This article about being able to retire well caught my eye yesterday for a number of reasons. The first, of course, being the idea that people are panicked about the state of their retirement accounts, but they shouldn’t worry – they can still have a good retirement. I shouldn’t be one to worry, with 30+ years til retirement, but I like to plan ahead. The second thing that caught my eye was this quote:
“One of my daughters in her 20s said, ‘If I put it in the market I’m going to lose it, and if I put it in the bank I won’t make any money, so I might as well spend it.”
Clearly not the best plan, yet I know that it’s a plan many of my friends and co-workers are following. While I am putting money into my TSP and my Roth IRA, mentally, it’s difficult to do, especially when the accounts are falling. 2008 was a hard year to invest, but I did it anyway because I know that 30 years down the road, I will be glad I did it. For the most part, I try to not think about my retirement accounts. I won’t need them for years and years, so I should just keep socking money away and not think about what’s going on with the money. Of course, you can’t just invest blindly, but I know that my money is in good solid funds, so I need to just trust that things will turn out. And if the status of the funds I have invested in starts to change, then I will have to rethink my plan.
I admit, I’m a little obsessed with retirement calculators. I want to know what that magical number is and what I need to do to get there. And then, as soon as I find out what that number really is, I panic. How in the world am I ever supposed to save that much money? This article addressed that as well.
“To begin with, stop making a fetish of The Number — that fearsome string of digits some online calculator or investment adviser said you need to retire comfortably. Retirement is not an all-or-nothing contest like a basketball game, where losing by one is just as bad as losing by 40.”
That’s something we should all remember. While we all want to save as much as possible so that we never have to worry in retirement and possibly even leave some money for our heirs, you do what you can. If you come up short, you’ll make it work. Just don’t come up too short.
I’ve gotten better about not checking the status of my retirement accounts every day. I might glance at them once a week, just to see the general movement. If it goes up, great. If it goes down, oh well, things will improve later. Besides, I still have a lot of years to work. Might as well focus on the present and not the distant, distant future.
Part of the problem seems to be that people have trouble with the idea that when they put money into an investment fund, they ARE buying something. You haven’t ‘lost’ any money until you withdraw the funds or sell stocks for less than you bought them for.
My parents’ retirement accounts weathered 3 big stock drops over the 30+ years they worked, but they still came out way, way, way ahead in the end. It’s just a matter of having OTHER retirement money saved up so you can afford not to pull from mutual/investment funds if the market is down.
I try to make myself think of it as buying retirement products on sale – after all if the market is depressed, I’m getting more share for the dollar!
It’s funny – before the bottom dropped out of the market 07-08, I couldn’t bring myself to invest in it, it just seemed so expensive (and now I know that it was over valued!) so when I moved my Roth IRA from Putnam to Fidelity I couldn’t bring myself to rediversify back out of the cash account. Finally worked up the guts to invest in a couple of no load, low cost mutual funds in August 09 and watched them take off, go figure.