I read an interesting article in response to a question about the need for a retirement savings wake up call. I’ve always enjoyed advice columns, even though I realize they should be viewed more as entertainment than fact. Just like with reality shows; boring and normal don’t make for great entertainment.
Anyhow, this letter was from a father nearing retirement age who was facing a financial conundrum because he knew he and his wife didn’t have adequate retirement savings, yet he wanted to help his pregnant daughter with her own financial crisis.
You can read the entire letter and response. I don’t think the semantics are that important, but what did strike me was the advice columnist’s take on why people can’t save for retirement, a thought many of us have probably had at one time or another.
“Man, we spend too much on stuff we don’t need. Oh well, as long as we figure this out by retirement, we’ll be OK. It’s not like it affects us right now.
Don’t Think It Can’t Happen to You
Bam! That’s exactly why, at one time, we couldn’t stop ourselves from spending too much to make retirement savings a priority. We hadn’t had our retirement wake up call!
Unfortunately, that call did come during the recession, not to us, but to some close family members. Years of spending too much and saving too little caused them to lose everything. All we could do was stand back and watch it happen, all while feeling shamefully relieved that it wasn’t us.
Americans are very much about the here and now.
- You can’t take it with you!
- I’ll work ’till I die!
That all sounds great until it doesn’t. Work is never a given, and most of us won’t be able to work until we die. That leaves an uncomfortable amount of time left to survive. I can’t imagine working for decades only to find myself with nothing to my name, wondering if I’ll be able to afford real food this week or if pasta and red sauce will have to do. I don’t want to imagine how bad it would feel to depend on my child to bail me out of a financial mess.
How Can I Find My Wake Up Call?
Odds are, you might have already found it. If you were a working adult for any period during the recession years of recent memory, you probably know what it’s like to lose a job or wonder if your income will be there next week. Even if it didn’t happen to you, I bet you know someone who got knocked down financial speaking.
If there hasn’t been a financial crisis in your life, go to My Social Security and figure out what your monthly benefit might be. Now try to plan a life based around this income. That’s what you’ll end up with if you don’t save for retirement.
My account says that I’ll get $1580 a month if I have to take Social Security at age 62. If that isn’t a wake up call, I don’t know what is.
Don’t Ignore Your Retirement Wake Up Call
I know many people who started saving and cutting expenses, maybe for the first time ever, only to fall right back into the paycheck to paycheck lifestyle as soon as life got a little better. Don’t put your wake up call on the back burner and think you have plenty of time to figure it out later.
- Start tracking your expenses so you can stop wasting money on things that aren’t basic necessities or that don’t bring joy. That doesn’t mean you can never splurge on something wonderfully frivolous. Just don’t do it every week.
- Take any money you’ve managed to cut and save it. Find ways to increase income. Build up an emergency fund first. Then, start putting money aside for retirement. Whether that means contributing more to a work retirement plan, opening a SEP IRA or solo 401(k), or contributing to a traditional or Roth IRA, it all goes to the same end goal.
- Do that after you’ve set aside money for necessary expenses but before the end of the month. That way the money is as good as gone and you won’t be tempted to fall back into old overspending habits.
Take a Hard Look at Your Retirement Picture
I guess having some income from Social Security is better than nothing, but it’s not the retirement I want to have. I want to be able to travel, enjoy life, and give back to the community. If I live long enough to become elderly, I surely don’t want to be a burden to my family.
You probably do still have time to figure it all out, but procrastination has a funny way of making next month turn into next year and so on.
If you aren’t sure about your retirement path, I would encourage you to plug some numbers into the free retirement calculator at Personal Capital.
Because you can factor in real life events and expenses, I think it gives the most accurate retirement picture of any calculator I’ve tried. Even if the numbers are bleak, maybe that’s the retirement wake up call you need to take action today.
Have you ever experienced a financial wake up call? Would you ever seek answers from an advice column?
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