The Retirement Game: Breaking Down Barriers for Our Future

Kids playing gameAmanda and I made the salary pact. After several vague conversations that implied our situations may be similar, we decided tiptoeing around the compensation taboo was not helping either of us.

So we promised to have these conversations, together, in an honest and open environment. To talk numbers, to ask questions, to figure out what we didn’t know and how to fix it. 

We married tough conversations and fun in the comfort of Amanda’s home. This alleviated the discomfort of sharing private information in a public place. We discussed salaries and benefits, but we quickly found our roadblock: Retirement. 

Neither of us had any idea about the big “R.” How much to save? What are the options? We were clueless. So I did my homework. I found many retirement calculators and resources online, including this retirement quiz, but I wanted to know more. I realized that I could contact a financial rep who manages my retirement accounts, but I felt intimidated by my lack of knowledge.

So I met with Jared Rendell from Thrivent, to hash out my big questions. As it turns out, the reason why many young professionals are confused about retirement is because there aren’t clear answers. There isn’t a magical number to save. The average percentage of money set aside for retirement is anywhere from 0-25%. Not very helpful, right?

The problem with finding an average is that these numbers are all determined by personal values. Some may focus more on short-term savings, while others are really focused on the long-term.

However, that 0% statistic raises a HUGE red flag. In a recent study, 30% of Americans said they plan to work until they are 80, because they do not have adequate retirement savings.

Still not alarmed? Imagine playing “Duck, Duck, Gray Duck” with your colleagues. Which one will be running laps until he/she is breathless, and which ones can stop, take a break, and join the fun?

Get Your Ducks in a Row: Covering the Basics

When it comes to retirement, there are two account pools that the federal government acknowledges in tax codes: a work-related account and/or an independent account. You can have both types of accounts (and it is recommended to have both at some point), but there are different rules that apply to each.


A work-related account is directly tied to your employer, such as a 401K or 403b. Many of these accounts offer options for both the employer and the employee to contribute, but the account stays connected to that employer, even after you leave (more on that later). An Individual Retirement Account (IRA) is not tied to any employer, and you are the only person who can contribute to it. The chart below helps define and clarify the differences in your options.

As I mentioned before, you can have both a work-related account and an IRA. If your employer offers a matching contribution through a work account, it is in your best interest to participate. If you don’t have a work-related account, then you can set up an IRA through a number of financial institutions. These contributions can also be deducted from your paycheck, just like a work-related account. However, if you change jobs, this account stays the same.

Lifecycle of a Duckling

As we mature and gain experience, it is very common to change jobs. If you have a work-related account, that money remains yours, but it is attached to that employer. Your next opportunity or employer may offer another retirement account, but you cannot connect two work-related accounts. So what to do? You have these three options:

Work-Related Accounts:

  • Leave it there. While this money is technically still yours, you can no longer contribute to it. The money will continue to grow over time. Once you reach retirement age, you can withdraw the money without any penalties.
  • Cash it. If you cash out a retirement account before the age of 59½, there are some VERY steep penalties. There will be a fee charged for cashing out early, in addition to this money being taxed as income (because work-related accounts are pre-tax contributions). But it can be done, and this may be a viable option, depending on your circumstance.
  • Roll it over. You can roll over any work-related account into an IRA without penalty. The government sees this as still saving for retirement. If you already have an IRA, you can roll a work account into that one. If you don’t have an IRA, you can set one up and roll the money over. No worries – the financial institution you choose will do the maintenance and transfer for you. Once your money is in an IRA account, you can contribute to the fund again.

IRA Accounts:

When you change jobs, the only maintenance you need to worry about is setting up your contributions, possibly through paycheck deductions. One thing to consider: if this new employment means an increased income, increasing your IRA contribution is also on the table.


Remember that game of gray duck? To avoid running umpteen laps, here are a few guidelines to help you get started:

  • Determine your values. Ideally you should set aside 20% of your earnings into different savings accounts. One option for dividing this up may be the following: 10% into a long-term savings for emergencies, education or travel; 5% into a CD for future investments; and 5% into a retirement fund. Of course, how you save is your choice. Your accounts and allocations will depend on what you value, but the key is to start now.
  • Match? If you have a work-related retirement account, ask your benefits manager if your company offers a match. If they do, try your best to max out that match. That match is free money for your future. At the very least, invest in yourself as much as your employer invests in you.
  • Get smart. Remember when I said I felt intimidated to talk to an account rep? The best way you can reduce fear is to educate yourself. I was worried my financial rep would use language over my head or talk down to me, due to my lack of knowledge. The best way to feel confident and empowered is to learn the language. You can also attend a financial workshop or talk to someone you trust (a referral from a friend or family member, the benefits administrator at your work, a trusted banker, etc.). 

The important thing to remember is that you do not have to do this alone. Make a salary pact like I did. Talk to your peers or someone you trust. Educate yourself, and plan for when your nest is empty. 

What are your retirement strategies?

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