I’m 18 and Saving for Retirement

Hi! My name is Marie, and I just turned 18 last month which means I can open up a retirement account! Yay! First, I’ll share what my whole philosophy around money is, and second, what I intend to do with my money. 

First, Marie’s Philosophy on money:

Money doesn’t make you happy, but it facilitates happiness. For example, having $100,000 isn’t going to make me happy, but being able to go on hikes and spend time outside will. But to spend time outside I need to be able to pay for gas, hiking boots, outdoor wear, and a phone/GPS so I know where I’m going. That’s how money can facilitate happiness. 

I also aim to be financially independent. My goal is to be financially independent by the time I am fifty. What that means is that by the time I am fifty, I will have enough money saved up that I could quit my job and retire comfortably. Now, I’m not saying that I will retire when I’m fifty, I just want to be able to. 

When it comes to retirement, it’s best to start saving early such that compound interest is on your side. I intend to open up a Roth IRA (Individual Retirement Account) which means that I pay taxes on my money before I deposit it into my account and my money grows and can be taken out tax free when I’m 59.5 and older. I can also withdraw money from my IRA for the purchase of my first home. So for the next 4 years in which I am in college, I plan to save mostly in my IRA where my money can grow in the stock market. I am planning to use Vanguard for my Roth IRA. I plan to use an index fund with a higher risk profile which means a great opportunity for reward. My investment portfolio will become more conservative as I get closer to retirement age. 

Here’s my plan:

I currently have $4,000 saved up. 2,000 will go into retirement savings. 1,000 into a 1 year CD, and the last 1,000 will go into a savings account. In the summer during high school, I have a job where I’m paid Massachusetts minimum wage, $12. I don’t work during the school year. In college, I plan to get a job

The Real Reason Why I’m Saving so Aggressively 

I’m really afraid that I’ll be stuck “living for the weekend” in my future adult job. I don’t want that for myself. So, I’ve decided to save aggressively for 20 or so years so that I have the option to retire and live my best life. If I’m living my best life working a job, then I’ll continue doing that. But the overall goal is to not be beholden to a salary. I want to be able to quit if that job is making me miserable. That’s the real reason I’m saving so aggressively. 

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