PSA: Save early

[Anonymous]

Anonymous wrote:OP, if someone had given you this advice when you were younger (and they probably did), what would have made you listen? There are so many cautionary tales like this, and a large segment just thinks, "that won't happen to me."

Yes, or they don't even click to read a thread like this or they aren't even looking in the money and finances section. It's unfortunate that financial education is neglected but so needed.

I'm another one who did not save aggressively enough earlier in life. One thing that really irritates me is that I didn't defer the IRS maximum for many years that I could have afforded to but didn't even know there was a maximum. I just picked an arbitrary percentage that met the match requirement.

[Anonymous]

Anonymous wrote:I often read the "can I afford private school?" threads and am always surprised they s doesn't come up more. I am saving aggressively in case I get laid off at 50. Until I have enough saved so that I would be ok in that scenario, my kids have to stay in public school.

Yep. Our friends with a fancy house and 2 in private openly admit they couldn’t float 3 months of expenses (I assume they mean without a 401k loan or equity loan.) Their plan is to just always earn more money than last year.

[Anonymous]

Hi OP,

I am sorry this happened to you. This is very stressful. My husband was a non-equity partner in big law and was laid off when he was 49. In a way, this was the best thing that ever happened to our family. After doing some soul-searching, he ended up getting a government job. Our HHI decreased by 2.5 fold. Our children won’t inherit millions. But:
- DH is happy
- our marriage is better than ever
- our children will inherit happy memories and a healthy model of a good marriage

We used to be able to afford (pretty much) everything: fancy vacations, fancy restaurants, fancy presents for our children. But we hardly had time to truly enjoy life. We no longer can afford to drop $500 on a fancy dinner. But when we do splurge (after saving up), it is much more meaningful. We were lucky that we still had our old modest home so that we did not have to move.

Good luck with everything! You’ll get through it!

[Anonymous]

Saving early is for the rich.

We both worked, but money was siphoned away to paying student loans, saving for a down payment, paying for that expensive house, childcare, paying for kids, and saving for college.

Sure we started saving for college and increasing retirement savings in parallel b/c we can’t get loans for retirement, but saddling our kids with loans is an unpleasant trade off.

Where does this early come into play? Our down payment for a standard 40s special in the DMV was $140k. That took forever to save for.

[Anonymous]

Anonymous wrote:Hi OP,

I am sorry this happened to you. This is very stressful. My husband was a non-equity partner in big law and was laid off when he was 49. In a way, this was the best thing that ever happened to our family. After doing some soul-searching, he ended up getting a government job. Our HHI decreased by 2.5 fold. Our children won’t inherit millions. But:
- DH is happy
- our marriage is better than ever
- our children will inherit happy memories and a healthy model of a good marriage

We used to be able to afford (pretty much) everything: fancy vacations, fancy restaurants, fancy presents for our children. But we hardly had time to truly enjoy life. We no longer can afford to drop $500 on a fancy dinner. But when we do splurge (after saving up), it is much more meaningful. We were lucky that we still had our old modest home so that we did not have to move.

Good luck with everything! You’ll get through it!

We were never super-high income but at 59/53 we have saved up about $7M. Never ever paid for a $500 fancy dinner but friends and family in CA have treated us to Michelin star restaurants and expensive wine from their $250K wine cellars. I honestly can't tell the difference between a $30 meal and a $300 meal. The sizzle is better of course, but rarely the steak. Same goes for wine. I don't get the " smell and taste different with each sip: lime, wildflowers, wet stone and more" BS! I'd much rather have a good burger and fries with beer at a Fuddruckers than BS fancy food that costs an arm and a leg.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hi OP,

I am sorry this happened to you. This is very stressful. My husband was a non-equity partner in big law and was laid off when he was 49. In a way, this was the best thing that ever happened to our family. After doing some soul-searching, he ended up getting a government job. Our HHI decreased by 2.5 fold. Our children won’t inherit millions. But:
- DH is happy
- our marriage is better than ever
- our children will inherit happy memories and a healthy model of a good marriage

We used to be able to afford (pretty much) everything: fancy vacations, fancy restaurants, fancy presents for our children. But we hardly had time to truly enjoy life. We no longer can afford to drop $500 on a fancy dinner. But when we do splurge (after saving up), it is much more meaningful. We were lucky that we still had our old modest home so that we did not have to move.

Good luck with everything! You’ll get through it!

We were never super-high income but at 59/53 we have saved up about $7M. Never ever paid for a $500 fancy dinner but friends and family in CA have treated us to Michelin star restaurants and expensive wine from their $250K wine cellars. I honestly can't tell the difference between a $30 meal and a $300 meal. The sizzle is better of course, but rarely the steak. Same goes for wine. I don't get the " smell and taste different with each sip: lime, wildflowers, wet stone and more" BS! I'd much rather have a good burger and fries with beer at a Fuddruckers than BS fancy food that costs an arm and a leg.

Well done, PP. You did a great job and OP’s point is probably to be more like you.

[Anonymous]

I’ve always maxed out my 401k since 2003 but my balance is only $500k?! Never sold anything, target date fund.

[Anonymous]

Anonymous wrote:How long have you been laid off? Why are so sure you can't get another job? Assuming you can find one in 6 months to a year, yes you lose retirement contributions but not in a place that is unrecoverable.

Unless you are depleting other savings? Did you get a severance?

At 51, you should be able to find something else if you look aggressively, unless you are in a weird niche industry. 51 is not 61.

np.. 51 in certain industries is considered "old", like tech.

I hear ya, OP. I'm lucky to still have my $170k paying job at 53. DH is almost 61, and no longer able to find anything that pays $170K, even. Luckily, I made sure that we did save the max earlier on.

But, yes, OP's situation is all too common and a cautionary tale for younger people. You think your career path is set and you're good at your job so you will always be in demand for a high salary job. DH is great at his job, but he's old. Ageism is real.

Listen up, people in your 30s/40s. One day ageism will come for you, too.

[Anonymous]

Anonymous wrote:Saving early is for the rich.

We both worked, but money was siphoned away to paying student loans, saving for a down payment, paying for that expensive house, childcare, paying for kids, and saving for college.

Sure we started saving for college and increasing retirement savings in parallel b/c we can’t get loans for retirement, but saddling our kids with loans is an unpleasant trade off.

Where does this early come into play? Our down payment for a standard 40s special in the DMV was $140k. That took forever to save for.

You don't need an "expensive" house, especially with student loans.

[Anonymous]

Anonymous wrote:

Anonymous wrote:How long have you been laid off? Why are so sure you can't get another job? Assuming you can find one in 6 months to a year, yes you lose retirement contributions but not in a place that is unrecoverable.

Unless you are depleting other savings? Did you get a severance?

At 51, you should be able to find something else if you look aggressively, unless you are in a weird niche industry. 51 is not 61.

np.. 51 in certain industries is considered "old", like tech.

I hear ya, OP. I'm lucky to still have my $170k paying job at 53. DH is almost 61, and no longer able to find anything that pays $170K, even. Luckily, I made sure that we did save the max earlier on.

But, yes, OP's situation is all too common and a cautionary tale for younger people. You think your career path is set and you're good at your job so you will always be in demand for a high salary job. DH is great at his job, but he's old. Ageism is real.

Listen up, people in your 30s/40s. One day ageism will come for you, too.

+100!

I'm the 12:03 poster above. I was making $200K+ bonus and options in my 40s and thought I was irreplaceable. Laid off at 47, didn't want to touch lower level jobs, became a contractor, landed a job 5 years later that paid 20% less than what I was making before, laid off again at 56. I could have prob. gotten a job at $150-$160k but the offers were for hands-on work and I'll have to take direction from some snot-faced idiot who wouldn't have dared to talk to me 'back then'. So I said 'fu*k this' and 'retired'. DW was part time when i got laid off the first time, switched full time and now makes over $200K. Thankfully, we'd focused on savings and investments when both were working and of course, the market doing well over the past decade or so (except the past couple of years) has definitely helped. Save as much as you can, as early as you can, and invest.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Saving early is for the rich.

We both worked, but money was siphoned away to paying student loans, saving for a down payment, paying for that expensive house, childcare, paying for kids, and saving for college.

Sure we started saving for college and increasing retirement savings in parallel b/c we can’t get loans for retirement, but saddling our kids with loans is an unpleasant trade off.

Where does this early come into play? Our down payment for a standard 40s special in the DMV was $140k. That took forever to save for.

You don't need an "expensive" house, especially with student loans.

Hey boomer. ALL homes are expensive now, at least if you want safe and okay schools.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How long have you been laid off? Why are so sure you can't get another job? Assuming you can find one in 6 months to a year, yes you lose retirement contributions but not in a place that is unrecoverable.

Unless you are depleting other savings? Did you get a severance?

At 51, you should be able to find something else if you look aggressively, unless you are in a weird niche industry. 51 is not 61.

np.. 51 in certain industries is considered "old", like tech.

I hear ya, OP. I'm lucky to still have my $170k paying job at 53. DH is almost 61, and no longer able to find anything that pays $170K, even. Luckily, I made sure that we did save the max earlier on.

But, yes, OP's situation is all too common and a cautionary tale for younger people. You think your career path is set and you're good at your job so you will always be in demand for a high salary job. DH is great at his job, but he's old. Ageism is real.

Listen up, people in your 30s/40s. One day ageism will come for you, too.

+100!

I'm the 12:03 poster above. I was making $200K+ bonus and options in my 40s and thought I was irreplaceable. Laid off at 47, didn't want to touch lower level jobs, became a contractor, landed a job 5 years later that paid 20% less than what I was making before, laid off again at 56. I could have prob. gotten a job at $150-$160k but the offers were for hands-on work and I'll have to take direction from some snot-faced idiot who wouldn't have dared to talk to me 'back then'. So I said 'fu*k this' and 'retired'. DW was part time when i got laid off the first time, switched full time and now makes over $200K. Thankfully, we'd focused on savings and investments when both were working and of course, the market doing well over the past decade or so (except the past couple of years) has definitely helped. Save as much as you can, as early as you can, and invest.

I can totally relate. Laid off at 49. Was able to find another job, then laid off again at 55. I was very happy that DW has a stable job with benefits. Although I was making more than her for most of our marriage, the safety net of a government job was very comforting to us, even before I got laid off. When I got laid off the for the second time, I took over managing the household: shopping, cooking, driving the kids around, etc. Our lifestyle took a hit, but we adjusted just fine. Luckily, our kids’ 529s were already funded. So all is good.

[Anonymous]

I’m surprised that people still get shocked when they are laid off from a job, especially at age 40+.

This is not a new phenomenon. Imho Layoffs are common and should be expected and financially planned for.

The expense, skills and upward trajectory of a 50 year old are very different to an employer than a younger worker. Higher health care costs, larger paychecks, more vacation time off work, more sick time off. Coupled with a declining and outdated skill set, knowledge base and lower productivity compared to younger workers.

No worker should be surprised when they are laid off in this day and age. But older workers should definitely not be shocked by it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why didn't you start early OP?

OP probably did save *something* for retirement, but like many Americans, didn't save "aggressively". Reasons for that typically include:

- paying off student loans debt
- needing money to pay for living expenses
- buying a more expensive house in order to live in a better school district
- paying for private school or other kid expenses

PSA: The need to start young predates the child-rearing years by at least 5 and by as many as 15 years, depending on when you drop those sprogs.

This is what my DC have internalized--live lean and work hard in your early 20s when there are plenty of friends willing to share apartments, and fun is cheap. Save intensively in Roth IRAs/401ks. That way you have a good nest egg rolling when the bigger expenses come in. Bonus you're not so used to luxuries too early. Even if you have student loans, the new payment plans make it manageable to save for retirement and pay off loans.

[Anonymous]

Anonymous wrote:OP, if someone had given you this advice when you were younger (and they probably did), what would have made you listen? There are so many cautionary tales like this, and a large segment just thinks, "that won't happen to me."

DP, but both DH and I listened to that advice and started saving early. We were able to start ROTHs for each of our children when they started earning money in their teens. 401ks and IRAs became more available in after we started our careers. I understand both started in the 1970’s, but there were few options and more restrictions then. I did start a traditional IRA when I started working, the max was $2k then. At 59 and 62, we are in decent shape.