Many young people enter the nonprofit sector with a strong sense of idealism and the desire to make positive social impact. We also have hopes and dreams outside the office, many of which require money. At times, these parts of us can feel at odds. In YNPN Boston’s 2015 Young Nonprofit Professionals survey, participants reported that the number one reason why they’d leave the nonprofit sector was—no surprise here—low salary and lack of benefits.
We recently kicked off the first event in our Let’s Talk Finances professional development series to explore how we can have successful nonprofit careers and a secure financial future. Boston Security Analysts Society (BSAS) members Firoza Panthaki and Daniel O’Neill led us through an expert presentation on all of our pressing questions about retirement planning. Here’s part one of two of our summary on their advice, with the disclaimer that we are not financial professionals and are not offering endorsement or other opinions on this advice. Look out for part two, which will be published next week.
Determine how much money you’ll need
The average lifespan in 2014 was 76.4 for American men and 81.2 for women, so if we’re retiring by age 65, we’ll have to cover about 10-15 years of expenses. Understandably, a common fear among retirees is outliving their retirement savings. To some, that’s even scarier than death itself!
How will you know what’s enough? BSAS recommends checking out AARP’s retirement calculator to give you a sense of what you’ll need. As you’re planning, remember that social security may not be there for us as it was for previous generations. If you have dreams of retiring early, start saving early!
Start saving now!
Many retirement accounts have compound interest—meaning you’ll earn interest not only on your contributions, but also on the interest you accrue from those contributions. The earlier you start saving, the more time you’ll have for those savings to grow. You won’t have the same effect trying to “catch up” later in life.
Image from BSAS presentation
Matching Contributions
Check out your employer’s retirement plan and see if they offer matching contributions. In a matching contribution, an employer contributes a matching amount–based on your contribution–to your retirement plan. For example, if your employer matches 50 cents for every dollar you contribute, and you contribute $100 annually, your employer would contribute an additional $50. This is FREE MONEY! Usually employers will match contributions up to a certain percentage of your annual salary. Aim to contribute the maximum amount they are willing to match. Don’t leave any free money on the table!
Dealing with Debt
Young people often face a big obstacle for getting an early start on retirement savings: debt. BSAS recommended looking into Sallie Mae to consolidate student loans and get a lower interest rate. If the interest on your debt is greater than the interest you are earning on your retirement contributions, start with the debt first.
Dive in
Part two of our favorite tips from Let’s Talk Finances: Retirement Planning 101 will be published next week. In the meantime, why not dive in and work on these first few tips? Let us know how it goes!
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Jackie Lewis is an Events and Programming Ambassador with YNPN Boston. She works in nonprofit development and communications in Boston and worked previously in Kigali, Rwanda.