Retirement: Top 5 things for millennials and Gen Z to consider

The acronym S.T.A.S.H. represents the top five things you should be thinking about in order to start saving for retirement. Award-winning author and retirement expert, Anne Lester, joined Robert 'Bob' Powell on the debut episode of Decoding Retirement to discuss the acronym mentioned in Lester's book, 'Your Best Financial Life: Save Smart Now for the Future You Want'.

S.T.A.S.H. stands for the five things the next generation should be thinking about to build their retirement savings.

S. Save for a rainy day

T. Tax advantage savings

A. Assess your budget and pay off debt

S. Stay the course and max out your retirement savings

H. Have fun!

Lester explained, "I think executing that S.T.A.S.H. is really about making sure you've got the emergency savings fund. You have eliminated all of your high interest rate debt, and you are putting 10 to 15 percent into that long-term savings."

Retirement planning doesn’t mean locking up your money for a rainy day and forgetting about it. Planning your future means reacting to events today. Decoding Retirement gives you the tools to navigate the years ahead, and take action now!

Yahoo Finance's Decoding Retirement is hosted by Robert Powell, and produced by Zach Faulds and Alexander Frangeskides.

Find episodes of Decoding Retirement at https://finance.yahoo.com/videos/series/decoding-retirement.

Thoughts? Questions? Fan mail? Email us at yfpodcasts@yahooinc.com.

Editor's note: This post was written by Zach Faulds.

Video Transcript

This notion of stash the acronym and how young adults can hack their brains to stash more money.

That's it.

Um And we have actually been talking about it a little bit, right?

A stash uh stands for sort of the five things you should be thinking about.

Number one is save for a rainy day, right?

That emergency savings fund, number two, tax advantage savings.

So using uh the power of compound returns and the growth of that money to really uh grow your money.

So tt tax we savings uh the A is uh assess your budget and pay off debt.

So once you start your emergency savings fund, once you're getting at a minimum, the match, which is your first target, right?

To get that match and get the free money, free money, then you start paying down debt.

Now that is a little there's some disagreement uh in the people sort of talk about this stuff about whether you should be tackling debt first or long term savings first.

For me, the power of compound return over time plus the 401k match.

If you get it is more important than aggressively paying down debt.

Once you get that match, you get the free money, which is doubling your return.

Um because they're doubling what you put in right out of the gate, then you aggressively pay off debt after you are debt free for everything but low interest rate debt.

And again, people can argue about what that means in my book, I refer to anything under 7% as being low interest rate, which is less than what you might earn in the stock market, uh, or in a balance portfolio.

Um, so typically a mortgage tip, some federally guaranteed student loan, right is below that 7% rate.

Everything else you should be paying off as fast as you can.

Then you go to the fourth step of stash, um, which is the, the s which is, uh, uh, max out your four stay the course and max out on your, uh, retirement savings and get up to that 10 to 15%.

And then the h stands for have fun, right?

Once you get to that, let's call it 15% savings rate.

You really should then be allowing yourself to enjoy more.

Maybe you're gonna save more money and save it up for a bigger down payment or, uh, for a fancy vacation or maybe then you want to think about not retiring at 67 but at 60 or, you know, that's when you have a little more room to think about different kinds of goals.

But, you know, I think executing that stash is really about making sure you've got the emergency savings fund.

You are, have eliminated all of your high interest rate debt and you are putting again 10 to 15% into that long term savings.