What about Social Security?
Paula’s view on Social Security comes from a piece of advice her grandfather gave her years ago.
“My grandfather told me years ago not to bank on Social Security. So, for my personal plan, that’s not even considered in my finances.”
It’s a strong position, and she’s clear that it reflects her personal approach. She also acknowledges that for many people, especially in rural communities, Social Security is the primary or only source of retirement income, and they must plan around that reality.
Her broader advice for anyone still in their working years is the same, regardless of what they expect Social Security to look like in 30 years: “While you are young and able, try to put back that 5% of your income into another avenue. Even 2% of your annual income would be better than nothing. You may not want to necessarily rely on those Social Security funds to be there in the future.”
Rates, inflation, and why you should pay attention
The current environment, with elevated interest rates and ongoing inflation, has changed how Paula talks to customers about where to put their savings. It’s also part of a broader transformation in banking and finance that’s reshaping the products and tools available to everyday savers, including AI’s growing role in lending and finance.
“Don’t leave all your eggs in one basket because a little paperwork is involved. If you can move your IRA or 401 (k) into a better plan that pays a higher interest rate, move it with the guidance of your financial advisor. Rates are NEVER a constant, and while they are good, you have to capitalize on them and make money because there will be years that you’re not going to make much at all.”
Rates aren’t constant. When they’re favorable, capitalize on them. The customers who treat their retirement accounts as set-and-forget for 30 years can leave a meaningful amount of money on the table.
For customers asking what tools she leans on most, Paula’s recommendation is clear: “While rates are higher, I always recommend IRAs. Whether that be traditional or Roth, start somewhere. Those rates may change, but those funds are not at risk of being lost.”
Unlike investments tied to equity markets, the IRAs offered through a bank are not subject to market loss. The rates fluctuate, but the principal is protected. Paula also recommends two professionals worth talking to: 1) a financial advisor before making any major changes to how your retirement savings are structured, and 2) a CPA before making decisions with significant tax implications.
Paying down debt vs. saving for retirement
This is where a lot of people get stuck. Should you focus on paying off debt first, or save for retirement at the same time? Paula’s answer reflects what she’s doing in her own life right now.
“For me, I’m at that point where I’m starting to really focus on paying down debt. At the same time, I set myself a monthly goal and try to save that amount. Some months aren’t as easy as others, but progress is being made.”
Two things at once, with a monthly goal, and an acceptance that some months will be better than others.
“I feel the first step is to set yourself a goal, then figure out a plan to reach that goal and do it in a way that makes sense for you financially.”
Starting at 30 vs. starting at 50
In your 30s, you’re often in the “get the children through school” phase. Retirement feels far away, and the realistic move is to be somewhat conservative on retirement contributions while working toward other goals: paying down debt, building emergency savings, putting kids through school. The advantage is time. Even modest contributions compound meaningfully over 30+ years.
By 50, the picture often changes. Kids may be out of college. The mortgage may be paid down or paid off, which can free up budget room and, for some homeowners, open up options like a home equity line of credit for other goals. There’s more room in the budget overall. Paula’s view is that this is when you can afford to be more aggressive.
“This would be a time to be a little riskier and throw as much as you can into a retirement plan of some sort.”
Different decade, same underlying message: save what you can, when you can, and adjust as life allows.
The one piece of advice she gives repeatedly
If Paula could put one message in front of every customer who walks into the lobby, this is it:
“It’s never too early to start saving and thinking about retirement.”
Worth repeating to your kids, your nieces and nephews, your younger coworkers, and anyone else who tells you they’ll get to it later. The customers Paula sees who handle retirement best aren’t the ones with the most income. They’re the ones who started early, kept going through the hard stretches, and didn’t let the perfect number stop them from saving anything at all.
Thinking about your retirement savings?
Whether you’re opening your first IRA, weighing how to balance debt and savings, or want to talk through what your options look like, our team at First Financial Bank is here to help. We’d love to chat.
