

[00:17:14] And so I really say like, what you're spending now, let's just pretend we're gonna spend that in retirement to give us some wiggle room. No one spends as much after 65 as they do now at 40, but that gives us a little wiggle room, which I love. I love a little wiggle room.

[00:17:32] Emily Thompson: I love all of this too, because I finally understand all the things that David's been saying to me.

[00:17:40] Sarah Becker: Look, I'm just, I'm here to improve your and David's knowledge. What the others talking about, like, what can David and I talk about next week? Like have him send his schedule over.

[00:17:49] Emily Thompson: Y'all can have the real conversation. We were talking before we got on this, that, on the way to the office to do this recording, I had to call David and be like, so what are we doing for retirement?

[00:17:59] He's told me this like, you know, every year he's like, he shows me. And I'm like, I don't know what I'm looking at. No idea. Um, and so I asked him what he was doing and basically he said this, but not in those words. Yeah, and I was just like, okay, that's in my head for this conversation now. I think I get it.

[00:18:16] I love this. We're doing this. I'm very proud of us

[00:18:19] Sarah Becker: You're saving for retirement. I'm so proud of you and proud of David.

[00:18:22] Emily Thompson: Yeah, very much so david.

[00:18:24] Sarah Becker: It's amazing. And you know what's great about too, being in a partnership, whether it's a business partnership, a personal partnership, or for you and David both. Both of you don't have to be involved in this.

[00:18:32] Right. One person can help. It's there's, there's too much in the world to do, for everyone to be involved in everything.

[00:18:38] Emily Thompson: Yep.

[00:18:38] Sarah Becker: Um, so a lot of times when I meet with clients, they'll be like this, I do this for my family, or I want my partner to do this. And that's totally fine. Totally fine.

[00:18:46] Emily Thompson: Yeah.

[00:18:46] Sarah Becker: Uh, something to note about the Roth is when you start making big, big bucks and you're starting to profit over $144,000 a year, you can no longer contribute to a Roth.

[00:18:57] The government's like, Hey, we've helped you out enough. We're gonna cap you here. And that's another reason I recommend starting with that one first, when you're not making...

[00:19:04] Emily Thompson: Even capitalism has its glass ceilings, everybody.

[00:19:07] Sarah Becker: Yeah. You're gonna hit it and they're gonna be like time for you to get an independent 401k because you're out, you're out, you're out for the Roth.

[00:19:15] Um, and you know, a great thing about an independent 401k, which you can start any time, and I have one as well, is that it is tax advantage like you. Deduct whatever you put in there from your income, uh, to get your tax bracket down. But again, that's so personal to every person. A good example that I will give in my personal life is that for the last four years I've been maxing that baby out.

[00:19:38] Okay, well now the bank is like, we don't really wanna give you a mortgage because your income on paper is so low and has been for the past few years. Cause I put about $30,000 in there every year. So this year I'm working with my CPA on a different tax strategy to not put so much money there, not deduct so much, um, so that I can get a mortgage.

[00:20:03] Again, this is like a little silly, right? Like I literally told the banker, this is a, this is a tiny bit silly. Like I feel like.

[00:20:09] Emily Thompson: I could see you looking at a grown ass man and saying just those words with just that face.

[00:20:15] Sarah Becker: It's a little silly and his button down so you can't gimme a mortgage. It's a little silly. Um.

[00:20:23] Emily Thompson: Yep.

[00:20:24] Sarah Becker: But you know, one thing that I work with with clients is figuring out like what is the best mix? And I brought a few examples if you think that would be helpful. Yeah. Okay.

[00:20:32] Emily Thompson: Absolutely.

[00:20:34] Sarah Becker: Again, shout out to these people who are letting me share their numbers. Okay, so my client, Maya, she's an artist in her annual sales, $65,000.

[00:20:42] Okay? So she's like paying her bills, but again, she's not like on a yacht. Alright? She's happy with this amount. This is what. She wants to be doing. Um, and she has a partner who has a corporate job, which I know a lot of creative entrepreneurs also have. So he's been able to max out his 401k. He has a partner match with his firm that is giving him a little more money.

[00:21:02] So what she needs to make, to retire is less than average, so she only invests in her Roth IRA so she maxes it out at $6,000 a year. But she doesn't have plans to open up a 401k cuz she doesn't need it. She started saving at age 30. Okay. At age 60. She'll have almost $700,000 in there just from doing that.

[00:21:22] Okay. Because she started again at 30. A little more like high powered example is my friend Elsie, she makes $150,000 in sales and so she has an I-401k. She cannot do the Roth anymore. You know, the IRS is like not for you. So she annually invests $38,000 in there. Okay? Because she did not start until age 45.

[00:21:46] So she's catching up. So she's like, well, at least, cuz I'm making so much money now, I can put a lot of it away. I can easily live off a hundred grand a year and she'll still have by age 60, even though she's only gonna be doing this for 15 years, she'll have 1.3 million.

[00:22:00] Emily Thompson: Nice.

[00:22:00] Sarah Becker: Again, the magic of compound interest and just to show that like it changes a lot.

[00:22:05] I mean, I have another client who's a photographer, annual sales around 50K, but she started at 22. So because she started maxing at her Roth, $6,000 a year, 22, she won't ever have to open up a 401k and she'll have 1.7 million at age 60.

[00:22:22] Emily Thompson: Oh my. Can I just retire now? , all these things are like, okay, what do I have to do to retire now?

[00:22:29] And I think that's kind of part of it too. You can do some reverse engineering with that as well.

[00:22:33] Sarah Becker: Right? Absolutely. And I think, Emily, you and I have talked about this personally, is that I plan to be, I don't really call it retired, but I plan to be work optional at 45. Yeah, that's when our son is gonna be going to college.

[00:22:44] So that's why I'm putting $30,000 away in retirement, you know?

[00:22:48] Emily Thompson: Yeah.

[00:22:48] Sarah Becker: Like again, when the banker's like, why are you doing this? I'm like, well, cause I don't wanna work till I'm 65. Yeah. So I think that you can absolutely reverse engineer it. And I have seen so many creatives do so well with real estate properties buying investment properties.

[00:23:03] Renting them. Having that cash flow is also huge for your income. And you know, I always say like it's, it's either you cut your expenses, you, you make more money or you do both. And I've really tried to pretty aggressively do both. Over the past 10 years.

[00:23:18] Emily Thompson: Yeah. I also love that example of someone 45 who is showing up to do it in that way too, because I do feel like there's probably a large portion of people, what would you say, like 87, 80 7% who like, you know, is like far enough along I think our, you know, general audience age is between the age of 30 and 50.

[00:23:40] Sarah Becker: Yeah.

[00:23:40] Emily Thompson: Um, who probably hasn't started it yet. And I feel like this is one of those things too, where I feel like it could be easy to be like, well, I haven't done it yet, so I might as well just never.

[00:23:52] Sarah Becker: Yes, I think so.

[00:23:53] Emily Thompson: But no.

[00:23:54] Sarah Becker: I think so, and it's gonna be interesting to see what happens in about 20 years when all those people kind of hit retirement age, because this is really the first generation of creative entrepreneurs we have.

[00:24:04] Emily Thompson: Yeah.

[00:24:04] Sarah Becker: And so it's gonna be interesting to see, and something I would really encourage people if they're listening and they're like, okay, I need to get started, is that, you know, Elsie making 150k and now saving 40k for retirement. She didn't have that extra 40k. She was spending 150k a year. We had to go through and be like, where are we gonna cut, so that in 15 years you can peace out and live in your lake house and your grandkids can come over. Right. And that's a very, and now she's like, I don't even notice that, that I'm not spending that because lifestyle creep is real.

[00:24:35] Emily Thompson: Yeah.

[00:24:36] Sarah Becker: So again, a lot of times we don't need to be spending as much money as we are and we could probably make a little bit more money than we are.

[00:24:43] And just a couple strategic choices in both of those areas can lead to huge savings now, which means even bigger savings down the road.

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[00:26:40] Ooh, I love all of this and I love that this is. It's just one tactic, but it's also the tactic of, I think like this is the standard of what everyone needs to be doing. It is something that you can do on your own with the, like if you're, if you have the skills to download this podcast and listen to it, you have the skills to get yourself a Roth IRA.

[00:27:01] Sarah Becker: You definitely do. And I also have a retirement 101 guide on my website that literally will be like step one, you go to this. Step two, you inter in this number. Okay. Like I am breaking it down. Yeah, and you can find that on Becker talks money.com/resources. It's just the retirement 101 guide. It goes through all of this.

[00:27:21] And again, I really am just trying to break down this weird gatekeeper system we have around retirement. And I will say that I do think part of it is that it does profit companies like Edward Jones or Northwestern Mutual, stuff like that, who are, you know, taking commissions and fees to do this work. Um, I know so many clients that are with companies like that, that are now kind of, you know, moving away from that.

[00:27:46] Um, and something I'll say about that is that 90% of actively managed funds, which is like an Edward Jones fund, they don't beat the market. They're not better than what I'm doing, you know, at my little laptop with my little chai tea. And so I wanna point that out because I really do think that there's a lack of confidence issue, especially with women, that we can't figure this out or we don't know.

[00:28:08] Um, you do know you can, again, if you can open a bank account, you can open up an investment account and save for retirement, and you can do it without fees, but literally it can amass six figures at the end of your lifetime if you go with a company.

[00:28:24] Emily Thompson: Yeah. I will say one of the things David did tell me while I was coming over here was, was just that he said that statistically a managed fund versus an index fund will equate to literally the exact same returns. Yes. And so it really isn't about finding someone who will do it for you. It's about you going in there and doing it yourself and pushing that little invest button when you get done.

[00:28:46] Sarah Becker: Absolutely. Yeah. Just push the button.

[00:28:47] Emily Thompson: Mm-hmm.

[00:28:48] Sarah Becker: Yeah, absolutely. And you know, again, like. I think people are like index fund, like what is that again? It is just a portfolio of stocks and bonds, a combination that are gonna mimic the entire market. So it is so safe. It's tried and true, like Thank you Jack Vogle for creating this for us. Like we bless you. So it's so easy to do. It's almost shocking.

[00:29:09] That people don't do it. I really think it's just like the vibe around it and the verbiage around it that we need to change because the system is there for us to opt into.

[00:29:18] Emily Thompson: Yeah. I also have to say that if any boss listening to this goes when you're done and or just stop right now or wait until us finish saying this and then stop and do this.

[00:29:28] Um, if you go start at Roth, IRA. Tweet me, Instagram me, get in the Being Boss community and let me know. Like

[00:29:35] Sarah Becker: Tell us Yes. We wanna celebrate with you.

[00:29:38] Emily Thompson: Indeed. It is such a simple thing to do. It is something that, you know, it's funny you're saying all this too. Like I let David do it for us. Cause I don't even know.

[00:29:45] Sarah Becker: Yeah. That's fine.

[00:29:45] Emily Thompson: If I knew it as easy, I would've done it myself.

[00:29:47] Sarah Becker: David get outta the way.

[00:29:49] I can do it now.

[00:29:50] I wanna press the invest button. Yeah, no, totally, totally. And you know, I also think that like, just unfortunately, a lot of these sites are clunky, right? They're not free to look at. Are you gonna get any serotonin or dopamine hits from like pressing the button?

[00:30:04] No, because it's like, it's your, your, it's your parents' button, it's your grandparents' button, you know, . Um, it really works. It really works. And you know, when people ask me about something that's flashier or more fun, like NFTs, crypto. Yeah. All that stuff. There is nothing inherently wrong with that, but it is not a tried and true vetted.

[00:30:25] You cannot bank on that working. And so I always say if you're maxing out your retirement account and you still have some money left over, buy an NFT with that, buy some crypto with that, have some fun with that. Um, and that's totally fine, but it is not a retirement strategy.

[00:30:40] Emily Thompson: Indeed. Okay, let's talk about those extra things, but also legit.

[00:30:44] If anyone goes and opens one, opens one. Right now, I will like give you a virtual slash remote high five. That hits so hard, it stings, and it might give you a bit of dopamine.

[00:30:56] Yeah, that's true.

[00:30:58] We'll do it's, we'll give you the do . Yeah, yeah. The button won't, but we will.

[00:31:02] Sarah Becker: Yes, we will do it. Yes we will. And we'll be so proud.

[00:31:04] Emily Thompson: Indeed. Um, okay. I love that you just made that like basic step that everyone needs to be taking. Super simple, super digestible, but I do wanna talk about the other things too, because I think, you know, it's easy to get bitten by an investment bug every time I've ever like gone in and played with things.

[00:31:23] You know, I don't do crocs. I don't do crocs, but like, it is, it's a fun thing to start making your money work for you. I mean, that's literally what we're talking about, right? And once you start seeing that it's gonna be a thing and you can, you know, save some money and invest it in something, you start thinking about other options.

[00:31:41] So I'd love to talk maybe. This is like a two sided conversation. One side of it is just like investing for fun, and the other part is really hitting it with that, but we're talking about retirement.

[00:31:54] Sarah Becker: Yeah.

[00:31:54] Emily Thompson: Right. Cause I think we have to pair those two things together cuz it can be easy to think about fun.

[00:31:59] Sarah Becker: Yeah.

[00:31:59] Emily Thompson: But like we're talking about this in the context of retirement, so let's not forget about that. Right. What are the other things that you are doing, um, and what are you recommending that people do in addition to Roth IRAs if they are feeling froggy?

[00:32:14] Sarah Becker: I love it. Okay, so something I preach so much is diversification.

[00:32:19] Emily Thompson: Yeah.

[00:32:19] Sarah Becker: Which is why I love an index fund cuz it does it for you. But even beyond the stock market, I own real estate. That's something I got into, you know, as soon as I could afford to do it. Um, and then I've also taken some kind of quirky steps as far as how to save money to buy more real estate. So, for instance, my partner Barry and I, we practice house hacking, which is a fundamental term in the financial community that basically means.

[00:32:43] We live in a duplex. So we have chosen to live in New Orleans. We call them double shotguns, which Emily knows.

[00:32:48] Emily Thompson: Mm-hmm.

[00:32:49] Sarah Becker: Um, so we have chosen, you know, for our family to live in quite a small space, 700 square feet. But we do this because the other side, our amazing tenants, they pay us rent and that nearly covers the mortgage.

[00:33:01] So, you know, when we're talking about, well, how did you save money to buy this extra house? Or, you know, whatever it's like well because we're doing this because our, I have one door and it goes to the bathroom. Um, that's why. And so that has been. And it's funny cuz you know, now our son is almost six and it's like, okay, like it's time.

[00:33:19] We're truly starting to outgrow it.

[00:33:20] Emily Thompson: You need more doors.

[00:33:22] Sarah Becker: We need more doors. Yeah. Yes. And that's totally okay because another great thing about this is that nothing is permanent. Everything's an experiment. And this worked so well for us for five years. It allowed us to buy a house, a little cabin home, two hours away from New Orleans.

[00:33:37] It allowed us to buy this house in Vermont. And there are just amazing things we were able to do when you're able to sock away what most people would spend a mortgage every month, like think about what you do with that money. So that's a little untraditional and I'm very aware of lifestyle creep, like something that I really recommend.

[00:33:54] You know, every few years this study will come out and say, you know, if you make $75,000 a year, anything above that, it's lagniappe, right? Like your happiness is actually not going to change. Again, if you were listening in New York City, please replace $75,000 with however much you actually

[00:34:10] Emily Thompson: With $175,000.

[00:34:13] Sarah Becker: Please. And it's so dependent on cost of living, right? Yeah. But once you hit that like, okay, like my, I don't have to worry about money, anything above that. Put it in investments and, you know, I, that doesn't mean that you can't do fun things, doesn't mean you can't have experiences. I value experiences so, so, so, so much.

[00:34:32] I also drive a 12 year old Honda CR-V that has never had a note on it. Right. So a lot of it is picking and choosing what your values are. Um, and you know, something we've, I think we talked about in the last podcast is if you don't get clear on your own financial goals, we're just gonna pray to everyone else's.

[00:34:48] Yeah. Because. Instagram and Facebook. I mean, everything is just like a highlight reel, and it's really hard to not get distracted by shiny objects, which is another great reason to start your retirement account as soon as you start your business, because if you're not giving your money a job, it's just gonna fall out of your wallet, as my grandpa used to say, you know, like, you gotta tell it where to go, or it's just gonna fly away.

[00:35:10] So that's huge. Um, and then, you know, both my, my partner retired early. He quit his corporate job. When he was 32, 33 ish. Um, he was actually laid off, but it was like perfect timing. So he was laid off at that time, and now he has, has had untraditional work since then. So that was another example of him really putting his head down for, you know, eight years, working a corporate job and saving really aggressively.

[00:35:34] And now I'm kind of in a similar situation where fortunately I love my work a lot more than he did. Um, so I'm happier and I'm grateful for that. But thinking about, okay, what, where do we wanna be at 45? Well, probably. Still living in two places, but maybe ones not in the United States. Like maybe we can move to Europe, maybe we can do this.

[00:35:51] Okay, well what's it gonna take to get there? Having a huge, scary, audacious goal like that keeps me from buying a Tesla. Do you know what I mean? Like, I don't need the Tesla cause I'm gonna have Portugal in 15 years, you know? So, and everyone's gonna be like, how'd you do it? And I'm be like, it's my 22 year old Honda CR-V.

[00:36:08] Emily Thompson: Yeah.

[00:36:08] Sarah Becker: At that point I just... so I think that really making a plan. It's so important. And again, once you know how much money you need to be saving to hit that, then you can play with the other money. A thing about crypto and NFTs too is that you can win big and oh my God, it feels so good, but you can lose big.

[00:36:26] The thing about an index fund is that it's boring. And I know not, probably no one listening to this podcast wants to be boring or have a boring life, but it's okay if your retirement investment strategy is boring.

[00:36:38] Emily Thompson: Yeah.

[00:36:38] Sarah Becker: Because that's what we want. We wanna be able to. The most freedom, the most choices down the line.

[00:36:45] Emily Thompson: Yeah, my life is exciting in so many ways that I'm okay with something being boring personally.

[00:36:52] Oh, finally, wonderfully.

[00:36:53] Sarah Becker: Like, can I just count on something?

[00:36:56] Yes, absolutely. Absolutely. And you know, another big thing about, you know, talking about counting on the market, you know, this year we're seeing the market take a downturn and people are scared.

[00:37:07] And it's something I wanna remind people is again, with the diversification aspect. For instance, last year I bought two houses. It was a great time to buy houses and it was a horrible time to put money in the market because the market was so dang high this year. It's swapped. I'm not gonna buy a house this year.

[00:37:22] Like it is a terrible time to buy a home unless you really need one. And it is an amazing time to put money in the stock market because as I say, it's all on sale. It's 20% off, you know, get you some, um, limited time only.

[00:37:34] Emily Thompson: Yeah.

[00:37:35] Sarah Becker: And I always tell people too, that in past downturns that we've seen in the stock market, and there have been, you know, like 30 big downturns over the past hundred years or so, you will always still come out on top.

[00:37:47] If you invested before that, then if you waited again because of compound interest. So if you just let your money sit in there, let it ride the next wave, you will be fine.

[00:37:58] Yeah.

[00:37:58] Emily Thompson: Okay. Question about this, like visualizing retirement, if we can go back into that. Because, because that is really important, but I feel like, I mean, most creatives struggle with like a three year vision of their life.

[00:38:12] Sarah Becker: Yes. Yeah.

[00:38:13] Emily Thompson: You know, like how are we supposed to be expecting these folks, these creative, live in the moment, go with the flow folks. Planning what they want their life to look like 25 years from now.

[00:38:29] Sarah Becker: Okay. I love this question so much because literally my strategy. Plan to have enough money that you don't have to know what you wanna do in 25 years, right?

[00:38:39] Emily Thompson: Mm. Yeah.

[00:38:39] Sarah Becker: Like plan to have the money so that in 25 years you can be like, what do I want to move to Portugal with Sarah? Hello? Um, you know, do I want a lake home? Do I want to live in the city? Do I, you know, what do I wanna do? My goal is that you have the freedom to do that. I mean, you have been alongside me my whole career pretty much, and you see me take all these pivots.

[00:38:59] Emily Thompson: Yeah.

[00:38:59] Sarah Becker: I basically had three. Careers already In 10 years, I'm gonna have a few more. Who knows what I'm gonna wanna do at 45. Again, I'm just planning so that I have the option and so that I'm not like I still have to work, but now like I'm not passionate about it or I still have to work, but the market has changed.

[00:39:17] I feel like the pandemic taught us that we never know what's coming and the last thing I would want is to be like, I have to do something I don't wanna do to pay my bills. I don't want that for anyone listening.

[00:39:30] Emily Thompson: Yeah.

[00:39:30] Sarah Becker: I want that freedom for you that you have now to continue, and that's why this is so important.

[00:39:36] Emily Thompson: I also love that this is illustrated in this fact that you shared that literally the thing that you're doing in January is maxing out your IRA first.

[00:39:45] Sarah Becker: Yeah.

[00:39:45] Emily Thompson: Nerd.

[00:39:46] Sarah Becker: Nerd alert. I mean, I have, these glasses are real. Okay. These are not fake, I literally need them It's all the eye strain with my calculator. Yeah. And I mean, honestly, like we talk a lot about Profit First.

[00:39:59] I know you've talked about, you know, that system, which is so great and it's literally when I do it, I'm like, I am paying future Sarah. Like in 20 years she's gonna be. Thank you. You know?

[00:40:12] Yeah.

[00:40:13] So for me, you know, obviously like an investment in your future self is always a good investment. Like yeah, you are literally paying toward the future. And again, I'm so nerdy, I'm like, well, if I do it January 3rd, I'll done with 0.0485 more percent more dollars. You know?

[00:40:29] Emily Thompson: Oh my God.

[00:40:30] Sarah Becker: That's why I do the beginning of the year.

[00:40:32] Emily Thompson: I love that. You're really hacking it for yourself, aren't you?

[00:40:37] Sarah Becker: I mean, again, it's. So fun at parties inviting to your next party.

[00:40:42] I'll bring my calculator.

[00:40:45] Emily Thompson: Right? Oh, but no, this is really good. I feel like this really paints, um, or I, I hope this is offering a mindset shift to anyone who has been putting it off of one. It can be super easy.

[00:41:01] Yeah.

[00:41:01] Two, it doesn't need to be intimidating or like too big to handle. And three, it should be priority number one.

[00:41:12] Sarah Becker: Right? Cause you're literally paying future you. And I think that no one listening wants to feel stuck ever. That's why we're entrepreneurs, right? Yeah. We want the freedom and that's why it's so important.

[00:41:25] Emily Thompson: Um, so I wanna go to matching Roth IRAs as your business matching your contributions.

[00:41:35] Sarah Becker: Okay, so I think you were talking about a 401k.

[00:41:38] Emily Thompson: Okay. Is that the thing?

[00:41:39] Sarah Becker: Yes. Yeah, I don't think I know Emily.

[00:41:42] Emily Thompson: Okay. Okay. So, oh no, you're right, you're right. Yes, that one.

[00:41:44] Sarah Becker: And I, I would love to talk about that. Okay. So yes, so a Roth ira, again, it stands for Independent Retire. So it is, you are on your own. Um, can you write the check from your business account?

[00:41:56] Totally. You know, and it can be like in your business, but it's again, not tax deductible.

[00:42:00] Emily Thompson: Mm-hmm.

[00:42:01] Sarah Becker: No Roth is, that's part of the beauty of it. Um, because since it's not tax deductible, you've already paid the taxes on that 6k, all the growth. You don't have to pay taxes on. So that's why it's appealing. And again, I love a diversification.

[00:42:15] So if you have a traditional ira, don't freak out. That's still great. Having either is amazing, but the magic of an individual 401K or solo 401k, they're the same thing, but they're got a couple different names. Is that, yes, you can contribute two ways as your employer and as you the employee. So me, Sarah Becker, even though I am only one person, in the eyes of the law.

[00:42:38] I have my business and I have myself. So every year as an employee, and the max changes a little bit every couple years, right? But as of this recording, the max is $20,500 as me as a person. So I can put that much money in every year, no matter how much money I'm making. Okay? And that is a huge amount of money.

[00:42:59] So, And you don't need to do, if you're doing that, you were like top 0.001%. So again, I don't wanna throw these numbers around. This is just what the government says you can do. But then no matter how much money you've put in as a person, so let's say that you've started individual 401k, but your max is like five grand a year.

[00:43:16] Okay, that's totally fine. Do that. But then as your employer, your business at the end of the year can put up to 25% of your profit into that account for you. So that's amazing because that is, I mean, I've never seen a more legitimate write off, okay, now the government does say, Hey, $61,000 total each year.

[00:43:37] We're not gonna let you put any more than that. Again, if you're making that much money, call me cuz we need to have a more, a more robust retirement plan. But that is an incredible way to do it both, have it both ways.

[00:43:52] Emily Thompson: I do know that one thing with doing 401ks, and feel free to correct me if I'm wrong and that I know something that is not true.

[00:43:59] Sarah Becker: Mm-hmm.

[00:43:59] Emily Thompson: Um, is that if you are doing this for yourself, you have to do this for all of your employees.

[00:44:03] Sarah Becker: That is correct, yes.

[00:44:05] Emily Thompson: Okay. Look, I know something.

[00:44:06] Sarah Becker: Yes, that is correct. And look, that kind of depends. A that depends on so many different factors. It even depends on what state you live in. It's mostly correct.

[00:44:13] It depends on if your employees are part-time or full-time. It depends on, um, what tax bracket you're in or the percentage. And it all tweaks a little bit, but. So you're gonna wanna think about, you know, when you start a 401k, if you were contributing as your business or even like a SEP IRA and you were planning on having full-time employees, there are implications of that.

[00:44:32] And that's when it's a really good time to sit down with your CPA and be like, okay, where is this business exactly in the eyes of the law. What can I do? What makes the most sense for me as a person?

[00:44:41] Emily Thompson: Yep. Which is why doing your own personal Roth IRA is just another reason why it's the best.

[00:44:48] Sarah Becker: It's another reason why it's the best step. It's the easiest. And again, I love that you're paying, even though it's non deductible now, you don't have to pay taxes on that money later. And again, I just think that growth, it's just, it's just. I wish you could see me. I'm just,

[00:45:02] Emily Thompson: Her arms are just flailing.

[00:45:04] Sarah Becker: Oh, you so much money. I'm just envisioning piles and piles of money for future you.

[00:45:10] Emily Thompson: Indeed, indeed. That is the goal. All right, boss, because you're here, I know you want to be a better creative business owner, which means I've got something for you. Each week, the team at Being Boss is scouring the news, the best entrepreneurial publications and updates and releases of the apps and tools that run our businesses, and is curating it all into a weekly email that delivers the must know tips and tactics in the realms of mindset, money, and productivity.

[00:45:37] This email is called Brewed. We brew it up for you each week to give you the insight you need to make decisions and move forward in your creative. Check it out now and sign up for yourself at beingboss.club/brewed. That's beingboss.club/brewed. Now, until next time, do the work. Be boss.