Buzz
I can still clearly recall the moment when I realized how long it would take to save up an entire year's worth of income.
I’m pretty sure I’ve shared this before, but when I started my first full-time office job, I was eager to start saving. I was determined to live below my means! Build up my emergency fund! Contribute to my retirement accounts and take advantage of the company match!
Then the reality of the math hit me.
Even if I managed to save 20 percent of my pretax income for retirement—which felt like an incredible amount—it would still take me five years of working to save up an entire year's worth of income.
Of course, investing that savings should help it grow, and keeping my expenses low would mean I wouldn’t need a full year of pretax income for each year of retirement. But I couldn’t control those factors. (Inflation? Market crashes? Healthcare expenses? The overwhelming desire to have more money as I grew older, so I wouldn’t end up stuck in a dilapidated, moldy apartment forever?)
All I had control over was how much I saved, and considering the constant threat of layoffs, unemployment, and unforeseen major expenses, I couldn’t even fully control that.
It was a deeply discouraging realization, especially when I calculated the years between my age at that time (27) and my intended retirement age (67?) and divided by five.
If I saved 20 percent of my pretax income for 40 years, I might only have enough to fund eight years of retirement—if I didn’t need to spend it on something else first.
But—and fortunately for me—I chose to start saving money anyway.
Over the next decade, I saved my first $10K, switched careers twice, accumulated $14K in credit card debt during one career shift, paid off that debt, dove into investing, and grew my net worth to its current value of $116,293.34.
I’m still uncertain whether I’ll have “enough” for retirement—I hope so, and I’m even aiming to retire early, but I’m taking the advice from online calculators with a bit of skepticism.
And you should too.
As Grant Sabatier, author of Financial Freedom, shared with CNBC, it’s about saving what you can and not letting the long-term math overwhelm you:
If you’re not putting any money into investments, it’s hard to picture how you’ll ever reach $10,000.
It’s definitely not wise to mess around with retirement calculators. Someone saving a tiny amount—say, $10 a week—might be in for a rude awakening: the dreaded error message.
It’s incredibly discouraging, to say the least, when you're told it will take you 487 years to reach retirement or get hit with an error message.
Instead, Sabatier suggests starting with smaller amounts and setting more achievable goals. “Once I’d saved $500 to invest, my next target was $1,000,” he explained. “It’s a mindset trick to reach your first 10,000.”
Once I hit my first $10K, it felt like I could accomplish anything. (It also felt like the end of a long and difficult journey, and I realized I’d need a better work-life-savings balance to sustain this over time, but it was still a major achievement.)
All I can do is continue with what I committed to when I was 27: save as much as possible, invest what I can, and trust that everything else will fall into place.
After I saved my first $100K, and the calculators started suggesting I could retire in 10 years if I kept saving and investing at the same rate, it felt thrilling—but it was also a reminder that I hadn’t really changed anything this time. I was earning more and living in an area with a lower cost of living, so I could save more. In the future, I might earn less and/or save less.
So, all I can do is keep doing what I decided at 27: save as much as I can, invest what I can, and hope that everything else sorts itself out.
That’s what I wish for you, too.
(Also, go read Financial Freedom. It’s one of the best personal finance books I’ve read in a long time.)
