Does anyone else find the word “retirement” super uncomfortable? There’s something about it that just repulses me. I don’t like saying it, I don’t like the way it looks when it’s written, and I don’t like the connotations that go along with it – namely getting old and dying.
For a very long time I tried to not think about having to retire one day, as if by avoiding the thought, I could prevent it from happening. But that’s not how it works. Logically, I know that I am going to grow old, that in the future I’m likely going to have health issues that inhibit my ability to work, and that if I’m lucky (and don’t suffer some untimely death), one day I will retire and will live in that retirement phase for decades. I can either be ready for it or not.
But is it just me, or does saving for retirement seem a little backwards?
I’ve been thinking about it lately and it seems weird that we’re expected to put a chunk of our money away into a retirement savings account when we’re young; when we’re just starting in our careers, our income is lower than it’s likely going to be in the next 30-40 years, when we have the huge expenses of going to school, saving for a downpayment on a home, and possibly being on maternity/paternity leave or having children in daycare. It’s the most expensive time in our lives, while we make the least amount of money.
I recently read an article on Facebook that said young people should delay saving for retirement until they were out of their 20’s and 30’s because interest rates were so low and most people that age have so much debt they need to focus on. It got some serious backlash in the comment section. Frustratingly, I can’t find that article again, but while I was looking for it, I stumbled upon this amazing one that expands on the idea behind delaying your savings. It basically says that the benefits of compound interest from investing at a younger age are “arithmetically correct but logically indefensible.”
Often times, financial experts use graphs and examples to show how much more money a person would have if they started investing at a younger age versus a person who started later. According to the article, “The illustration encourages them to believe, erroneously, that there are huge financial repercussions if they are unable to save for retirement when they are young. This is simply not the case” and that “if we lived life by the numbers, we would logically save for retirement first, then buy and pay off a house, and finally, nearing retirement, have children…unfortunately, biology trumps financial considerations…hence the kids and the family home come first.”
I guess all this is to say that it may make more financial sense to start saving earlier, but we don’t need to feel bad if it’s not possible, or if like me, you’ve avoided even the thought of retirement for a very long time.
And while I still don’t like the negative connotations associated with retirement, after recently going to the bank and setting up my own RRSP (Registered Retirement Savings Plan) I actually feel a little warm and fuzzy sometimes thinking about the money, time, and freedom I may one day have.