Kyle Steele’s From Paycheck to Pension, step-by-step financial guidance for public-sector employees.
“At first my co-workers at the fire department teased me,” said Kyle Steele, certified funds specialist and author of From Paycheck to Pension, step-by-step financial guidance for the public sector. During their breaks, the other firefighters used to watch sports or the news, but Kyle watched CNBC, one of the financial channels. “They laughed because I would watch these numbers scrolling by on the screen for hours,” he said.
Kyle says, “I’ve always been interested in finances. When I was fourteen I asked for stocks for Christmas. With my first retirement plan, I was like a kid in a candy store. There were all these online calculators telling me how many hundreds of thousands the account could grow into. At first, I was inexperienced. I would watch TV and pretty much buy any random stock that came across that looked good. I was like a puppy, easily distracted, without a real plan in place. I really didn’t understand the power of investing. But I do remember putting a big chunk of my money into my retirement account, and the township administrator came back to me and asked me if I really wanted to contribute $150 per paycheck when I was only making $9 an hour. And I said ‘YES!’”
the priority, he explains. “I just stayed frugal, lived with grandma, or with my frat brothers, or crashed with friends so I didn’t have to pay rent. I challenged myself to go a year without buying clothes. And I did. How many clothes do I really need, anyway? I put that money in the stock market.”
He learned from scratch, with a lot of research, trial and error, and then formal education by studying financial planning at Boston University. “After a while, people began to respect my knowledge. My co-workers wanted advice, to pay me to help them, but I’m not a certified financial planner, so I wasn’t getting into that. But I did want to somehow help people with everything I had learned. I asked myself, ‘How can I help the most people?’ And the answer was a book. The concept behind it is ‘I did it and you can too.’”
The book, written informally with dialogue, does not give financial or investment advice. Kyle says, “I’m not telling people where to put their money. I’m not teaching people to trade stocks. I didn’t want this book to come off like I know everything, which I don’t. I did a lot of research and consulted experts and financial planners, but the book is a little autobiographical, written mostly from my experiences.”
Kyle continued, “The book begins with things that are very general that everyone should know: it addresses spending habits, mindset, buying a car, a house. Everyone can benefit from that. So, a big chunk of the book applies to everyone. But I was also writing with people who work in professions with a pension, like firefighters, law enforcement and teachers in mind, so there are several chapters dedicated to that sector specifically.”
These professionals have some unique opportunities in saving for retirement. Kyle believes it’s crucial for those in those industries to understand the difference between a pension and a retirement fund, two very different things.
“A pension is a paycheck, only you don’t work. It’s calculated by a formula that is based on the number of years you have worked and gives you a percentage of that every month,” he explains. “It’s exactly that; it won’t grow over time, it is not a retirement fund.”
“Well,” Frank says, “what exactly is a pension then?”
Adam clears his throat, ensuring that he will speak clearly. “A pension is nothing more than a paycheck.” He continues slowly, “And you collect this paycheck in retirement for the rest of your life.”
“Really?” Charlie blurts, surprising even himself.
“Really,” Adam confirms. “It’s a wonderful benefit that offsets our lower, blue-collar salary.”
“A paycheck,” Frank says, “for the rest of my life. So, in retirement…”
“Yes,” Adam says, cutting Frank off, “a paycheck without going to work.”
“The 457 (similar to a 401K), on the other hand, is the exact opposite. It is a retirement fund. For one, it is tax-sheltered. In a 457, you pick your mutual funds and your account will grow over time. The really important thing to remember is that the more you put in it, the more it will grow by earning interest. It’s called compounding. It just continues to multiply. It truly amazes people the way that works.”
Kyles says, “A lot of firefighters say to me, ‘I don’t have enough money to invest.’ I tell them, ‘Try the lunch challenge: if you pack your lunch you’re going to save $5 a day. Put that $5 into your investments, and over time, if you work 10 shifts a month and invest it at an eight percent return, that turns into over $45,000 over about 25 years.”
“Money and investing can be confusing and stressful to think about and I hear that and see that from my co-workers. And sometimes just a little bit of information can tweak someone’s course and make an enormous difference. I hope, with this book, I can do that for some.”
Read the book!
Available at The Open Book in Old Town Warrenton, or online.