Considering Our Retirements

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The Washington Post has a new-ish section focused on money, and most of it (as money sections tend to be) is currently focused on retirement. Their latest retirement column says that people who get advice on their 401(k)s are generally better savers than people who don’t:

People working with financial advisers also contributed more, about 9.5 percent of their income on average, compared to the 8.6 percent contributed by all workers overall, according to the firm. In contrast, people without advisers contributed 7.8 percent of their pay. Natixis surveyed 1,000 people in May who are making at least $15,000 and focused on the 899 who were enrolled in 401(k) plans. Of those participants, 472 people did not have financial advisers and 427 did get advice.

The main reason for the higher percentage of contribution is because many people who are socking away money for retirement do so without concrete goals for how much they need to save to fund the kind of lifestyles they want later in life, and people who seek advice from advisers usually get that sorted out. I should also note that though this statistic shows advice-seekers saving 9.5 percent of their income on average, experts have generally recommended dedicating 10 to 15 percent of your income to retirement (I’ve regularly put 15 percent away, and another 10 in general savings).

Another point the piece makes it that, according to a recent study by Charles Schwab, people spend twice as much time doing things like shopping for a new car or planning a vacation than they do when it comes to thinking about their 401(k) options. And the thing that gets people to actively think about retirement often comes too late—they are in their fifties and nearing the retirement age so they begin to think about it more seriously: “Sixty-three percent of people said that event was most likely to encourage them to seek help with their planning.”

What often gets me thinking seriously about retirement is, often, simply reading pieces like these, or at least, it gets me checking my accounts to see how far along I am since the way I save for retirement is all automated (according to Vanguard, I’ve funded half of the $5,500 maximum in my Roth IRA so far for 2014).

Logan, back when she was editing the site, would often tell me how antsy she felt whenever I wrote about retirement because she wasn’t saving and had all this credit card debt, and I told her: “Well, you are doing exactly what I would be doing in your situation, which is focusing on getting rid of your credit card debt, which has interest rates of 20 percent—more than what you’d be earning in an investment account.” (I’d only suggest putting money away in retirement account if you’re paying down high interest debt if you work at a company that offered matching.)

Another story that gave me a different perspective on the way we think about retirement is Anna Sale’s podcast from last month in which she focused on couples and money; one woman in her fifties she spoke to said she was dating a man she loved, but had decided not to get married because of what getting married would mean if their health deteriorated and they had to navigate our complex health care system later in life:

While we like to think that we’re going to healthy forever and we work very hard at it, the reality is, what we see in our parents’ generation is dementia, strokes, Alzheimer’s, in either one of our families. And what I’ve seen, for instance, is my aunt, who had been chronically ill, she had a partner and they never married, because if they had, all of his assets that he’d worked through for his lifetime would have been taken up for her medical expenses. So long as they did never marry, Medicaid covered what her basic needs were for healthcare. We’re such practical people, and sadly, the romance and the idea of the marriage and all this has to be weighed against the practicalities of the laws in the healthcare and the long term healthcare issues in the United States.

Retirement, then, is not just thinking about the kind of money you do or do not have socked away, but what happens to that money when there are other factors in your life you need to consider. I find this kind of practicality kind of romantic?

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