No Retirement and not enough time to build it up
We lost most of our retirement in the Great Recession. We know we are not alone. Now we have almost no retirement and are already in our 50s, not enough time to build it up.
Here at the I Heart Tightwad home, we are on the lookout for alternatives.
Lamb and I have learned a thing or two in our half century on the planet. The most amazing glorious thing is compound interest.
You know how “youth is wasted on the young”? Well the concept of retirement planning falls on mostly deaf ears when it comes to young people. They think 30 is “old” and they can’t fathom the years that compound interest takes to exponetially grow and consequently explode into wonderfuness. When they do, well, they retire at 30. The rest wind up like me (and you?). And those, like us, probably didn’t take it seriously enough and then if shit hit the fan financially, they spent it. That door to that level of retirement funding closed. And sadly there is not much to do about it.
So, what does a large percentage of the population do as a result? According to Reuters, almost a third of working adults without savings or a pension.
All is not lost. There are plans and ideas. Most of us say “I’ll work until I die”. That might be good in theory, but that is betting you have good health. Just as many of us played the grasshopper instead of the ant with our finances, many of us did the same with our health. Yes, you can get away with a whole lot while you are young but when it catches up to you, you will pay.
So, I can’t work until I die, and I can’t start saving with only a few decades left of my life to get enough impact, what do I do?
- Go ahead and work on investing with a plan for compound interest. You may live a LOT longer than you think and you will need money. I am indebted to many great bloggers out there for helping me build my skills in this arena. Mr Money Moustache, Frugalwoods, Mrs. Picky Pincher, The Mad Fientist, JL Collins. The list goes on. These people are incredible resources!
- Keep learning and growing. The MOOCs (Massive Online Open Courses) out there are growing exponentially and you and I both need to continue to up our skills if we are going to survive and heck compete. Here is one of my favorite, free classes!
- Build a side hustle. There is a school of thought about not putting all your eggs in one basket. Today’s work place offers little in the way of guarantees and job security. Having a second (or third) stream of income is not just wise, it is vital. I think Side Hustle school is an excellent resource.
- Learn to live on less. This is a skill that is akin to a muscle. The more you flex it, the stronger it becomes. When you can live on little, you simply don’t need as much. When you don’t need as much, you have a lot more options. Reading blogs like this one will help you build that muscle. Also, Mrs. Picky Pincher,
- Take care of yourself. If you don’t take care of your body, where will you live? Comfortably?
So what does this kind of life look like?
For us, for now, we both have full time jobs (thankfully). We also have benefits included in jobs (thankfully). We are aware this can change at any time.
We have made a commitment to:
- Keep a side hustle going. For Bunny it is building a blog and requires 1 hour every morning (5:30am – 6:30am). For Lamb it is driving for Uber every other Saturday. He works 9pm – 3:30am and brings in about $150 a shift or $300 a month or $3,600 per year.
- We take care of our health. For us this meant giving up alcohol (read about that here), going to the gym 4-5 days per week and eating more fruits and veggies. We also get lots of sleep (8+ hours). We aren’t perfect by any means on this but we are taking our health seriously.
- Investing. We are working on moving our retirement accounts into robo-investing accounts. We are glad to have them even though they are only about one year’s worth of income. We will write more about this experience as we progress. We are also adding to our 401Ks at a rate of 20% each.
- Live on less than we make and save the rest. Much of those tips and tricks are here on this blog. For instance, at this moment our dishwasher is dead. While we decide on a large expenditure, we are hand washing dishes.
- Save, save, save! We have 8 different savings accounts allocated through Capital One 360. They are as follows:
- New Roof fund
- Emergency fund kept at a minimum $5,000
- House projects
I cannot recommend Capital One 360 high enough for their platform of savings accounts with the ability to differentiate money to each goal or “bucket” and to easily transfer between those and other accounts we have. Money goes into these buckets directly from our paychecks. When we want to do something, we look at the bucket. Is there money to do it? No? Can we move it around? Is there time to up the savings on it?
For example, in January we will lower the amount going into Xmas fund and up the amount going into Grandkids fund. We use that money to help out with summer time activities for them. Come August, we switch that money to Xmas to build that up so we can do some fun things over the holidays. It takes a couple of clicks and we are done. Single-handedly, this account has given us enormous success at keeping our finances in good order.
We are all in different boats. Maybe you have zero in a retirement fund, Maybe you are single. Maybe you already have serious health issues. Maybe you have awful health insurance. Each of us has different circumstances and there is no one silver bullet. Together, as a community we can share ideas, thoughts, and compassion as we figure out this part of our life’s journey. Please share what you are up against in the comments below.
Bonus: EXCELLENT article by Trent Hamm over at the Simple Dollar.