Kathleen shared her Mint-generated timelines for some of her personal finance goals. One of them is retirement. I don’t know much about personal finance, but I do know the importance of saving for retirement (the earlier the better). But I nearly fell out of my chair when she said that according to Mint’s stats, she either needs to contribute more than her annual salary to meet her goal – or work until she’s 91.
I haven’t really paid much attention to my retirement savings (not that there’s much to pay attention to currently!). When I filled out my new hire paperwork in September, I filled out a sheet for my 401(k). I read about the minimum and maximum contributions, employer matching, profit sharing, investments, etc. I briefly consulted a calculator, reread the guidelines again, and then decided how much of my salary I wanted to be taken out of my pre-tax salary and put into my 401(k).
And then I promptly forgot all about it.
Well, perhaps not “forgot.” My pay stubs showed how much was getting taken out of every paycheck and contributed to my 401(k). That was a pretty constant reminder of my retirement savings. But otherwise, that was pretty much it. I mean… it’s not like you can do anything with a 401(k) plan besides check to see how it’s doing. Even then, I would be bored to tears monitoring it obsessively.
I know I’m doing everything right by starting to save early because time is money and the value of compound interest over time can’t be beat and all that. But the thought of needing millions and working till my nineties terrifies me. (Yes, I know these are extreme examples. That knowledge does little to comfort me.) I really, really don’t want to be working until I die. Is that what the options are, though? To throw everything into my retirement savings in an attempt to retire comfortably at a comfortable age (65?) and deprive myself of enjoyment now, or chip in a small percentage of my salary and enjoy life and hope that by the time I retire, someone will have gifted me the millions of dollars I didn’t manage to save?
I don’t know many people who actually retired/are planning to retire at 65. People live longer now, so they can expect to work longer as well. I mean, obviously people DO retire at 65 (or younger!), but I think it’s more and more common to work until 70 or beyond, either because you have to or because you want to.
My dad turned 65 in March and he is definitely not retired… nor will he be retired anytime soon. But in Canada you automatically start getting your pension at 65 (not sure how it is elsewhere), so he’s getting that on top of working, which I suppose is nice.
I think it’s early for you though! You just started your career, and things can (and most likely will) change a lot… so while it’s good to think about these things, I don’t think you have to stress too much. (Just wait, when I’m in your position I’ll be freaking out just as much and you can tell me to calm down.
)
I think 65 is when Social Security benefits kick in for Americans, but I’m not even going to bother counting on that being around by the time I am of retirement age because the US government can’t even figure out how to pay its own bills each year. (Rant for another day, haha.)
I never want to stop working, but I’m worried that I won’t physically or mentally be able to when I’m past retirement age. I haven’t set up a 401k or retirement IRA yet because it’s confusing and I live overseas and the gov. requires companies to file certain paperwork (mainly tax stuff) so that I can prove the income comes from working but my company doesn’t because it’s not American.
Anyway, my point is that it’s good you started now.
If at some point in the future I work overseas for a few years at a non-American company I probably won’t be doing anything fancy with 401(k)s, etc either. This probably isn’t the greatest thing to admit but if this stuff wasn’t all automated with my company I probably wouldn’t have any of it set up right now!
Hey, thanks for linking to me! Hopefully Mint is all wrong, and not taking any compound interest into consideration. Otherwise, here’s to hoping other things pay off!
I tried plugging in my own stats into Mint to see when it said I’d reach my retirement goal, but I couldn’t figure out how to add my employer match amount or my pre-tax contribution that gets automatically deducted from my paycheck. I gave up in the end because Mint’s numbers were too depressing!
I started saving for retirement when I was 18, but that’s what happens when you have a financial advisor for a dad, haha. Definitely best to get started as soon as humanly possible!
My personal goal would be to stop working full time at possibly some point in my 40s, and then just be able to pick up freelance projects here and there when I want them and not because I HAVE to take them. I can’t imagine fully retiring until I’m forced to because of mental capacity or some such.
Even if I retire in the technical sense I can’t imagine I would stop doing everything. Like, at the very least I’d want to volunteer at organizations and such. If I’m not traveling the world, that is!
I wish I had a financial advisor in my life as my tax forms just came in and I can’t make head or tail out of them
It’s good to start early, as much as you can. I agree about it being a toss up between enjoying life/living life now, or being able to live comfortably later. For a lot of young people, it’s just not really an option right now, since there’s things to pay for like houses, kids, college, etc. My husband and I have retirement through our work, but the only contact we have with it is a statement every year. We have no say in how much gets put in, and we can’t contribute anything at all too it. It’s actually kept sort of hush hush that it’s even there for the most part, and a lot of the details are fuzzy even with the higher ups. It’s weird. But, something’s better than nothing, so you’re on the right track at least!
That’s odd to me as you get so little say in your retirement account! I would have imagined your company to be at least a little more transparent about it (like giving you say in how much goes in?) as the account is, well, yours.