Recently, I asked Karisa for her thoughts on saving for retirement. From there, we had quite a fascinating conversation, and I thought it’d be fun to recap some of the main points for those of you who might be able to relate. For a bit of background, Karisa’s in her late 20s, has been working a steady job, spends less than she earns, and has paid off a bunch of debt. That was a big accomplishment! She and her husband Taylor have also accomplished other savings goals together, like saving enough that he could quit his job and go back to school.
These were Karisa’s thoughts on her future retirement:
Right now, I’m not saving for retirement. Honestly, I haven’t thought about it much. But I probably have more questions than anything. I mean, how much do we need to save? And how are we going to get there? It seems like it’s gonna be a lot of money. Also, I haven’t really thought about what kind of life I’d want my husband and I to have in retirement, which is funny, because, in other areas of budgeting, I always consider how our budget will impact our life.
One reason I haven’t been thinking about retirement is because it’s not the goal right now for us. I know it’s important, but it hasn’t felt as urgent as other things, and I feel like we have time.
Karisa’s still early in her working years, so everything she said made sense in a way. But there’s so much to unpack there about why she’s not saving for retirement even though she’s able to save for other things, and that got me thinking. For those of you out there that can relate to Karisa, here are some of my own thoughts to help encourage you to start saving for your own retirement.
“Right now, I’m not saving for retirement. Honestly, I haven’t thought about it much.”
I really appreciated Karisa being open about this. We all start wherever we are on our financial journeys, and the first step in any budgeting goal — whether it’s paying off debt or saving for retirement — is to spend a bit of time thinking about it.
“I know it’s important, but it hasn’t felt as urgent as other things, and I feel like we have time.”
This is a key point: urgent vs. important. Unlike many other goals, retirement probably won’t feel urgent for a long time, especially if you’re in the first half of your life. But it’s still important, especially for those of us who can’t expect a pension in our old age to cover our needs. And if you’re like Karisa, you’ve got your monthly and annual budget working, and you’re accomplishing some of your medium term goals. That means you can start thinking about the long term.
“I haven’t been thinking about retirement because it’s not the goal right now for us.”
It’s true that at Goodbudget, we encourage you to focus on a single main goal. It’s easier to get excited and motivated when you see yourself making progress on your top priority. But here’s the thing — there will always be other goals that are more pressing or more exciting than saving for retirement. That is, until you’re about to retire, and it suddenly feels like it’s an emergency and you’re out of time.
That’s why it’s important to learn how to work on more than one goal at a time, where one is the main focus and the others are slowly being built up. In fact, it’s a bit like a debt snowball, which Karisa used to pay down her debts. The main difference is that you (not your creditors) decide on the minimum payments for each of your goals. Try saving the minimums each month for all your goals, then put the rest towards saving for your top priority. That way, you can stay excited about working toward your number one goal, like buying a new car in cash, but still make steady progress on others, like saving for retirement.
“How much do we need to save? How are we going to get there? It seems like it’s gonna be a lot of money.”
The amount of money you’ll need to save for retirement will probably be the largest sum you ever attempt to save. But remember when setting aside enough money to pay off your debt felt like a TON of money? Or when saving up enough to buy a car in cash felt like a TON of money? Saving for retirement sounds like it will be a lot of money — and it can be — but the same skills and habits you used to accomplish other money goals can help you accomplish this one too. And precisely because you’ll be aiming to save a big chunk of change, it’s better to get started earlier rather than later.
“I haven’t really thought about what kind of life I’d want to have in retirement, which is funny, because I think about that in other areas of budgeting.”
This is spot on. Just like with other budgeting goals, it’s important to spend some time imagining your future self and your future situation. If you were to start saving for retirement, what would you be working toward? And why would you be working toward it? Pondering what kind of life you’d want to have in retirement can help you get motivated to save, and it can also help you figure out how much you’re aiming for. That’s why it’s the first step in how to save for retirement.