How a Retail Worker Who Maxes Out Her Roth IRA Does Money

Photo credit: Aranami, CC BY 2.0.

Miranda (not her real name) is a 26-year-old retail worker in suburban Massachusetts.

So, Miranda, how much are you making?

In 2016 I earned just under $20,000. My total yearly net income after taxes, medical, and dental got taken out was $15,800. I actually just received a raise like, two weeks ago, and currently make $13.25/hr, but I also work every Sunday at $20/hr (1.5x my hourly wage) because Massachusetts requires that employers with so many employees pay time-and-a-half on Sunday.

I think now my typical monthly pay after taxes will be between $1,600 and $1,700. Picking up an extra shift, working holidays, and using PTO to pad my paychecks can occasionally get that income higher. I average about 35 hrs/week.

Do you want to work more hours per week, or are you happy with what you’re working now?

Haha, if I could work a full 10 hours on Sunday, that would be gold. I’d prefer to work 40 hours in a five-day week or squeeze that 35 hours into a four-day week, since I’m currently working the 32–35 hours across five days.

That said, it’s out of my control. Stores are operating on a tighter budget as far as hours go. Expecting more with less.

That is very true, and we’ve shared more than one post about the tightening retail sector.

Has your store experienced layoffs?

Not so much layoffs as just slowly diminishing hours to the point that the front-of-store sometimes is only staffed with two employees. A cashier and a manager.

Got it. So let’s talk about your expenses. Where does your paycheck go? Are you earning “enough,” whatever that means to you?

For basic fixed monthly expenses, mine look something like this:

$200: Rent (I live with a parent now; my former landlord stopped renting.)
$150: Grocery/eating out
$50: Phone
$50: Gas
$50: Entertainment (Netflix/Hulu/Prime/some other indulgences.)

So for me I earn “enough.” I’m in a unique privileged situation. I paid off my car years ago and my car insurance ($516) is paid through the end of the year. Health & dental insurance through my employer. No debt.

I am struck by how many Doing Money interviewees note their privileges, especially because in your situation (landlord stopped renting, work hours out of your control) there are not-as-privileged elements as well.

But it sounds like you’ve had some financial success and/or luck (and privilege) in your life, so tell us more about how you paid off your car and stayed out of debt.

I started reading personal finance blogs when I was still in high school and I think it really hammered in a certain mindset, but it’s also pretty easy not to get into debt when you decide not to go to college as I did.

My dad bought me my car off Craigslist when I turned 18 and came home with it out of nowhere and was like “here’s your car, it was $4K, pay me back whenever” and I spent the next year giving him most of the money I was earning. Which at the time was $800/mo working even more part-time in retail. And it’s worked out pretty well for me ’cause I still have the car!

That’s amazing! I love that you started getting into personal finance in high school. I wish I had started that early!

So what do you think you do really well, financially, and what do you wish you could do better?

I’m at the point where the only thing I can do to better myself financially is to, you know, earn more money. And then save more money. I mean, I track my expenses. I spend less than I earn. I have a substantial emergency fund among other savings. I max out a Roth IRA. My credit score hovers around 800. I’m pretty disciplined, but in some ways not very driven.

I am so impressed. You max out a Roth IRA on earnings of under $20K/yr, which was more than I was able to do. Plus no debt.

I have $16K in a Roth IRA and I just started a 401(k) with a 4 percent employer match. It’s pretty aggressive, but this is money I would’ve been spending on rent otherwise. I don’t know if I can keep up this pace in the future though, haha.

Where do you see yourself, financially or otherwise, in the future? (I KNOW, THE WORST QUESTION.)

I’d like to retire not at age 85! That would be cool. A good amount of my coworkers haven’t been teenagers, but folks in their 50s and 60s and I just don’t want that for myself. In the short-term, over the next couple years I honestly think I’m just going to sit here and keep saving aggressively—but some day I’ll be renting again and hopefully not spending 50 percent of my income on rent.

Do you see yourself staying in the retail sector?

Not forever, but I don’t know what I’ll be doing. No idea. I just started splitting my time between working in the front-of-store and working in the pharmacy (hence the aforementioned raise), so there is an open path to becoming a pharmacy tech but I don’t know that I want that. There’s not much growth or pay there either.

Well, it sounds like you’ve got a very strong idea of what you want financially and how to save and achieve those goals, so I suspect you’ll figure out the earnings end of things as well. I am seriously impressed by everything you’ve accomplished.

With that in mind, last question: what financial advice do you have for Billfold readers?

Find opportunities for negotiation. I saved nearly $4K over three years by asking my previous landlord upfront for lower rent. I asked my boss’s boss for an adjustment to my pay when the state minimum wage increased this past January and I was going to be making the same as new hires, and I got it. It could be anything — asking for a credit increase, lowering a monthly bill, etc. Ask for what you want.

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