Is there anything about Beyoncé that isn’t FIERCE? Completely unrelated, for most Americans, the prospect of retiring comfortably is a complete mystery. Queen Bey is able to routinely command the attention of millions of fans, whether she’s dropping surprise albums or slaying at the Super Bowl halftime show; on the other hand, most young people couldn’t be less enthusiastic to discuss their future financial health, despite the enormity of its consequence. So let’s celebrate the greatest artist of our generation with these killer photos and retirement facts.
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1. Beyoncé is not only a great singer and dancer, she’s a powerful feminist icon for an entire generation. At the same time, investing in your retirement early is a necessity if you want to live decently in your later years. The average Social Security benefit is $1,234 per month which amounts to less than $15,000 per year. That’s below the poverty line—the opposite of slaying. If you retire at age 65 and live for 30 more years, you’d need 1 million dollars in savings to have a yearly income of 48k. That’s going to be tough to accomplish if you’re only putting a little bit away in a savings account every month. There’s no getting around it, you’re going to need to get involved in the stock market. The key is to start early—if you invest a little over $400 per month ($5,000 per year) for 40 years and get a return of 7%, by the time you retire you’ll have that million dollars to spread over the next 30 years. Yaaaaaaas kween!
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2. Beyoncé is an inspiration because her lyrics promote independence, strength and a healthy body image. You know, a lot of people think the stock market seems complicated and difficult, but actually there’s a way to invest that doesn’t require ANY work, skill or thinking: low cost index funds. You don’t need to hire a manager to oversee your stocks, all you need to do is invest in the US Total Stock Market and Total International Market and you’ll passively follow the entire world stock market at a very low cost. An index fund will provide you with broad market exposure, low operating expenses and low portfolio turnover. You may think that you’d yield higher returns with a more actively managed mutual fund, but that tends not to be the case: most of the time, it’s pure guesswork and it’s far riskier, too. Not to mention you avoid fees that add up significantly over time when you go with an index fund. Bow down, bitches!
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3. Beyoncé isn’t afraid to stand up for her beliefs. Her latest video “Formation” is a celebration of black culture and her performance at the Super Bowl halftime show evoked the Black Panthers. If you have a full-time job, you may already have a 401k plan. This is a workplace savings plan that allows employees to invest a portion of their paycheck before taxes are taken out. The savings can grow tax-free until retirement, at which point withdrawals are taxed like ordinary income. So a 401k makes a lot of sense if you have a high income tax now but expect to be in a lower bracket by the time you retire. Most employers will match an employee’s contribution, which is like getting free money—if you put in 3% of your paycheck, they’ll match that same amount. But that doesn’t mean you should limit yourself to what they match, the rule-of-thumb figure is to put away 15% of your take-home pay into a retirement account every year. That’s a lot but remember that one of the benefits of lowering your taxable income with a 401k is you become eligible for tax credits that will lower your bill even further. This also helps lower monthly payments for student loans that are on income-based repayment plans. Slaaaaaaaay!
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4. Beyoncé handles adversity with the grace of a champion. When some of the former members of Destiny’s Child criticized her in the press, Queen Bey stayed above it and exacted her revenge simply by continuing to dominate the music charts. The difference between a 401k plan and an IRA is who is setting it up. 401ks are established by employers and IRAs are set up independently by the individual. There are two kinds of IRAs—traditional and Roth. A traditional IRA functions similarly to a 401k, but a Roth IRA is different in a few key ways. One, you pay income taxes on the money you put into it now, as opposed to later. This benefits people who are in a lower tax bracket now and expect to be in a higher bracket when they retire. It is also a way of hedging your bets against an uncertain future. Who know what the tax rate will be when you retire? It could be much higher. So if you choose to invest in a Roth IRA, you deal with the devil you know rather than the one you don’t. Fierce slay!
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5. Beyoncé has an amazing sense of humor and doesn’t take herself too seriously, just one of her many charms. It’s important to note when people talk about the stock market, what they’re referring to are the three major stock indices: the S&P 500, the Nasdaq and the Dow Jones Industrial Average. Here are the differences: the S&P 500 is an index of the 500 most widely-held companies and is generally regarded as the best way to track the U.S. economy. Beyoncé! The Nasdaq tracks 4,000 stocks listed on the Nasdaq exchage (which is one of the places where people buy and sell stocks, the New York Stock Exchange being the other) and are weighted toward the information tech sector. Among investors, Nasdaq is known as the “blue chip” index. Beyoncé! The Dow Jones, or “the Dow” as it is known, only follows 30 companies and it’s always been that way since its inception in 1896, although exactly which 30 has changed a few times over the years. Today it focuses on companies like Disney, Apple, Coca-Cola, Nike, Microsoft and other major corporations. Remember when Beyoncé said “When he fuck me good, I take his ass to Red Lobster”? That was flawless fierce slay, kween.
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6. Beyoncé has a beautiful family and a strong sense of loyalty. She seems like a great mother to Blue Ivy, she’s very close to her parents, and she’s maintained a close and supportive relationship with her sister Solange. Another common retirement strategy is investing in bonds. Bonds are less risky than stocks. In the event of a stock market crash, the value of a bond is unlikely to go down; in fact, it’s just as likely they’d go up. The way to think about bonds is you’re essentially lending money to the government (or a company, whoever is issuing the bond). When they pay back the loan, you get the interest they pay. The more creditworthy the borrower, the lower the interest rate, so when an investor wants a higher yield, they will buy “junk bonds” from companies or governments with lower credit ratings—this is known as fixed income investing. This is important because if you’re living off of your investments by the time you retire, you don’t want to be forced to sell to pay for living expenses, particularly not if the stock market dips or crashes around this time. Instead, you want to be able to sell bonds because you’ll take either a small loss, or no loss, or possibly a small gain. Fierce! Flawless! Slay! Fierceflawlesslay! Frcflwlsssly!
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7. BeyoncéBeyoncéBeyoncéBeyoncéBeyoncéBeyoncéBeyoncéBeyoncéBeyoncéBeyoncéBeyoncé. The key takeaway from all of this is your goal should start investing as early as possible. That will make it easier for you down the line to be able to have enough money to stop working and retire. The first step is to begin saving. That will likely mean cutting expenses in your budget and making cutbacks in things like eating at restaurants, media purchases or other unnecessary things. Establish an emergency fund to keep yourself out of credit card debt. The next step is you need to pay off your debt. Once you’re living debt-free, you can begin putting more money into a 401k or IRA and increase the amount you put into it until you’re able to do 15% of your income per year. You can set up an IRA at places like Vanguard or Fidelity. The earlier you start, the easier you’ll make it on yourself when you get older. Mic drop!
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