So I’m standing at the bus stop the other day (I use the bus to commute to work downtown) and I start talking to a gentleman who I only know through waiting on the bus each day. We make small talk about the nice weather. And that discussion rolls into a mention of having a little bit of spring fever for both of us.
For him, retirement, in addition to the desire to be outside instead of behind a desk, was on his mind. “Just two more years”, he says. “I have just two more years until retirement!” “Really”, I say; “that’s great.” “So, what are your plans for when you retire?” “I don’t really have any.” “I guess maybe I’ll be a Wal-Mart greeter”, he chuckled.
He said, “You know, I wish I would have saved more for retirement, but when you’re a man trying to provide for a family, you just can’t save.” “Yeah, I have two little ones at home and I know how you feel.” “It sure is tough to save sometimes with new expenses popping up around every corner.”
Finally, I say, “I suppose it’s all in how you desire to live in retirement, right? It’s really about the standard of living or lifestyle we choose.” “I would imagine that’s different for everyone.” About that time, our bus arrived and off we went in our separate ways.
Some questions began to run through my mind after our conversation:
- How many people struggle to pay bills and provide and are far from saving anything each month?
- Is it really impossible to save when you’re trying to raise a family? I’m a fairly new father with an oldest child of 5. I can certainly attest to the fact it’s gotten a little more expensive each year to raise our child.
- How many people are moving into retirement without a plan and purpose?
In asking these questions, there are definitely some themes here to consider and all are choices I think are up to each person to make.
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Perhaps, it’s your choice to struggle
I can fully understand and relate to struggling to meet expenses. However, most of the time when I’ve struggled in the past, it’s been because there was a particular area of spending crowding out other budget categories. Of course, sometimes it’s not spending but a lack of income or an emergency which results in struggle. But for this article, let’s focus on monthly expenses.
Making those assumptions, not struggling, in my opinion, is a choice everyone can make. You can choose your expenses and aren’t those expenses all relative to the lifestyle you choose to live? Certainly, many expenses are economically driven. But choosing a balanced life style (not stretching too far) will allow enough room for economic impacts.
Let me explain further. Probably the three biggest expenses of a family budget are house, car and other debt. These are mostly choices with the exception of some form of debt such as medical. So, I ask, why struggle? If these expenses are weighing you down, can you not evaluate and potentially downsize them? The smaller the expenses, the more freedom there is in using the income towards your other financial objectives. It’s a matter of choice.
Perhaps, it’s your choice not to save
Throw out absolutely everything you’ve learned about budgeting and learn to pay yourself after giving. Then, build your lifestyle around what is left. This is a timeless principle that if followed will insure success with saving. But, unfortunately, the savings is built around the lifestyle.
The 401k is a great example of this principle. Most people sign up for this retirement plan which takes the money before they see it and it is invested. Personal savings should work the same way.
Practically thinking, why not have your employer automatically deposit your savings into a checking account and forget about it. If your savings is left up to you to think about each month, you will most likely find an excuse not to save.
Those investing in a 401k have lived without this additional income each month. It’s inaccessible to them. Again, it’s your choice to save. Make the choice one time to set up an automatic deposit.
Perhaps, it’s your choice to live without a plan or purpose
It’s a bit frightening for me to think of retirement years without plan or purpose. Now, the gentleman I spoke with might certainly have more than a plan that he just didn’t share. And it’s certainly okay to volunteer and help people at Wal-Mart.
But, don’t give their life long purpose enough thought. I think the retirement years are great years to carry forth your purpose further.
Without any statistics, I would imagine many who venture into this stage of life without a plan find themselves back to full-time work shortly after. Perhaps a year or so of doing nothing and emptying their checking account leaves them no choice but to earn more and find something to do with their time.
But how do you avoid this? In a recent post here at BBM, How Much to Save for Retirement, I discuss a sound approach that first starts with lifestyle, which is in-line with what I mentioned to my friend at the bus stop.
- Consider what you’ll be doing and the associated lifestyle.
- Adjust your lifestyle as much as possible today to align or to eventually transition into your lifestyle at retirement
- Build your savings goals, investment strategy based on that chosen lifestyle.
Lifestyle is all based on how you plan to live. If I were to insert a step 0, identifying your purpose, or what you’ll be doing to fulfill that purpose will depend on the lifestyle you can afford to have.
Final thoughts
Personally, I like choices I can own, not excuses. I’m not looking to make excuses tomorrow or someday in the future. How about you? It’s called ownership. More than that, it’s called financial stewardship.
It’s your choice to manage your finances, minimize expenses, save for tomorrow and chart a course for a purpose filled future.
What do you think about taking financial ownership in these areas?
Excellent post. Many years ago, when life was tougher people didn’t have a choice. To eat they had to hunt. Today the world is much different and too many people fail to even consider saving or retirement. I am amazed how many people that I’ve worked with believe that Social Security alone will be enough!
Yes, its true. All of these are choices, with some rare exceptions.
For those of us that have the ability to work and find work, they are all choices.
It is just a matter of deciding how you want to live your life.
Folks today are so ‘now’ oriented. They fail to think about life 20-25 years down the road. Their obligations of ‘now’ override any desire to think about the future. It’s appalling to see how debt is seen as a way of life (I have some too) and there’s no plan to at least minimize it and think about another plan existing. Not having a plan is not an excuse. Each is responsible for the consequences of having a plan or not.
After reading Dave Ramsey’s Total Money Makeover, and reading all the stories about real people making conscious decisions to own their finances, I know that it’s a choice not to save. Even with family incomes lower than what I’ve been blessed with, these families managed to pay off debt and aggressively save money.
It’s always a choice.
Andrew, you make a good point. There are many that don’t have much, or have lower incomes, yet they find a way to save. I suppse many also want to make the effort but struggle with debt. Obviously, that’s why it’s some important to tackle debt aggressively so these other important areas of personal finance can be worked on.
For most, I believe you can tithe and save if you make that your priority. Make tithing number 1 on your list with saving right behind that. After essentials, then you can go out to eat, get something you want, etc.
Good post, but I think it’s easier said than done. For me, I am constantly thinking about finance and how to properly manage my money. I’m assuming those of you with PF blogs are fairly similar, that’s why you have a PF blog. For those of us with this mentality, try to take yourself out of the “financial mindset” that we are constantly in. Try to imagine that your number 1 priority is caring for you three children, and if you have any money left over after that you might do something nice for yourself. Keep in mind, you are not programmed to think about personal finance as much as you currently do. Therefore caring for your children before saving for yourself is not only the thing that you WANT to do with you money, but that you feel it is more morally appropriate in that you are placing your kid’s livelihood above your own.
I don’t have much time to REALLY phrase this out, hopefully you get what I mean: Approach this subject with the mentality other than yourself (assuming you are very in-tune with personal finance), and suddenly it is much easier said than done.
This is true with obvious certain exceptions. Beyond people like myself who are disabled and so have some difficulty earning, there are also people who are simply unskilled workers and may never make more than $9 or $10 an hour. In some areas, that’s just enough (if that) no matter how you slice it.
My mom recently told me about a couple in WV: husband was a corrections officer, wife worked as a receptionist for the county and they couldn’t afford more than a one-bedroom apartment for themselves and their two kids over a relative’s garage. In that area $8 an hour is a common wage.
Still, by and large your point is true. Which is why people like my in-laws scare me. They brought up two boys, both of whom got into goodly chunks of trouble, so I’m sure there was some cost there. But they both worked decent jobs yet no money was ever saved.
They have literally $0 in retirement funds. My FIL had a profit-sharing plan through his old company but when he switched to a competitor corp, he took early retirement. It was $80k after taxes (but before the penalty, so now they owe the IRS money) and it was gone in under a year. Which is saying something, since his new job lasted maybe a total of six months. Even when it was gone, they kept spending.
Since then, my MIL has become completely disabled (she could only work part-time before) and assuming my father-in-law gets more work in the next couple of years, he’ll basically have to keep going until his own health gives out. Which, given his overall health level and family history, probably won’t be that long. At that point, they’ll get a total of $2,500 a month, max. Their space rent alone is over $500, and their mobile home’s mortgage still isn’t paid off, though the payments are relatively low.
It’s terrifying but also infuriating!
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Good post Jason. It is amazing how many people think that saving for retirement (or anything else) is impossible. But, as you suggest (with some exceptions such as medical and health reasons), it is a choice. For many a fuzzy choice, but still a choice.
Not having a plan is a choice too, but I imagine there are many, many people like the guy you spoke with who somehow made it through life without giving it much thought. But then THAT is a choice, albeit another fuzzy one.
Thanks for challenging us to step up and be responsible. If we make bad choices, we need to look no farther than into the mirror to see who is to blame.
Like this post — have linked to it on my blog here: