W+M 029: An Interview with Sophia Bera
Sophia Bera is not your father’s financial planner. She is the owner of Gen Y Planning, a 6-figure online business she runs from her laptop, where she works with young professionals in their 20s and 30s looking for a CFP to help them navigate through big life decisions. In this episode, Sophia and I discuss retirement. We break down the difference between a 401(k) and a Roth IRA, talking why you would want to go one way or the other or invest in both if that’s an option for you. She shares her insights on achieving financial success and why we need to find joy in some of the things we spend money on.
Listen to the show:
What we talk about:
- What sets her business apart from other financial planner businesses
- The importance of understanding fees
- Why Sophia cautions millennials against buying a home (from personal experience)
- Always negotiate your salary.
- Figure out what you can do to take care of yourself and create space in your budget and your life for them.
Takeaway: Understanding Retirement - 401(k)s and roth iras
- The difference between a 401(k) and a Roth IRA (Sophia's blog post)
- 401(k): Company-provided retirement plan. If they offer a contribution match, you want to contribute to that.
- IRA: Individual Retirement Account. Anybody can set up an IRA.
- Roth IRA: A type of IRA where the money put into the account is funded with after-tax dollars. The money grows tax-free and when you withdraw in retirement, you don't have to pay taxes when you take it out because you already paid when you put it in.
- We touch on Roth 401(k)s as well and which Sophia favors.
- To contribute to pre-tax dollars into a traditional 401(k) or post-tax dollars into a Roth IRA/401(k)
- If you're in the 28% or higher tax bracket - Do the pre-tax 401(k).
- If you're in the 15% or lower tax bracket - Go Roth
- If you're in the 25% tax bracket - Go either way.
- Overall, have a little bit of Roth IRA/401(k) money and a little bit of Traditional IRA/401(k) to keep your tax liability stable in the future.
- If you contribute to a Roth 401(k), the company match will go to the pre-tax 401(k) even thought your contributions will be in after-tax dollars.
- Anybody can set up a Roth IRA that has earned income, even students.
- How much can you contribute to a Roth IRA within a year?
- $5,500 if you're under age 50.
- You can make too much money to contribute to a Roth IRA.
- Look at the IRS.gov tax charts to check the income levels that will disqualify you from contributing to a Roth IRA.
- Get on Sophia's course waitlist
- Smart and Easy Retirement Planning for Millennials - Sophia's Course
- GenYPlanning.com/apply - to become a client of Sophia
- JamesClear.com - productivity and habit hacks
- Pomodoro Timer - productivity timer app
- Coach.me - habit tracking app
- Smart Women Finish Rich - David Bach
- Happy Money - Elizabeth Dunn & Michael Norton
- The Miracle Morning - Hal Elrod