Loren Kite and Jess Long have a house in South Seattle’s Columbia City neighborhood that has appreciated a lot since they bought it in 2012. They built a backyard cottage and make $700 a month in rent.

The husband and wife, both 39, thought they were pretty smart about money.

Then Kite read something in The Seattle Times that planted a seed of doubt.

“I thought we were in a good financial position until I started reading the Money Makeover,” Kite says. “I realized we are not contributing enough to our retirement. In 30 years we may not be prepared.”

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Financial planner Maureen Jones has heard this before. There’s a lot of advice out there — in the ads of Sunday morning talk shows, articles in financial magazines, and a growing passel of podcasts that scream the message: Start saving for retirement in your 20s.

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But Jones says people don’t hear that message until they are well into their 30s. “The average age of retirement planning is age 35. They slap their foreheads and say, ‘Oh my God, I need to be thinking about this!’”

Which is not to imply that Kite and Long are slackers. In the yard of the 1905 farmhouse they have been renovating with a rehab loan, you will find two chickens, two dogs and two rough-and-tumble boys ages 4 and 1. Long teaches fourth grade at a public elementary school in their neighborhood. Kite used to work at Trader Joe’s and now has his own business with four employees teaching carpentry skills to kids. He’s also a stay-at-home dad.

“My impression of Jess and Loren is that they are very busy with school, the business and kids,” Jones says. “They hadn’t taken a deep dive into their finances.”

That deep dive started when Kite asked for a Money Makeover and our partners, the Puget Sound chapter of the Financial Planning Association, paired them with Jones, a financial adviser with Viridian Advisors in Bothell.

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Long was dreading the process, daylighting all that paperwork she didn’t want to face and putting their money into investments that could lose value.

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“But then I realized that not thinking about it was risky, too,” Long says. “Money is not going to save itself!”

Jones and the couple laid out all the numbers and surveyed the damage that the pandemic has done. Long has been a teacher for 12 years and she makes $94,000 a year. Coronavirus hasn’t changed what she earns, but Long says teaching from home feels like an “entirely new job.”

Kite’s business makes much less money since he can’t offer hands-on classes due to the virus. He was anticipating that 2020 would be the best year since he started the business in 2013. He figured he might make $80,000. Now he says he’ll be lucky to scrape together $10,000.

“You can’t teach woodworking to kids online. It would be far too dangerous.” Instead, Kite and his four part-time employees pivoted to cardboard engineering, which they teach online.

“I could choose to shut down,” Kite says. “But I can’t afford to lose my people. And they can’t imagine leaving.”

Pandemic or no, the couple’s bills roll in. Their mortgage is $2,200 a month and they pay $300 a month on the home equity line of credit they took out to build the backyard cottage. They have a $360-a-month car payment and the landlord lowered the rent on Kite’s workshop from $1,300 to $1,000 a month because of COVID-19.

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They got another break that will help them pay off around $30,000 in student loans: Both sets of their parents offered zero-interest loans. The payment is the same — $500 a month— but Kite and Long pay it to their parents with no interest, instead of to the bank. That will shave years off the loans.

Two steps forward, two steps back: This month the couple’s sewer gave up the ghost. The $9,000 repair wiped out their emergency fund and then some. In short, there have been a lot of things to spend money on that felt more pressing to this young couple than retirement.

This is not to say that they haven’t saved anything. In fact, Long started when she was 18.

“My Dad urged me to open an IRA at 18. I did, but then I forgot about it. It has $5,000 in it and it’s been open for 20 years. Ridiculous!”

Jones was pleasantly surprised to find that the couple had signed up for retirement benefits at work. “Especially Loren with his Trader Joe’s 401(k). It has $112,000 in it. The problem is he stopped contributing.”

“I quit Trader Joe’s two years ago after 15 years and walked away with a retirement that the company fully funded,” Kite says.

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Long has amassed $43,000 in a 403b plan with Seattle Public Schools. She also has a pension that will pay $27,000 a year when she retires.

Jones says that’s better than most Gen Xers, but it’s not enough to fund retirement at the age this couple is aiming for, which is 67.

“Loren should open a retirement account like a SEP-IRA to both save for retirement and lower his taxes on self-employed income,” Jones advises. “Both of you should begin to save regularly in a Roth IRA, even if you can’t do the full amount allowed. Starting an automatic savings feature is far more important than the amount going in.”

Ideally, the financial planner says, that amount should total $20,000 a year. “Right now the couple is only putting away $7,500 a year,” Jones says, recommending that Long and Kite boost their input by $12,500 a year. But not this year.

 Maureen Jones, a financial adviser with Viridian Advisors in Bothell, helped the couple take an overdue “deep dive” into their finances. (Courtesy Maureen Jones)

“Be gentle on yourself when bad times interrupt your savings goals,” Jones says. “Be aggressive savers when times are good.”  

Benefits of a Roth plan

Got a Roth? Our planner says you should.

“The Roth IRA is the best invention since sliced bread,” says financial planner Maureen Jones. Here’s why:

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1. There are no upfront deductions on contributions, but your investments grow tax-free inside a Roth IRA account. Withdrawals in retirement are tax-free, including earnings.

2. The planner wants Long and Kite to juice their returns by taking on more stock exposure. She says the Roth IRA’s properties make it a good place to put growth and dividend stocks because they will grow tax-free. And they don’t have required distributions like regular IRAs. “Roths have the longest time horizon. It’s the last money you will tap in retirement.”

3. Roth IRAs are flexible. You can take the money out (but not the earnings) for any reason without a penalty. “I took $35,000 out of my Roth to buy real estate,” Jones says. At the time some folks thought it was a strange move, but 10 years later, Jones says, those two units have appreciated $300,000.

4. Are you Roth IRA eligible? There is a limit to how much you can make and remain eligible to invest in a Roth. For a married couple it’s almost $200,000 a year. Jones says investors can have both traditional and Roth IRAs but an individual’s total contribution limit is $6,000 a year between the two.

This article has been updated to correct the amount of the couple’s monthly mortgage payment.