Why I don’t pay attention to percentages and you shouldn’t either

For much of my working career I have not focused on retirement. In fact, I wrote in an earlier post how fortunate I was that I had savings from negotiated contracts (CBAs) otherwise I would have a lot less. Saving has to be intentional – for one to save, they have to do so purposefully.

My twenties were full of what I would consider above average expenses and excessive affluency. Above average because of $600 a month child support and excessive affluency is represented by dining out, leisure weekends, and buying things I didn’t necessarily need.

You see, for the longest time I didn’t save anything towards retirement except that which was saved for me via contract negotiations and I should have. I should have saved more. I should have saved much more. I’m reminded of this when I read those who in their 20s saved a MASSIVE amount of money, invested it, and are financially independent in their late 30s. I just discovered what financial independence was a few years ago – and I stumbled upon that researching for something else entirely. Now, at 40, I’ve become more focused on retirement savings so my wife and I can live comfortably in our latter years. You are never too old to learn.

You have to start somewhere

There is a starting line for you – and perhaps it’s today

It would be prudent, then, for the current me to learn from the former me and that is one of the points of this article.

After a number of years I began to heavily research retirement and the available vehicles people used to get them there. I want to retire and not be poor (my benchmark still). I wanted to learn all that I wasn’t taught as a kid/young adult. I caught a bug, as it were. I want to be able to retire from the daily grind at retirement age and not have to worry about whether I’m going to bust the fixed income budget because I am buying groceries. I never really paid attention but a co worker used to talk about the seniors he’d see at the grocery store eyeing the steak he had in his cart – as in they couldn’t afford what they were getting much less steak. I may not want to eat steak when I retire but I want to be able to afford it.

Beginning to save via investing

Begin investing and play the long game

So I contacted a financial advisor, a fiduciary, who I could talk to and run some things past him. We spoke for a couple hours about what we wanted out of life, retirement goals, work/life balance, the ability to give, etc. I was impressed with what he said not because it seemed wise but because he had acted upon the things we spoke about. He had made life changes to support the slower pace, smaller house, more deliberate living lifestyle. We set up Roth IRAs, one for my wife and one for me along with a joint taxable account for us to begin.

So what did I begin to save and invest?

$10.00 here and $10.00 there. If I worked some overtime I put some away in savings, building up our emergency/opportunity fund. Conventional wisdom says 3 to 6 months of income saved – I personally prefer 6 months and even more to be honest. I will likely raise it slowly to closer to 9 months or more as finances allow.

Personal example and setup to save

Start small if you have to – but it takes time and intentionality 

I wasn’t going to get there from measly $10.00 deposits, though. I needed more and I certainly had more coming available. When I contacted the financial adviser I had in mind to invest that $600 a month in IRAs when my son graduated high school. And that’s EXACTLY what I did.

*IMPORTANT: I know so many guys in the trades who are paying child support and when they get done they get themselves a motorcycle, boat, or some other extravagant gift. Do yourself a favor and save/invest the money instead. It will be the EASIEST money you have ever saved. You have gone for likely a very long time without having that money at your disposal and it’s too easy to roll it right over into savings/retirement. Trust me, your future self will thank you immensely.*

Let’s do a bit of math here. $600 (per month) x 12 (months) = $7,200 a year.

Now, if we continued with just that amount for the next 30 years:

$7,200 (yearly) x 30 (years) = $216,000. In 30 years you will have SAVED $216,000. Remember, this isn’t counting any investment gains which have historically been around 10% yearly when considering the overall trend of the stock market. (If you’re like me you can use a much more conservative number like 6% or even lower; remember, anything extra is icing on the cake).

That’s not a small amount of money, especially considering the skilled trades and how the jobs ebb and flow. But that isn’t the primary reason I stared this post, however.

Comparing percentages and savings

Comparing percentages of savings can rob you of your joy – be careful of the trap

I started this post because of percentages. I get inspired when I read other people who are active in saving and when I say active I mean they have the math down to where they are saving over half their money for retirement and investing. I read their frugality, their thriftiness, their intentionality, and their focus and become inspired to do the same.

Then I compare the percentage we are saving to what they are saving and I become dejected. I’m nowhere near 50 percent. I can’t – it simply isn’t possible. I have a list in my head as to what bills I know we have for the month – they are fixed and I do not know how many times I have written them out along with monthly net income comparing the two, trying to squeeze out any additional money to save, you know, $10.00 here and $10.00 there. Hey, if the small purchases add up and sneak up on you I know small deposits can do the same thing.

Comparison is the thief to joy

That was me on the left – don’t let it be you

Through comparing our monthly bills and net income, my wife and I have trimmed expenses to what I would say is the bone. We don’t budget, never have and likely never will. Instead, we just don’t spend money. We don’t budget money for clothing, we just don’t buy any – even the kids. We have been the recipients of free clothing for many years now and that has helped us tremendously. My wife breastfed our kids and thus eliminated another expense. She used cloth insert diapers which were an initial investment up front, saved us A LOT of money down the line (that, and having the two oldest potty trained before two years old helped out). We hardly ever eat out, shop at Aldi (an amazing small grocery store), have never had cable, and in general live a simpler life. We have Netflix via T-Mobile and all of the other streaming services we get from family.

You see, I cannot tell you how many times I have looked at the bills going out in comparison to net income coming in, trying to figure out if there was anything recurring I could cut I have found nothing except the cell phones – which I have no intention cutting. Because there is little left to cut we often have a conversation about other people who spend what seems to us WAY more than we do. We live in a higher than normal cost of living with the largest military presence in the country and because of housing allowances the housing market (for the wage earned here) is higher. A lot of my wife’s friends get housing allowances, freeing up money that we have tied up.

Oh, did I mention we are single income household? I would be remiss if I did not mention that important information. My wife works harder than I do wrangling our kids, homeschooling them on a daily basis, and is an unsung hero. Yes, I know she could work but childcare costs are astronomical and it is of singular importance my wife stay at home and raise our kids and teach them our values.

Our plan of action to save

You HAVE to plan things and you NEED a goal to pursue

So while I compare our situation to some people and know we are tracking in the right direction I also can’t help but feel dejected because we aren’t saving a massive amount of money percentage wise. (Last year our savings was probably close to 20% for those who were curious). And I don’t have the time to wallow in my self pity and mope around like Eeyore. I want to save and I will, it just won’t look like others but our situation doesn’t look like others and that’s ok.

Rather than set my goal for a percentage, I have decided to not pay attention to it and instead set the goal to save a certain amount of money. 

My first goal is to max out the IRAs at $12,000 for the year 2022. The limit is $6,000 per IRA and we both have one. This should be something we are able to do. If we saved nothing else but this we would be ahead of most people already. You can follow along with us, too: for this year, I have decided to do a monthly write up about where we are and you can find those posts here.

Second, there are other options available from work which could enable me to save a decent amount of money. Taking a second to look it over, it is right at $9,000. Again, this will happen through no action of my own.

So, if I have no other goals (I do) the total amount above is likely close to $21,000 for the year 2022. Percentage wise it wouldn’t be as impressive as 50% or greater but dollar wise $21,000 is a great goal to meet and save.

On top of that, I opened another savings account just so I could begin saving for some future trips. I have to have a separate account for this in order for me to save correctly for this goal; compartmentalizing is where it’s at for me. While plans haven’t been finalized as to where we will go, what we will do, how long, etc., (If I have my way we would visit the Nordic countries – the beach is overrated) what I do know is I would like to save around $1,000 at least this year. We never do anything for our anniversary and sometimes we don’t even go out to dinner so it will be a nice celebration – whatever it happens to be. (I mean, we have kids; who has time for anything?) 

I also have additional savings as the year goes by which will add to the total amount for the year. I hope to add around a few hundred dollars, as permitted, which brings the total to $22,000 and that is a mix of pre tax and after tax dollars. I plan to do this while we still give to various ministries and non profits and try not to lose focus. I do not know what the overall percentage will look like but for a dollar amount I believe it is good. I have no intention of trying to keep up with the joneses, whether they are in debt up to their eyeballs or save 50% or more of their income and investing it.

Our family is unique, our needs are unique, our situation and desires are unique, and our savings will be unique too. I’ll earn, give, save, and continually seek to do so, all while not paying attention to percentages.

*Addendum: When I really look into it I realize those who have higher savings percentages have different lifestyles and circumstances than we do. Many are in their 20s WITHOUT kids, both people work and save; it’s even likely many don’t give money to charities or practice philanthropy. Maybe they do, I don’t know and perhaps it isn’t fair to assume. It’s certainly a possibility though and from what I can discern it’s true for some.

Consequently, my wife and I have 3 kids together, we are in our 40s, a single income household, and we give to ministries we believe in.

I don’t write this to be a defense or an excuse; rather, I fully acknowledge we have different circumstances and situations which warrant different approaches. Most people don’t even plan for retirement, much less save for it.

Like I said earlier, I’m not paying attention to percentages and I don’t think you should either.*

So get out there and save for retirement – and don’t forget to have fun, too! 

Let me know here how you are doing, what your plans are, and you intentionality to bring it about. We learn from one another, after all.