I got a new job, and one of my first priorities was setting up automatic deductions for my retirement plan.
Hopefully, this is the most boring thing I’ll ever say.
It should be boring because it should be seen as:
Almost too obvious to mention
When instead it’s one of the most commonly procrastinated tasks. Women especially tend to refer to it as confusing or overwhelming. I did, too, until my first husband spent our entire house savings behind my back and I wound up divorced and flat broke.
Now I think of financial planning as the ultimate in self-care.
You think a hot bath and a massage would be relaxing? Try knowing you have an emergency savings cushion.
Out of all the causes of a tension headache, in my opinion, money worries are the worst. I used to lie awake and cry myself to sleep because I was so freaked out about my finances. Now, it’s one of the touch points I use when I want to calm down.
I set up my first retirement account when I was 26, a couple years after my divorce. I felt old as the hills, like I had been procrastinating for years, but the truth was that most of my jobs didn’t allow for such an option.
I remember the first time I got a quarterly retirement statement, and it said I had about $40.
“There are double digits in my retirement account!” I said to everyone in my office. “I can retire for... half a day!”
This is a good joke to make around older, more established people. It makes them feel better about their own situation.
Fast forward nearly twenty years and that account has significantly more in it than my entire annual earnings from that job.
Time does most of the work. It really is “set it and forget it.” For every minute you spend reading materials and figuring out where you want to allocate your funds, you get a year of peace and tranquility.
I was determined to learn all this investing stuff as a young woman because I had learned the hard way that you can’t trust anyone else to do it for you. I also knew, from observing older women among my friends and family, that I would probably get old, too. Older ladies that I knew were almost exclusively broke.
It’s been my observation that elderly people tend to live around 15 years longer than they thought they would.
Nobody can picture themselves being old, frail, and poor. Why would you want to??
I understood, though, that if I had forty years to prepare, that was plenty of time to try to take care of Old Me. Even if I always earned well below the median. Even if I lived alone and had to do it all by myself.
The irony here is that my frugality attracted my second husband. Not only am I still in charge of my own money, I have a partner to share expenses, and he’s in charge of his own money, too.
This is where the challenge came in. It was time to set up my new portfolio at my new job. Since we are working from home, for the same employer, in the same room, and it was the end of the day on Friday, my hubby noticed what I was doing. (Probably because I talk to myself a lot).
He wandered over and started peeking over my shoulder.
This is a moment of choice.
It’s so easy to sit back passively and let another person make our decisions, take our risks, do our labor. Like when I had to assemble my own office chair this weekend - it only took an hour and an Allen wrench, but I was also doing laundry and I would have loved to just have someone else do it!
There is nothing like the pride of knowing you’ve done it all yourself, though. I’m sitting in my chair right now, enjoying it so much more than the wooden folding chair I was using over the past three weeks. And that is an analogy for the two types of retirement I could have.
I thanked my husband for his interest and reminded him that I had a strong track record in choosing my own investments. I broke even in 2008 (+0.25%) and I’ve beat the market a few years.
He went back to what he was doing, probably smirking on the inside, because he loves that I am good with money. He also loves that I can stand up for myself.
The default at my employer, it turns out, is to set aside 10% and put it in a target date fund. That’s totally reasonable. It was a weird moment though to see that they had chosen the same date I would, and also to know that there are now only twenty years left of my traditional career arc.
It’s a long time, though!
I maxed out on everything. I like to think of it as being ‘extra.’ I like to think of my investment choices as somewhat flamboyant. Rather than whatever image people have of extreme savings, I like to see it more as the ‘sequins and a feather boa’ version. We’re allowed to put 15% of our incomes into our 401(k), pre-tax, so I do. I also put aside another 10% for my IRA.
We save more than that, of course - we like to live on just half our income - but where we put the rest of it is a different subject for a different day.
Where did I put my funds? It doesn’t matter, really, because there are only maybe a dozen or so options for most employers. Those funds are generally only available to institutional investors, which is cool because it means I couldn’t get into them as a freelancer.
Really the only thing that matters is that Old Me is going to look back and be proud of the decisions that Young Me made. We still have time, and time is better than money.
(Although money is pretty darn great, too).
I've been working with chronic disorganization, squalor, and hoarding for over 20 years. I'm also a marathon runner who was diagnosed with fibromyalgia and thyroid disease 17 years ago.
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