I agree.
A friend of mine just turned 60. He’s had steady employment since he was 18, but has never enrolled in a 401K. A number of years ago I asked him about it. He said, “The stock market is a gamble, and you can lose all your money in it!” Today he has nothing… no savings, no retirement, nothing. He’s already in poor health. The next decade is going to be rough for him.
It may never be “too late”, but the OP should start learning fast.
My mom never had a pension, or savings plan, and only got the minimum of social security. It was not enough to live on. If I wasn’t able to help, I don’t know what she would have done. What would you chose: necessary medicine, or food?
Wow, tons of great info here! Thank you for all the replies, and sorry it took me a bit to read through everything.
Mostly I just wanted to make sure I understood my options if – big if – I ever get enough income and stability again to actually put anything away. If I were to be in that fortunate situation, I should maximize my 401k contributions, get the full company match, consider HSA shenanigans, and if I have anything left over after that, maybe think about investing it elsewhere too.
It’s likely SS won’t be enough (if it’s around at all) and healthcare will keep getting more expensive. Just keeping adding, as several of you mentioned.
Noted. Thank you.
The brief history of our retirement schemes was also really interesting… how we basically went from no retirement unless you were wealthy to pensions and SS to what we have now, which is basically “fend for yourself, but with tax savings”.
And just to answer some questions:
Yes, at least one of them did. I never put anything into them because 1) I couldn’t manage my finances well enough to have enough to save, vs wasting cash on booze and food or whatever and 2) I didn’t (and still don’t, really) have enough confidence in the stability of our society and financial system to last until retirement. I don’t really want to make this veer off into a political tangent, but the country just didn’t/doesn’t seem very stable to me, and trying to plan 30 years in advance seemed absurd when it seemed like the multi-apocalypses™ were always just a few years away.
Mmmmmmm… hard to say. I worked several years as a student at a university in various capacities, but as many universities do, mine had various arms. Some were state entities, some were independent associated nonprofits/trusts, some were partnered for-profits, etc. Their org chart was a veritable Rube Goldberg and I can’t remember exactly who ended up paying me. Regardless, at minimum wage, I doubt it would’ve amounted to much anyway.
I also worked for the State of California for a few months as a trailworker making $7.50/hr. Maybe there were some benefits there, but it also wouldn’t have amounted to much.
Nah, nothing insulting about it. Totally fair question. I just didn’t get into all the details because I was more interested in the theoreticals of how retirement is supposed to work if you did it right, rather than focusing on how I did it all wrong, lol.
Without boring you with my whole extended life story, the shorter (but still long, yeesh, sorry…) version is this:
I’ve had a privileged but messy life that started out upper-middle-class in my youth (courtesy of my parents), then in adulthood, continuously see-sawing between working-class/blue-collar gigs and the occasional high-paying but short-lasting job. Some gigs paid me minimum wage moving piles of rocks. Other gigs paid me $150/hr doing freelance web dev. I’ve often strayed back and forth between those two worlds, never fully belonging to either.
My social circle includes both rich FAANG tech workers much younger than me and people my age Doordashing and struggling to pay the rent. I’m in between those extremes, having been both a high-school dropout and a college grad, both homeless and having had a 6-figure income for a brief period.
Add to that a sprinkle of millennial angst, a touch of mental illness, and dizzying cycles of alternating between lots & zero money… suffice to say I was just never good at stability or long-term planning.
In addition, the political instability in our country made it easier to rationalize/justify all that craziness to myself – why bother planning for retirement if the USA might not be around in a few years; might as well party it up while I can. To some extent I still feel that way.
So what changed? I happened to meet and settle down with a wonderful lady – as much as two unmarried DINK renters can settle down, anyway. She’s more stable and grounded than I have ever been. Opposites attract, I guess? It’s very much a tortoise-and-hare situation, with me having earned much more than her in brief spurts but never keeping a gig for very long, while she’s held down a steady career doing the same thing for the last 15-20 years, having saved for retirement from the get-go. Slow and steady very much won the race there 
She’s built up a sizable nest egg and I think she’ll be OK with or without me (we’ve made sure to keep her personal savings and finances separate so I can’t touch them). But both our parents are aging, and intend to leave us with enough money to possibly afford the down payment for a house, which will be the largest thing either of us will have ever owned.
Together we can afford the mortgage (just BARELY), but I’m worried about what would happen to her if I were to prematurely not-die. I already have a life insurance policy with her as the beneficiary, but I am – for the first time in my life, admittedly – forced to reckon with the longer-term what-ifs on someone else’s behalf. I always knew I didn’t want kids (and neither does she), so no worries there, but I don’t want her to be made destitute and homeless if something happened to me that didn’t outright kill me (i.e. injury, prolonged unemployment, coma, simple poverty in old age, etc.).
That’s all. It was easy enough to live in reckless abandon when it was just me and “walking off a cliff once I’ve seen enough” was my retirement plan, but now I gotta start thinking about her/us too
Around 30 years ago I had the idea I needed to start saving money for the future I won’t say I did too badly but I don’t feel like I really got serious until about 5 years ago. I am currently semi retired but I simply can’t afford to fully retire ever. Honestly even if I’d scrimped and saved every penny from the day I started working 40 years ago would I still have enough to retire? Probably not.
One group pushing for IRA and 410Ks fifty years ago or so were consultants and IT people who never stayed in one place for seven years.
I had a pension from AT&T which I used to joke would maybe pay for Starbucks, but it turned out to be bigger than I thought. When the chance came I moved it to an annuity so I’d be able to keep track of it when my former part of the company changed hands yet again. I wouldn’t recommend annuities, but it was the same kind of investment. I’ve never taken anything out of it, but it does have an excellent death benefit.
As for Social Security (not in response to Roderick) we mostly live on it, but we could wait to take mine until I was 70 and I was maxed out. Our financial planner sometimes yells at us for not spending enough. But that’s an example of it takes money to make money, and not that useful for the OP.
There’s a difference between saving and investing. Putting your money in your bank account will get you very small interest, but of course your money is very secure. Investing does open you up to some risk, but the risk can be mitigated by investing in more stable securities, and even those will pay better than interest in a bank savings account. With investing, you have the idea of compounding, where the more you invest, over time the more it grows by reinvesting. It’s like a snowball rolling downhill, picking up more snow as it goes. Sure, there is more risk and there will be dips in the market on occasion, but over a long term the snowball, for most investors, keeps growing.
I have had to explain the compounding concept to my kids. If you look at average investors, not even people you would think of as “rich”, they did not get there by working much more than anyone else, or that their salary is 100 times someone else’s - there are only so many hours in a day. No, the money starts to work for you at some point, as long as you make decent decisions.
Thanks for the explanation. So, do you plan on changing anything, either in terms of job situation, spending, saving/investing?
Not sure life insurance is your best bang for the buck. Term or whole life? Why do you think the premiums are better spent on insurance than invested?
And, I’d suggest you rethink your (IMO exaggerated) doom and gloom outlook. IMO, angst is an expensive luxury. It might be convenient to attribute that to your millennial cohort, but such an attitude certainly is not prevalent among the many millennials I know.
People who want to retire comfortably - especially those who want to retire early - plan and sacrifice. People who choose to fuck around - well, I hope you enjoy your present sufficiently to make up for what may well be a challenging future.
Did your upper middle class parents plan well? Do you anticipate inheriting anything?
When I got married, I was very fortunate that my wife and I were on the same page WRT saving and planning. You say your partner has planned well. As you clearly are aware, it might cause issues if you failed to do the same and, instead, expected to leech off of her hard work.
buy term insurance if someone depends on your earnings. Do NOT buy whole life under any circumstances. Invest the difference in the financial markets.
I am no financial advisor. But I am a successful saver. For the uninitiated, I feel comfortable giving the following advice. 40 is late, but it isn’t too late:
Whether through a 401k or an IRA (free to set up at Fidelity), pick an amount to save and put that in there every month. The employer will do it for you automatically, you’ll do it yourself in an IRA. There are many ways to move the cash, but for me the simplest is just to write a check to myself, which I can then deposit using the Fidelity app. If using a traditional IRA, this will reduce your taxes.
Given where you are, just put it all into an S&P 500 index fund. I would recommend VOO which has an expense ratio of 0.03% - But I wouldn’t fight them if someone thought there was a better option.
Historically, with reinvestment of dividends (Fidelity will do that automatically if you turn it on), this returns 10.5% Which means your money doubles every 6.9 years.
Start today, and if you put in $1000 per year, you’ll have $106,000 at 65 (assumes 10.5% and simple annual compounding). $2500 will get you $265,000 and $5000 will get you $530,000 (all calculated using PV in Excel, in case anyone quibbles with my numbers).
For perspective, if you have $265,000 at 65 and live 30 years, and can achieve 5% in retirement, that will pay you $17,235 per year.
It’s not too late. Pay yourself first.
I think for you, today is the best time in history for how to help you retire. You’d never have gotten a pension in a previous time/life. Today retirement opportunities follow you around and you can use an app on your phone to help. The investing advice in the posts above (401k; Vanguard Funds-VOO; all of it or any of it…etc.) are all perfectly good and stable places to put your money for decades.
The hardest part, is actually doing it. And then thinking that saving $50, or $25, or $10, or even $5 a week is actually worth doing - will that actually make any difference for retirement. Yes, it will. I wouldn’t get hung up on amounts now, just get used to the act of actually saving money / not spending money. It’s really hard.
It’s like a healthy diet or exercise, super simple in theory - you walk more / don’t drink sugar water…but close to impossible (at first) to actually do…and to do it again, and again. Good luck!
I think you’re exaggerating the level of instability in America, especially compared to many other countries. Assuming that the US might not be around so no need to plan seems foolish.
Sure, working on it! Had a series of job changes & income fluctuations over the last few years – it’s been a tough few years for computer programmers who aren’t working in AI, with a lot of layoffs and not many companies hiring (especially where I live). Currently freelancing, but hoping to turn that into an employee status again in the very near future… fingers crossed. Then, hopefully, health insurance and savings. One step at a time
I mean, as someone who didn’t grow up here, it doesn’t really seem all that normal, lol. I guess you can get used to anything, but this is definitely the least stable country I’ve spent significant time in (compared to Europe, Asia, and Canada). Anyway, don’t need to get into all that.
And don’t worry, regardless of my personal feelings towards the country at large, I’ll continue to work and try to save for the future, if only for her and the cat. I may not value stability as much, but they do
I just needed to know how to start approaching that whole retirement thing once I was able to get my ducks in a row. Now I know!
Totally. Fairness is really important to us both. When I used to make more than her, I paid a little more than half of household expenses and many of our shared outings. I’m poorer now but still pay 50%, though she does contribute more to the vacation fund right now. Anyway, definitely don’t want to (and won’t let it) become an exploitative thing, just out of principle.
Thanks for the tips, all
I think one of the differences between today and the past of, say, the 50s and 60s, is that jobs and pension funds were both more secure. The effect of this was that it was more realistic to expect to stay in the same job for life and then retire with secure pension funding.
Today both are much more rare than they used to be, though they still exist in stable institutions like the financial industry and some areas of the public sector. Beyond that, you’re pretty much on your own with only token assistance from social security, the extent of which depends both on what country you live in and, usually to some extent, how much you contributed over your working lifetime.
One way some people are able to contribute to their retirement accounts is by not having a vacation fund or really taking any vacations aside from just staying home from work. Also, you mentioned some high-paying jobs. You might want to contribute to an IRA or 401(k) during those flush times.
Or maybe you’re right that societal collapse is around the corner, in which case your strategy of living it up now is better than mine.
Ding! We have a winner! (Says the man who rarely took a vacation while young, but now, nearing retirement, recently got back from Kenya and is going to France next spring.)
I disagree. I’ve done lots of travel all my life and lived frugally elsewhere. I don’t want to wait until I’m too old to trek in Nepal, backcountry ski in Japan, and wander the slot canyons of Utah. I prioritized travel and adventure over other luxuries, married a woman who agrees with me, and we’re fortunate to earn enough that we can both live life and save for retirement.
Life is for living - don’t wait until your near retirement to have fun.
Heh, well, there’s gotta be some balance between “FIRE” and, I dunno, let’s make something up… “WATER: Waste All Today, Eventual Regret”?
A good friend my age was one of the FIRE types who worked at an insurance marketing firm. She hated every minute of her work life, her office, her “finance bro” peers, all of it. If she kept up that level of stress and misery, she wouldn’t have made it psychologically intact to 35, much less retirement. At the time I was working for a nonprofit, and my situation was the exact opposite: I loved my job, my office (a museum), my coworkers (passionate & creative idealists), etc.
We talked about it a lot, about our different lifestyles and dreams and what we each had to forfeit. For me it was money; for her it was happiness. We each learned from the other and eventually met in the middle. For my part, she made me realize how much financial planning I’d really missed out on in my 20s and 30s. She’s a large part of the reason I’m in this thread now and thinking about this stuff. And for her part, thankfully she eventually switched jobs and found a much better/healthier work-life balance. We’re still different, of course, and she will always be better-off financially, especially later in life. But for me, even when I was homeless and sleeping in my car, with drunk kids pissing on my tires and cops shooing me from parking lots to highway rest stops… I was still happier than she ever was at her old job.
Another family friend was a late-career hedge fund manager who lived in the biggest hilltop mansion I’d ever seen, with several pools and a dedicated outbuilding for entertaining guests… but in the years I knew him, I never once saw him smile or laugh, or spend time with friends, or really do anything except watch TV for an hour or two before falling asleep. His weekends were just as miserable as his weekdays, if not more so, since he seemed to work extra hard while his clients were resting. He divorced not long after that, and last I saw him, seemed to be in the midst of some serious soul-searching. (He’s much older than me, so I don’t really know how to respectfully cross that generational & cultural boundary and have a real heart-to-heart with him; I wish I could.)
Yet another was a startup founder back in the 80s who eventually became a multimillionaire. He was so unsatisfied with his life he left his family in the dark of night, fled to a different country, and started a whole new secret life there, leaving his original children behind without any explanation.
I don’t want to live like them. I would choose my poor, messy, flawed current life over “miserable millionaire” anyday. I’m happy now, have been for years, and probably will remain so for quite a while – even if the country blows up and all I own becomes dust. I may very well end up destitute in old age if I don’t make better plans now, but you know… worst case, at least I’ll have these good, messy years to look back on. If that’s the grave I’ll have dug for myself, so be it.
But it may not have to be, if I start now.
Those are rather extreme cases. I fully believe there are healthier balances to be found. My own mother grew up a literal peasant – as in rice farming – but she bootstrapped her way up, learned English, put herself through school while supporting her family and their single mother, and eventually found a corporate gig that paid for my college and then some. She’s comfortably retired now. She’s also the one who advises that balance, to never focus too much on just the money or just the day-to-day. I can only assume the better-adjusted among us Dopers here live by similar philosophies, not straying too far to either extreme. Similarly, my happier age cohort friends have found the individual balances that work for them – enough to get by, put just a little aside, not much more than that. Me, I’ve just been exceptionally bad at finding that sustainable middle ground, which is what I’m working on changing.
Fast-forward to the present day… the vacation fund was her idea (her insistence, really), not mine. I contribute what little I can. If I earn more again, I will contribute more. But neither of us would want to entirely sacrifice that in favor of earlier/more comfortable retirement. Like Telemark, we are experiential travelers, biking/kayaking/backpacking/snowboarding/climbing etc. whenever we can while traveling. Many of those activities will become less accessible later in life as our healths decline. So we prioritize doing what we can now and sacrificing on other fronts, deprioritizing homeownership, camping whenever possible, staying in hostels, eating powdered foods, driving old cars, whatever. And even then, on her wages alone, she’s able to not only put money into the vacation fund, but also save for retirement, and also eat out once in a while. On paper I ought to be able to do the same, and that’s what I’ll be striving for as soon as I find steady employment again. But we’re not, and probably never will be, the types of people stoic and disciplined enough to put off until retirement all of life’s pleasures. Tomorrow’s never a guarantee; we can plan for it and hope for it, but not at the expense of the present day.
Sure there is - I took at least one away-from home vacation every year except when my kids were really young. And I didn’t take vacations those years because of the hassle , not the money. But they were never expensive vacations - maybe $1000 tops until the kids were grown.
I don’t want to live like them. I would choose my poor, messy, flawed current life over “miserable millionaire” anyday.
Those aren’t the only two options. But you do have to make a choice and “future you” is going to have to live with it. My sister-in-law had what I assume she thought was a great life - she traveled for months at a time (while paying the rent on her apartment so she didn’t have to find a new one) to various places and eventually decided she no longer wanted to live in NYC and be a hairstylist so she used her retirement savings to move to San Diego (where she is a cashier at a grocery store and walks dogs) and now , in her 60s , she is envious of her siblings who are retiring because there is no way she can afford to. I’m 99% sure that if I had asked her when she was 30, she would have said she’d be okay with never be able to retire, that traveling for months when she was young would be worth it. And she certainly made fun of the rest of us for being conventional and working 35-40 hours a week most of the year. Except now that she’s over 60, it’s not fine. She wants to able to retire and is very vocal about her envy. There’s a very long story - but the end result is she can’t retire, she’s mad at her siblings over the problems she caused (and is still causing) with an inheritance and she’s not speaking to them. And all of this came about because she she wanted to , as I once said, “have her retirement in her 30s”.
You don’t have to put off all pleasures until retirement - I surely didn’t. But I didn’t take off months in my 30s to travel to Australia and Ireland in large part because I knew I didn’t want to be working until 75.
And honestly, you might want to think about other things ,too. Because the bulk of our retirement income is coming from me - I worked in government jobs that provided a pension and health insurance (for both of us) in retirement and I saved more money than my husband (because I earned more) and I’m fine with that. But we wouldn’t still be together if I was doing that and he was floating from gig to gig, leaving me to save and pay for vacations and retirement and eating at restaurants. It’s one thing to do that because your partner feels some sort of calling for a low paying profession or because they can’t work full time due to caretaking obligations or because they don’t have the qualifications for a higher paying job. It’s quite another to do it because your partner looks down on people with steady jobs ( like my SIL did) and floats from job to job with periods of unemployment- I’m not sure where you fall on that spectrum but it’s something you should think about.
Absolutely. I hear you, and I agree. I wouldn’t have been curious about retirement planning if I didn’t. It was one thing to live recklessly when I was young and single, but now that I’m old and this relationship is serious, the calculus has changed.
We’re not on either extreme. We have friends who choose to van-life for years at at time. I also have family my age on Wall Street who are probably millionaires by now. Us, we just have a rented roof over our heads, old cars, regular utility payments, all that jazz. We’re just normal, boring people, my rollercoaster past notwithstanding. We do try to take a foreign vacation every few years, but measured in days & half-weeks, not months.
Anyhooow, the vacation thing is a total tangent off a tangent to begin with. It was just an offhanded mention. It doesn’t matter; it’s not that much money to begin with, and even if it were, it’s not like I can just convert her contributions into my retirement savings.
Hopefully my job situation will become more regular again soon. I timed my last exit really poorly, at a crash in the labor market, and have been underemployed ever since, but hopefully not for much longer. And then yes, we can get right back on track, and I’ll be better about saving.
For all my failings, I somehow ended up with an amazing woman, and I will not take advantage of her. An equal partnership is what we both strive for, and in the few short years we’ve been together, we’ve supported each other in various ways.
And with that… off to work I go. I appreciate all the thoughtfulness and wisdom in this thread. And I promise you all, I will be better about this once I’m employed full-time again.
Sure. And we did sufficient driving travel with our kids - as much as we could stand each other! 
But the prompt mention of a vacation fund just sorta set off alarms for me. I encounter many folk who complain about their challenges saving, yet they often eat out, use Door Dash, travel extensively, own multiple vehicles…
IF you do not intend to commit to a decent paying career, and IF you do not intend to economize SOMEWHERE, yeah, saving for retirement is gonna be tough.
Reply - you haven’t responded as to insurance. Are you paying for term or whole life? And why do you think either is a good expenditure? I (and I suspect others) would suggest your premiums might be better spent invested in some growth fund.