Am I a Weirdo for Having Retirement Savings?

As I’ve mentioned in earlier posts, I’m slightly obsessed with retirement. The idea of having some change in the bank to just walk away from the 9-5 grind is very appealing…. and THE EARLIER THE BETTER! I don’t want to be 60 years old and walking into my normal early morning meetings.  I want to be on a beach or asleep in my bed while the rest of the world drags itself to work.

From house to hammock…My kind of commute.

Is This the New Normal for Retirement?

Penny Hoarder is one blog I frequently read. They posted an article about a recent Bloomberg report that shows two-thirds of Americans aren’t saving at all for retirement! The reasons varied, but many just weren’t taking advantage of company 401ks or didn’t even know what plans were available. Some didn’t have access to 401ks at all. Even worse, some simply didn’t have anything left at the end of the month to save.

This Alarming Stat Shows Just How Unprepared Americans are for Retirement

This is really scary to me. Social Security isn’t a reliable source for retirement money anymore. My generation may not have access to the same benefits that our parents and grandparents are getting. Pensions are rare, and how many times have you heard about a mismanaged pension failing or significantly cutting benefits to the people who rely on them?

SAVE THAT MONEY!

I wasn’t always smart about saving for retirement. For my first engineering job after graduating, I opted out of the company retirement plan. Why? Because I knew my stay there would be temporary and I thought I needed the money. They also didn’t offer a match for my contributions so, in my mind, I didn’t have much incentive.

When I joined my current employer, I signed up for their retirement plan as soon as I could. They offered a 5% match if I contributed 5% of my paycheck. Heck, yeah!! I’ll take free money!

Even though my salary was much lower than it is now, all of that change added up over the last several years…. Even when the market was doing poorly….Even when I was stupid about what I was investing in (why, oh why, did I invest in so many government bonds?).

Just recently, I hit a milestone in my retirement savings. A few years ago, I read an article similar to this one that says you should have at least one years salary in retirement by the time you are 35. I’m not 35 yet, but I JUST hit that goal! YAY! This is a big deal for me!

Don’t be normal. Be a Weirdo.

Please look into your company’s 401k or retirement benefits. See if they offer any matching contributions. Not taking advantage of it is like leaving money on the table. The earlier you save, the more you will have. Saving $100 a month starting at age 25 is worth SO MUCH MORE than saving $100 a month at age 40. Don’t be a normal American! SAVE THAT MONEY!

American Debt is on the Rise

Debt Sucks….

It sucks because you know you did it to yourself. You kinda want to go back and kick young-you into being smarter.

While any debt is irritating, student loan debts are especially bad. Our student loans have been our constant companion since graduating. They are like an evil relative that has moved into your life and won’t leave. Or a very expensive car payment for a vehicle that you will never get to drive. It feels like we will never be rid of them sometimes.

Getting out of Debt Slowly but Surely

My husband and I are recent transplants to Texas. One of the reasons that we moved was to lower our cost of living so we could pay off our debts faster, especially our student loans! Cost of living in Texas is much lower than the east coast, and our salaries only changed slightly. Plus the weather is better. NO SNOW!

Moving is kind of a big change and isn’t for everyone. We left behind family and friends, but our goal of getting out of debt faster was important to us.

Inspiration to be Smarter

Articles about people getting out of debt alway catch my eye, especially the ones where people pay off massive amounts of debt. I like to listen to the Dave Ramsey podcast to hear the debt free screams. I like to read blogs where people talk about their journey to pay off debt. It inspires me to be better and smarter with money.

Articles about people being STUPID with money also draw me in. I know some of that “stupid” is in me too. Its good to scare yourself into being smarter sometimes.

Debt in America

Business Insider released an article (Americans have 12.58 trillion dollars in debt) about household debt in the US. Total debt increased over 200 billion dollars at the beginning of 2016. Uh oh…. I took a look at the report from FRBNY to see what it said:

“Aggregate household debt balances increased substantially in the fourth quarter of 2016. As of December 31, 2016, total household indebtedness was $12.58 trillion, a $226 billion (1.8%) increase from the third quarter of 2016. Overall household debt remains just 0.8% below its 2008Q3 peak of $12.68 trillion, but is now 12.8% above the 2013Q2 trough.” – FRBNY, Quarterly Debt and Credit report 2017

That is a lot of debt!

Check out this graph from the same article. All of that red is student loan debt! Look how it increases steadily since 2003. 10% of the debt in America is student loan debt…Car loans only make up 9%.

Ugh! Some of this debt it mine! Graph from the Federal Reserve Bank of New York 2016 fourth quarter report. Click here for full report.

The fact that there are a large number of mortgages in the US doesn’t really surprise me. I imagine that very few people have their mortgage paid off. I am surprised by how low credit card debt is! I would have definitely expected it to be higher than 6%.

Still, its a little alarming to see that household debt number slowly edge its way back to pre-2008 numbers. Do you look at this graph and cringe a little? Does it inspire you to work harder to get rid of pesky debts?

Surprises Life Throws at You

Medical Surprises

Earlier this year, my mom had surgery on her hand. Nothing major, but I didn’t know about it because I apparently don’t call enough. She knows how much I love anything medical-related so, naturally, she sends me a picture post-op. Fortunately, she was all wrapped in a bandage, and I wasn’t eating or anything.

No shots….yet.

In retaliation, I may have implied that her hand injury was the result of the many (undeserving) whoop-ings that I used to get as a child (perhaps it really did hurt her more than it hurt me).

“Just wait till your father gets home.”

I DID call to check on her later in the week. Apparently, her hand surgery was a surprise! She was really there to see the doctor about her foot, and just happened to show him a recent injury to her hand. He told her that she needed surgery. Her doctor was also thinking about operating on her foot.

Me – “Good grief! You are falling apart, mom! We’re going to have to put you in an old folks home.”

Her – “You’ll spend all of your inheritance doing that!”

Me – “Not really. I didn’t say it would be a GOOD home.”

Relax. We are still speaking.

Recently, I read an article that talked about how many Americans couldn’t afford a $400 emergency.  I speak from experience when I say most medical emergencies are so much more than $400. Just recently, a regular visit to the doctor set me back $200-ish, and I have good insurance! Everything added up so quickly $35 copay, $20 at the lab, $100+ for medication, etc. If you don’t have an emergency fund, you are left with very few options.

Your emergency fund is hopefully bigger than this.

I remember being afraid of emergencies. In college, my husband and I were ALWAYS strapped for cash and I was always so afraid that one of us would be in an car accident or get really sick. I was afraid of every little weird noise my car made. Little stuff was a big deal. Since we’ve graduated, our income has gone up, and we both have good jobs with insurance. We try to always keep a decent emergency stash in the bank so those big deals aren’t so big anymore.

Dave Ramsey says that you should have $1000 saved up as the first step towards paying off your debt. I agree, although I personally feel a lot comfortable saving more. What do you think? Do you feel like you would be able to cover an emergency if it popped up? Perhaps you are like me and remember the times you couldn’t?