Retirement. I know…that word.
Doesn’t seem like this impossibly far away thing anymore and I woke up one day rather consumed by it as if a switch went off overnight, much like when I knew I wanted to have a baby.
I wasn’t taught as a kid about money and saving, though I wish I had been. I don’t blame my parents; it wasn’t in their culture or upbringing to know about things like retirement accounts or even savings accounts for that matter – not when you come from a poor, wartime childhood. I also think in traditional Asian cultures, children are expected to take care of the elderly so retirement planning isn’t quite what it’s like here, though that may be changing. My mom used to stubbornly tell me that we wouldn’t be left with the burden of taking care of her in retirement and that she wouldn’t want to live with us if that time ever came. Well, that remains to be seen, but it certainly signals a shift in her part from generations before her.
I’ll also divulge this, which is (or maybe was?) another cultural thing that I would later realize was not necessarily a given among my peers: it was always assumed that college would be paid for by my parents so I didn’t come out of school with student loan debt. Going to a scholarship based school certainly helped (though because of mounting financial deficits, Cooper Union is controversially considering charging students tuition for the first time, which would challenge its defining philosophy of free education when it was founded in the 1850s). My parents paid for everything. Maybe this sounds incredibly privileged, but I didn’t know any differently. All of this, however, made me fairly naive about money until I got my first job. It wasn’t that I didn’t know the value of money and I suppose I was fiscally responsible enough to never go into credit card debt, but I didn’t learn the importance of saving until I was 30 and at that age I felt like I had a lot of catching up to do.
That said, I don’t know if it would have been possible for me to start saving for retirement before I started at 30. I spent much of the 90s in school, stretching out my undergraduate studies to 6 years when I switched majors and schools, and then going to grad school which I did take out loans for – a whopping 60k debt which I was determined – and did – pay off within 8 years. But when I read articles of how compound interest works, it makes me wish that I had started saving earlier, that someone had pulled me aside and showed me a picture of the future and how saving even a little bit every month could change what we could be sitting on today. As it turned out, my long time accountant who retired last year, was the first adult in my life who urged me to open an IRA at 30 and for that I will be forever grateful.
I’ve been reading a lot of articles lately about how our generation is screwed mostly because of the timing of the housing and market crashes, not to mention the whole social security debacle. It’s likely that many of us will never accumulate the wealth that the baby boomers have been able to build (though interestingly enough, this article suggest that the picture for 20-somethings might actually be better than those in their 30s). If you ever want to give yourself anxiety, just read any article on retirement. Guaranteed to make you depressed instantly! Despite the fact that I don’t feel prepared for retirement with what we have saved so far (and I recognize that everyone’s comfort level is relative and personal) I also know that we’re doing better than a good percentage of Americans. Sometimes it takes a real scare to put things into motion and as counterproductive as it sounds, I’ve been reading these articles to scare myself into being more proactive about retirement planning and learning all I can about investing. I’ve not much of a big consumer, though I certainly like to buy things and do prioritize our spending, but no material purchase will ever feel greater than being able to sock away that money instead. So starting this year I have new goals: max out retirement, but continue to save for family vacations even if that means buying less stuff. That ugly ceiling light in our room that I’ve been dying to replace can wait a little longer, I guess. “Buy experiences and not things” is still a philosophy that is really holding true for me.
Ironically, I don’t have a clear vision of what the future holds for us in 2, 5 or 10 years, but I can visualize a 20 year plan now that has strangely calmed my nerves. In between now and then, however, remains a big question mark. Job stability and career longevity seem like a thing of the past and we have college to deal with in only 9 years. If private colleges are already costing 40k in tuition a year, what will it be in 9 years? All of this is scary stuff.
I keep coming full circle to the fact that it’s really important to teach our kids about saving money and the value of compound interest. Who knows what the world will be when they become adults? The education about money has to start at home. I don’t know if I can give my girls the gift of debt-free undergraduate education like my parents gave me, but what I can give them that my parents weren’t able to is an earlier start by teaching them about money while they’re still young. I also plan to open a Roth IRA for each of the girls as soon as they graduate from college to get their start in retirement early. I do believe it’s one of the most valuable gifts you can give your kids.