We are by no means “all set” but we’ve been saving for retirement since IRAs were first made available. My husband’s siblings did a lot of travelling etc. and I was always puzzled as to how they could manage it (answer: they really couldn’t: both declared bankruptcy at one point or another; to be fair one was largely prompted by medical bills). Ditto his parents though in their case it was decades of underemployment and some poor choices, then some bad luck that wiped out what little they had for retirement. They lost their condo to foreclosure (again result of bad decisions, they had a smaller, paid-for one that they wound up not being able to sell for years).
So we’re supporting them (just the parents) to the tune of about 800 a month in housing expenses. When they couldn’t afford their car and expected the “kids” to pick up the cost, we chipped in for 3 months and I refused to do so any further - as I had this crazy idea that if we couldn’t afford a new car, I was hella not gonna pay for THEM to have one (our newer car is 13 years old and has 175K miles on it).
Now, we are in a very expensive part of the country, with high housing expenses - but at the moment we both earn decent salaries (one job loss though, and we’re screwed). If we didn’t have the family to support (including 2 special-needs adult kids) we’d be in decent shape - but through it all, we have ALWAYS put money in the 401(k).
The tale of the person who withdraws 10K a year so she can have “stuff” now is horrifying to me. I have, once, taken a 401(k) loan - to buy the condo for the in-laws - and I was twitchy for the next 4 years until that was paid off.
My kids are under orders to save 10% of their income in an IRA. No discussion, no argument, no debate, just DO it. They have limited expenses - and I frequently bring up the example of their grandparents as a reminder.
Beyond “spend less than you earn” and “learn how to properly invest what you save”, another very important thing is NOT to get caught up in the hype about what you “should” have at any particular stage of life or income. Invariably, the prevailing wisdom about that is utter foolishness. Very few people NEED new cars, or larger houses in nicer neighborhoods. Nobody needs a 70" TV, or matching brand new high end furniture. Or for that matter, to be IN style all the time- when I was younger, I was routinely amazed to hear white-collar women of my acquaintance bemoaning a lack of money, but who had dozens of coordinated outfits and tens of pairs of shoes, etc… most of which were not knock-offs either.
The trick IMO, is to identify the essentials- rent, utilities, food, debt, etc… and then budget from there. Ideally, set up a separate savings account and do a separate direct deposit directly to it straight from each paycheck. That way, it never is visible in your checking account, and you’re a lot less tempted to spend it. The temptation though, is to spend it on frivolous crap once you’ve accumulated enough to be worthwhile. RESIST that temptation, and keep building your savings.
It’s REALLY handy to have a relatively large and liquid savings, so that you can cover stuff like a new water heater, car repairs, etc… without going into debt OR suffering major disruptions to your normal lifestyle either.
This coworker keeps saying she’s taking it out so she can pay off her credit cards, not realizing that she shouldn’t be using her credit cards in the first place. Her husband died 3 years ago and she inherited his 401(k), which is what she’s plundering now. She does contribute to her 401K, because of company matching, but it’s a minimal amount, like 4%. At one point she was $40K in credit card debt, which she paid from her husband’s 401(k) before he died. She’s getting older and is now saying she might not be able to afford to stay in her home (of course, she refi’d and took out some cash). At one point I gave her a copy of Financial Peace that I got at a library book sale for $1. Of course, she didn’t read it.
I’ve heard the stories many times over the years about people who bought a McMansion, because you’re supposed to buy a house whose price is double your income (think about that for a few minutes) and they have sheets on the windows and lawn furniture in the living room, and sleep on the floor, while the other 4 bedrooms sit vacant.
In my area, most of the people who live this way are Indian physicians, but not always.