Friday, February 4, 2011

Are You Putting Your Life On Hold To Save For Retirement?

ceramic piggy bankImage via Wikipedia

In her new book, “Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back” (Ten Speed Press), the author Kimberly Palmer recommends that young adults try to save at least a quarter of their annual income.

This is a tall order for young or old to accomplish. But for the author and her husband they actually saved one-third of their joint income. Ms. Palmer, who is now 30 and writes the Alpha Consumer blog and column for U.S. News & World Report, said she recommended the one-fourth figure rather than one-third in her book because “it’s more realistic for people” in the current economy.

So how did they do this? They lived in a one bedroom apartment and basically never upgraded their college lifestyle. The daily meals consisted of inexpensive non-meat meals costing $120 weekly. They never upgraded to new cell phone models and never got cable.
Let's fast forward to the present. Today they have a mortgage, a child, daycare costs and are only saving 15% of their income. There goal is to get back to the 25% level of savings, but that's going to have to wait a while,

What are the reasons for this radical shift, the answer is babies. A family takes a lot of your income. And not just for a little while. For this family the next 25 years will be a time for sacrificing savings for a family . If more children come along then the money needed, will be multiplied.

I know many couples who have chosen to not have children. They enjoy more freedom and can retire sooner if they were good savers.

I received a comment on another post called "Do I Rent or Own When the Kids Are Gone?". It was from a couple who were in their mid 50's who had retired. They answered my question by telling me they live in a apartment and feel they can move to any city they want if they so desire. They do own a vacation home in the country where they go enjoy outdoor recreation activities. These people are set with a sustainable life style that can be enjoyed for the next forty years.

Did they put their life on hold to prepare for this day? Or did they live their lives along the way. The young author sacrificed before the child arrived and is sacrificing, in a different way, after the child came.

The extremes on either side of savings must make you move to the center and convince you to live your life along the journey

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