A recent chat with my 20-something co-workers about the difficulties of saving forced me to reflect on my own 50 year experience. Once my shock dissipated (I’m over 50?!), I wondered what I could pass along that would be helpful for them.
For me, saving started in 1964 when I was 5 years old with a hoard of quarters in a pink plastic piggy bank. My Depression Era parents took my sister and me downtown to open passbook savings accounts. Kindergarten me was not enamored with the notion of compound interest, but I was obsessed with doing everything my older sister did.
The account took on significance when I got an after-school job and started the ubiquitous "Saving Up for College" fund. Things went swimmingly for the next few years.
All ended when I felt the real cost of living during my freshman year of college. The account was gone, spent the first year on tuition, room and board, books, fees and a pair of suede boots. A worthwhile investment overall (boots not withstanding), but the rapid rate my money was depleted impressed hard on me the importance of saving.
After graduation, I got a full time (albeit low paying) job and opted to save into a new-fangled IRA account. I had no retirement target date expectations, but I did want to get back into a saving’s habit and the tax break attached to the IRA was very attractive.
In my thirties, I moved many times, had many different jobs, assorted roommates, and traveled. Saving any amount of money became harder and even though I continued to put funds away periodically, my overall savings dwindled. I’ll admit it, at one point all the IRA’s were
cashed out. I already developed the habit of saving, but transitioning from my thirties into my forties really forced me to think about saving with purpose-"My Retirement Fund."
Today, I have replaced the old Traditional IRA with a Roth IRA (qualified distributions in the future will be tax free) and my latest job with Colorado PERA allowed me to open my first 401(k) (which lowers my current taxable income). Thirteen years into this plan with a purpose, these accounts have weathered two stock market downturns and are on their way to helping me be more prepared for retirement than I was when I went off to college.
So, what is the takeaway? We're not born to be great savers, nor does it happen overnight especially given life's twists and turns. I developed the habit of saving over time: months, years and decades. It requires sacrifice which is very hard in our instant gratification society.
Saving is as much a mental act as it is a physical one that takes a lot of practice and discipline. Like playing the piano or tennis? Not really, but you get my drift. Just keep trying. You’re never too young or too old to learn how to save. It will make a great difference in your life!
This post was written by Patricia Votava from Colorado PERA.
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