Several years ago I was working at my first ever real job. I’d had a million small jobs in high school and college, but this was my first job after I finished school and was out in the world ready to make money. This was my first job in my chosen field. Up until then I had done very little to save for retirement. The year was 2007.
I recall vividly the day I went down to the benefits office to submit paperwork for my employer-sponsored retirement account. Not only did I want to set it up, but I wanted to contribute 25% of my pre-tax pay. This was before we had decided to get serious about ditching our debt, so we were still making the minimum payments on our student loans at that point in time. Now, you and I could debate all day long whether it is a wise idea to contribute large amounts to retirement savings while making minimum payments on student loans (at the time we felt it was a good idea because our loans are locked at 2.5% and 3.5%), but the point is that the hubs and I had decided that we had wasted too many years either in school or working at jobs that did not offer retirement benefits and it was time to get serious. We were 26 and 30, respectively, and together we had almost nothing saved for retirement. We felt like we were really behind the game.
So I went down to the benefits office and asked for the paperwork that I needed. I took it home and completed it and a few days later I was trotting back to the benefits office to submit the paperwork. On the paperwork I’d had the option to write in a specific percentage that I wanted taken out of my check every month OR I could check one of the pre-printed boxes that offered options like 3%, 5%, and 10%. When I turned it in the guy who looked it over (who was about my age) said, “Wait, you forgot to put a check by your percentage.” I opened my mouth to respond, but then he saw my 25% written in. I’ll never forget what he said to me next.
“Wow, you’re really serious about this retirement thing, aren’t you?”
I was so amused and irritated by the question. To this day I remember my response.
“You bet. I don’t want to be doing this working thing forever!”
I think the reason why I was irritated with his question was that, by asking that question, he had insinuated that I was doing something really strange and out of the ordinary. I bet you anything if I had met that guy in a different location, such as a car dealership, he would not have thought me strange if he had seen me doing something like buying a brand new expensive car and financing the whole thing at 8%. He probably would have thought that was normal.
My advice to everyone out there about saving for retirement? Endeavor to be strange. Seriously. This is an area where you do not want to fit in with your peers. At all. As we hear nearly constantly in the media, most Americans do not have even close to enough money saved for retirement.
How to Save for Retirement the Awesomely Strange Way
1) Always contribute to your employer-sponsored retirement accounts AT LEAST to the point of the employer match (if you are lucky enough to have one). If you do not do this you are turning your back on free money!!
2) Consider Roth IRAs (for those of you in the US), which are an awesome way to save for retirement once you are contributing to the point of the match in your employer-sponsored account. These retirement vehicles are for post-tax dollars (in other words, money that you’ve already paid taxes on). Because of that, you will one day be able to withdraw your money (plus growth!) without paying taxes again. Pretty sweet.
3) Make it a goal to ratchet up your savings rate by a percentage or two every year (assuming you start out contributing to your retirement account at a low percentage). Contributing a larger percentage such as 15%, 20%, 25%, or even more is a great goal if you can manage it, but is not for everyone (we were lucky to have great jobs, live in a low-cost area, and have few expenses during those years I described above). Contribute as much as you can- your future self will thank you! These days we are enjoying some nice balances in our retirement accounts because we were able to put large percentages in our retirement plans during the years of the financial crisis when the stock market was at a low.
4) Start saving as early as you possibly can. As in from your very first job and the very first month that you are eligible to participate in the retirement savings plan. You will be able to enjoy the fruits of your labor (and the magic of compound interest!) more if you start early.
5) Pay no attention to your peers. Most people out there are probably not going to be working as hard to save for retirement as you are. That’s ok. You may not have as many flashy toys as your peers, but one day you will likely be living a much more comfortable and satisfying life because you put in the effort to save now. My favorite FREE resource to help you manage/budget your money and plan for retirement is Personal Capital (review here).
Before you start telling me that we should have been contributing to Roth IRAs instead of contributing 20% to employer-sponsored retirement accounts, don’t worry. We maxed those out that year as well. Those were the good old days when our expenses were super low (before we realized that we would be having children the expensive way and began putting money toward that). Also, in the years since then we’ve changed our financial tune somewhat in that we are now working hard to ditch the student loan debt once and for all!
How are you doing on your retirement savings goals? Are you working hard to be as awesomely strange as you can possibly be???
Suggested Reading: One of my favorite books about forgetting the Joneses and livin’ the “stealth wealth” lifestyle is The Millionaire Next Door: The Surprising Secrets of America’s Wealthy (affiliate link). If you have not yet read this book I HIGHLY recommend that you check it out!
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