I believe retirement is possible for us. But at the same time, I’m on record saying that student loans (and other debt) need to be paid off before starting to invest for retirement.
“What gives, Mike? I have so much debt that I’ll never get it paid off, so I’ll never have any money for retirement! Thanks for ruining my day by reminding me of all this.”
I understand that sense of despondency all too well. I spent many years believing that I’ll never get anywhere, that I’d always be poor, that I’d never get any traction. But a few years later, I paid off all my student loans, saved up an emergency fund, started investing for retirement, and bought a home. It wasn’t quick, but things changed for me over time.
So before we all give up, I invite you to re-frame the situation. Because as I’ve learned, just re-framing your situation can be the difference between a feeling of success and that of failure.
Retirement is a scary thing to think about. Many people think that they’ll never be able to retire, that they will be forced to work until they die.
But it’s worth taking a look at what retirement is and whether it’s really as impossible as it seems.
I run a discussion group in Portland called the Portland Integrative Finance Community. It’s been tremendously satisfying for me, but the feedback I’ve gotten from attendees so far has been remarkable.
Many people have mentioned how positive it was to discuss their financial situations with other people, and hear other’s stories as well. The realization that there are others feeling the same sense of unease and insecurity with their finances comes with a huge sense of relief.
But it need not be a shock. Think about how you were taught about finances.
Oh wait, you weren’t taught? Funny thing; neither was I.
I don’t necessarily think of one’s finances as a game (unlike, say, Tony Robbins), but more like a process, a challenge, a long task. Perhaps a kind of art.
That said, I also think it’s useful and important to know “where you stand”, to know where you are in relation to where you want to be.
I talk a lot about retirement, and making sure you save enough for it. I also talk about the importance of having an emergency fund enough to cover six months worth of bills and expenses.
Okay, I talk about lots of things.
But how do you put it all together?
One metric used to determine your progress is to calculate your financial net worth.
I got on a bit of a rant when I talked about the end of history. If nothing else, it made me want to print out anything important in my life (like this website, which at the time of writing has almost 400 posts)!
But a lot of my argumentation is about what happens in the future. No one really cares right now that they can’t access their information from a decade or two ago. (Though arguably they should. After all, do you really think that all those priceless artifacts that we cherish in museums were thought of as something special in their day?)
What’s even scarier though is when you find this over-reliance on technology spilling over into normally technology-free areas.
Like, say, books.
Hidden among the latest catastrophes and tragedies was a little-heralded story about how the last VCR was finally being produced.
“I didn’t even know that VCRs were still being made,” said mostly everyone.
Indeed, it’s been a while since I’ve really thought about VCRs. I grew up with them, but I’ve never been much of a movie buff, so I don’t have a large collection of VHS tapes.
Nevertheless, I found this turn of events more than a little chilling. And what’s scarier is that few people seem to realize the larger implications for technology in general, and how it relates to our history and culture.
Smartphones aren’t evil, but for me, the cons far outweigh the pros. I don’t need a map to get around, I don’t need email everywhere I am, and apps don’t seem like they would qualitatively add to my life. For most situations, there is a non-smartphone solution. (My version of Yelp is to ask someone.)
But there are sometimes when I wonder if I’m just being needlessly recalcitrant, or if there’s a way that I could make what is the ubiquitous technology today and have it work for me.
But it turns out that I’m stuck before I even get started.
This week, I managed to lower my phone bill by over 25%.
It was easy, and didn’t even require a call into the (dreaded) customer service.
But there’s nothing special about me and my situation, and you can do the same thing, regardless of what bill you’re dealing with.
When people think of employer-based retirement accounts like 401(k) plans, people often think that that implies pre-tax contributions. It’s only your own self-directed retirement accounts (IRAs) that have the post-tax (Roth) option.
I used to be one of those people.
But these days, employers can offer what is known as a Roth 401(k) plan in addition to the regular 401(k) plan.
Because the plan combines some of the aspects of a 401(k) and some aspects of a Roth IRA, I call it the retirement mutant hybrid.
But like comic book characters, the mutants aren’t always the bad guys. And in this case, I believe this one can be pretty good.