As people finish college and wade through student loan debt, financial advisers caution them about waiting too late to save for the future

Gay&Poor

Austin Green

ANNA WAUGH  |  News Editor

ADDISON — Joanna Bernal has often thought about putting money aside for her golden years, but the money for retirement hasn’t always been available.

Bernal, 27, currently attends an MBA program at Texas Women’s University and works as a pharmaceutical contract analyst. Her undergrad student loan debt is $80,000 from her time at Texas Christian University.

While her education at TCU was paid through financial aid and student loans, she said the price for TWU isn’t nearly as bad with mostly grant money funding her MBA.

As for retirement, Bernal has some money in a 401K from a previous job she plans to eventually move into an IRA.

“That’s my starter point,” she said. “And trying to add to it as much as possible.”

She said she’ll likely add to the fund once a year. She also has a regular savings account, but like many young people, she uses it for emergencies instead of for future planning.

“I’m always having to pull out for emergencies, so it’s more of an emergency savings than a retirement savings,” Bernal said.

Another cost-effective measure Bernal plans on doing is consolidating her student loans for a lower interest rate.

But for many people her age, she plans on working for several more decades, so it’s hard to think about retirement.

“I plan on working for a really long time,” she said. “It’d be nice to have some sort of savings or nest egg. Right now I’m really trying to focus on building equity.”

Part of building that equity is owning something, which Bernal hopes to do sometime this year by purchasing a condo.

Dallas-based financial adviser Carol Meyer with Merrill Lynch Global Wealth Management said people should start planning for retirement once they’re done with college. While some graduates are bogged down with student loans, Meyer said people should pay themselves first by paying bills and investing in themselves, either with an IRA or utilizing a 401K at work with a company match.

“That’s free money,” she said about a 401K match.

For people without a 401K option, Meyer suggests they open a Roth IRA, like Bernal plans on doing, in which people under 50 can put up to $5,000 a year into it without the funds being taxed.

As for being young, in debt or not making enough to invest in retirement, Meyer said she doesn’t let people get by with those excuses. She said people need to take the $5 they spend weekly on something they want, like Starbucks, and put that $20 a month into a retirement account. Basically, it comes down to identifying and planning for needs and wants.

“The discipline of investing on a regular basis no matter what amount is where they need to begin,” Meyer said. “People will spend money on things they possibly don’t need.”

After an IRA and 401K, Meyer said an ETF, or exchange trade fund, is a good option for younger people because it allows them to invest small amounts of money.

Meyer works primarily with financial planning for the LGBT community. And while the planning strategies for LGBT people are different with costs associated with family planning to legal protections, she said the most important thing for everyone is to start putting money away.

“The planning needs are certainly a little bit different, but whether you’re a heterosexual or a gay person, you should begin saving as much as you can,” she said.
TCU student Austin Green knows all about saving for retirement.

Green, 19, is a biochemistry major whose grandparents are funding his undergrad education. His parents, who both retired young, plan to pay for him to attend pharmacy school after TCU.

Without any student loans, Green said he’s often thought about his future because his mother retired in her 40s and his father later followed in his 50s.

“So my dad gave me the 401K 101 class,” Green jokes. “He’s making sure [financial planning is] intentional with me to make sure I can retire early if I want to.”

Right now, Green envisions himself working until he’s 60. He’s maintaining a savings account and plans to open a brokerage account soon.

Green is the only one of his friends who has thought about financial planning, and he attributes that to his parents’ example, something he’s grateful for.

“I feel like it’s not really in our scope of thought right now,” he said about college-aged people and retirement. “We’re thinking about the immediate future and a step or two after that, but a step or two after that is just our early career. The only reason I’ve thought about it because my parents were retiring in my high school years.”

This article appeared in the Dallas Voice print edition February 21, 2014.