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Retirement Planning in the Hot Tub | Fidelity

Watch Annie and Colin discuss why she should start saving for retirement as soon as possible while enjoying a slightly-awkward hot tub.

Find more articles about managing your money at https://mymoney.fidelity.com/content/topic/all.

To listen to more financial chitchat by Annie and Colin, check out these videos:

401(k)s: https://www.youtube.com/watch?v=BPYj5Tk5yBc
ETFs: https://www.youtube.com/watch?v=IbgSBWCzh8o
Mutual Funds: https://www.youtube.com/watch?v=kewrnjj5o6Y
Budgeting: https://www.youtube.com/watch?v=OgUcMb_VXqs

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Annie: Hey! I’m Annie, and this is my first time learning about retirement while in a hot tub. I’ve got my friend, Colin, here from Fidelity Investments, and he’s going to answer a few questions for me.

I’ve been hearing a lot about retirement from all my friends, but in my mind I am way too young to be thinking that far into the future.

Colin: Well, I don’t think that you can ever be too young to really start thinking about that. So, I mean, obviously, people start at different times, but the worst thing you can do is not think about it at all. I mean, ending up in retirement with no savings could lead to some pretty drastic outcomes. Imagine what that looks like.

Annie: Well, I guess… I mean…you could continue working forever, which wouldn’t exactly be bad, like, if you worked as an ice cream taster?

Colin: Maybe if you were a professional ice cream taster you wouldn’t mind working to your dying days, but there’s a lot of people out there that don’t want to continue to work into retirement. There’s also the option to start saving and start saving later, but the later you start saving the more you’re going to have to compress into a shorter period of saving, and it’s going to be that much more difficult than getting started early.

Annie: What would you spend your retirement on?

Colin: I think I would spend it on travel, actually.

Annie: I’m going to give mine to a library. And then keep working. That’s what I’ll do with my retirement.

Colin: Nice.

Annie: But I’m still confused about “how.” I mean, what’s the difference between retirement and just regular old savings?

Colin: Generally the main difference would be the type of accounts that you have at your disposal. So, there are two primary accounts for retirement: an IRA or a 401(k).

Annie: What do those specific ones mean?

Colin: A 401(k) is generally something that would be set up through your company. And they might take money out of your paycheck – or money is taken out of your paycheck – and put into a….

Annie: Whoa!

Colin: Well, it’s your money. It’s not like they are taking it for themselves. It’s still yours, it’s just earmarked for retirement. The other great thing about it is they might match the amount of money that you choose to have taken out, and that’s kind of like free money.

Annie: So anything I put into my 401(k) now, they would also just put that same amount into my 401(k)?

Colin: Some may, some may not, and some might do it only up to a certain amount. But if you have that at your disposal, it’s a good idea to take advantage of.

Annie: So then the IRA is…

Colin: An IRA is kind of similar. You’re making the choice of when that goes in. It could be one lump sum, it could be bit by bit, and that also has some tax advantages to it as well.

Annie: How do you have money for savings and retirement and still have money left over to spend on your daily budgeting?

Colin: So this is a tough thing to answer, and again comes down to sort of personal determination, but, if you can prioritize what you’re spending money on, you might be able to take a little bit and shave it off for savings and retirement. And we all want to buy things now, of course, but there’s certainly some wisdom in earmarking some of this for later.

Annie: I’m starting to understand why all of my friends are getting into this now. It’s way more time-sensitive than I was thinking it could be. Thank you so much, Colin!

Colin: My pleasure.

Annie: That is one more think that I can cross of my bucket list: learning about retirement in a hot tub. Done!

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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