As the global pandemic continues to heap financial concerns upon millions of Americans, including mass unemployment and fears over an economic recovery, retirement may not be your biggest concern right now. But the stock market, which holds most of our retirement hopes in its mind-boggling numbers and graphs, continues to bound along as if we’re not currently going through a crippling recession.

And while the country has seen pandemics and economic downturns in the past, one generation of Americans has experienced more than a few bumps on the road to economic security and comfortable retirement.

The Great Virus Crisis or Pancession, as some have called it, is the second economic collapse millennials have endured in less than 15 years, disrupting opportunities to increase salaries, build wealth and, ultimately, slowing down the growth of their retirement accounts.

But the dream of retiring early is still a possibility for millennials, but it all depends on the spending and saving you do now and how you expect to live in retirement, according to Calley and Bruce Coldsmith, a father and daughter financial planning team who work for Coldsmith, Ryder and Associates, a Mobile, Ala.,-based private wealth advisory practice of Ameriprise Financial Services, Inc. Jennifer Ryder is also a financial planner at the firm. 

The good news is, no matter how old you are, it’s not too late to get started.  

Reckon talked to the Coldsmiths about what to consider when saving, investing and preparing for retirement during an economic downturn. 

RECKON: Some millennials have a dream of retiring by 40, but as we’ve all seen, economic downturns over the last 15 years have probably made that more difficult. What does someone need to do to achieve that early retirement goal?

BRUCE: I’ll say it can be done. But it really requires a lot of financial planning and maybe the most important part is implementing the planning that you do. I have a friend I grew up with who actually did retire at 40. I guess he’s in his 60s now and still living happily. 

CALLEY: But it’s important to mention that he does live a frugal lifestyle.

So did he have an excellent job with a big salary or did he just set a financial plan and then decide to live frugally in his 20s and 30s?

BRUCE: I think it was all of the above. He was in school until he got a law degree at around 27 or 28, I think. But when he got out of school he got into the real estate market. But he was just very frugal, and not averse to risk, which is a big part of retiring early.  

Does that mean that people who want to retire early have to live without much fun in their 20s and 30s?

CALLEY: I guess it just depends on how serious you are about retiring early. Personally, I’m saving a little over 30% of my base income. And I think I still have fun for the most part. And it’s pretty hard for me to save any more than that. It’s also good to stick to a budget and reward yourself for sticking to it. That might be going for drinks with friends or going out for dinner. 

BRUCE: How do you define fun? I’d never been to a happy hour until I was in my 30s. And I was a very avid runner. And, you know, fun for me was going out and having a great race. I have a group of clients I call super savers. And I tell you what I think they’re very happy people. They can spend more in retirement now than they ever earned in a year while working.

They’re just happy doing what they’re doing. But if you’re going to keep up with the Joneses, it’s going to be very difficult to retire. And it’s not my place to judge what makes you happy, but it is my place to say something if you want to retire by 40 and are not taking the right path. And unless the Joneses are the McFrugals, you might not make it.  

Where do young people make the biggest mistakes when saving for retirement and how can they avoid those?

CALLEY: You’ve probably heard this before, but most people are not contributing enough to get the [employer] match. But also, what I’ve seen lately, is so many young people are getting swept up in fad investment type opportunities, such as the retail stock market accounts.

On one hand, I think it’s great for someone to have something like that. It’s educational and gives people a little bit of money to play with. I think it’s good our generation can do that. Whereas Bruce’s generation didn’t have that opportunity. So we’re more financially aware.

But it becomes a problem when people are not saving or not paying down debt and focused on getting the highest return from you know, whatever blog of the week says this investment is going to get them. And that’s dangerous, because at its worst it’s basically gambling. So making these fad investment choices or decisions to put your money there instead of a retirement account could be a mistake.

BRUCE: The biggest mistake we see is people just not getting started and not having a financial plan. The average client doesn’t come in when they’re 25 or 35, or even 45. Oftentimes, they’re 64 and saying I want to retire at 65. But if someone just gets started and puts 10% of their take home pay away in a growth-oriented portfolio, they’re gonna do all right for themselves.

And the thing that I encourage all, especially young parents, is to think about the idea that they really are role models for their children, and how children manage money, and I encourage people to be open about it and thoughtful and formally teach their children. You may be aware that we are the least financially literate state in the union. Minnesota being the number one most literate state.

CALLEY: I started early. I think my first job was at Chuck E. Cheese [at 16]. And I remember with my first paycheck, I kind of asked him what to do with it. And he told me to put it in a Roth IRA, and that was it.

You’re saying get going with 10% of your take home pay? That doesn’t seem like a ton. And people can maybe be comfortable in retirement by just putting aside that much every month?  

BRUCE: That’s assuming they started, say, at 22. At 32, it rises to 12% or 15%. And if you wait till 55, it’s 20% or 30% to be able to maintain the lifestyle you’ve otherwise been living. And that means if you’re making $30,000 and saving 10% you’re living on $27,000. As opposed to the person who’s not saving, they’re getting used to that $30,000 a year lifestyle.

But I don’t want to portray it as you know, “Hey, Bruce said if I save 10% I can do what I want in retirement.” It’s a really good starting place for a young person. If you’re older and haven’t saved, it’s not going to be appropriate.  

CALLEY: What you have to decide first is what kind of lifestyle you’re going to live in retirement. And depending on that, you’ll be able to determine how risky you actually need to be. If you can live off $40,000 a year in retirement you don’t have to save as much, but maybe you’re going to need $80,000 a year. Because you’re doubling what you need or want you’re obviously going to need to be more risky in your investment.

I don’t really like using the word risky, I’d rather say aggressive with your saving and investment. But also, you have to keep in mind, the earlier you retire the more restricted your savings may be depending on what kind of account they’re in. Your typical retirement account for the most part, with exception of a Roth IRA, you’re going to get dinged with a penalty from the feds if you withdraw from that account before 59 and a half. So, if you retire at 40, you have about 20 years where you don’t really want to touch the money that’s in a 401(k) or an IRA.

Editor’s note: Tomorrow, our conversation with the Coldsmiths will continue. In the meantime, also check our series “Money Talks,” which is all about building wealth.