Family Finances: Why we stopped saving for retirement

Amanda Gibson and her husband don’t put cash in their IRAs anymore and they may not for a good while. And here are the solid reasons why.

Personal finance experts recommend saving for retirement early, often, up, down, and to the hip hip hop.1 And there are great reasons to do so. No one wants to be tied to a job during their golden years when there are golf balls to knock around and grandchildren to cuddle. Plus, health care and end of life care cost, like, bazillions of dollars a year. So why would someone like me who obsesses over saving, stop saving for retirement at the tender young age of 33?

I opened my Roth IRA when I was 18. It actually had nothing to do with retirement. It was instead a clever strategy to hide $2,000 in income from the FAFSA people so they would give me more money for college. I wasn’t successful.2

After a brief interlude of being a poor college student, I started pumping money into my Roth IRA again when I was gainfully employed. My husband’s Roth has been subjected to the same treatment.

But after eleven years of tucking away cash, the Gibson household has officially stopped retirement saving for now. I’m not saying it’s a permanent situ, but for now the retirement savings train is powered down and parked. BUT WAIT, WAIT we have great reasons!

There may actually just be enough in there

After eleven years of consistent saving, some healthy stock market growth, and a cashed-out pension when I switched careers, our retirement savings accounts are looking pretty healthy. I’m not bragging, here. This is basic math, people! We’ve saved enough to make me feel relatively secure heading into retirement (after another 30 years of growth and dividends).

Our retirement will be gradual

Our projected employment paths have changed. I think I always thought I would work at a job for 30 years, then retire and have fun. Then I realized that ALL OF LIFE SHOULD BE FUN. So I am in graduate school to become a historian. Not only do I love this stuff more than fine wine at dinna time, but with this career I don’t ever have to actually retire. At 70 I’ll be that professor emeritus–you know the one who walks really slow but still knows her stuff. I’ll teach one class a semester while I piddle away at my research. And I’ll drive my hover car to the Moon University, because it’ll be 2051.

Anyway, my husband and I now both have careers that we can crank up and wind down at will.3 Our plan is to keep it in high gear as long as we like and then slowly do less as the timing feels right. For our finances, this means that a chart of our annual income won’t look like a cliff, with a precipitous drop at Retirement. Instead, we’ll have a nice downward slope, which we’ll supplement with our retirement savings. Working longer, even if we work less, means we can live the life we want with fewer savings.

We need the money now, and we may not later

70 is a long way off. Here and now, we have big health care premiums because neither of us has a job with benefits. We have day care bills. We cobble together a freelance income and a graduate fellowship because we are doing the careers we love and living the life we love. We have an old house that needs tender, loving care.

But so much of this is temporary. We expect that in ten years we won’t have day care bills, hopefully I’ll have a real job with health insurance, and the house will never need repairs–OK, that one won’t happen, but a girl can dream. Allocating our monthly savings to shorter-term needs (home repairs, the months the checks are slow coming in, emergencies) seems like the smart choice to make right now.4

Now don’t go getting the idea that we are saving less. We still aren’t saving as much as I’d like to, but today’s discussion is more a question of allocation. My husband and I have made the choice to funnel our savings into college funds and short-term needs at the expense of what for us would be retirement overkill. We’ll use these funds as a cushion during lean times, until we get all the kids in school and me out of school. One day we plan to go back to stuffing cash in our Roth IRAs, if just for the tax savings.

What about you? I know you care about saving money (you’re reading this, right?) Are you happy with how much you are putting toward retirement right now? Or are you on the same pressing-needs-first page as us?

  1. And don’t stop! 
  2. Turns out you pay taxes on the money you put in a Roth IRA, which is a great wealth building strategy, but pretty dumb if you are trying to hide money from the government. 
  3. He’s a freelance graphic designer. 
  4. But don’t worry, I’m also applying my super squirrelly saving powers to the boys’ college fund and our short-term savings account. 
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Amanda Gibson

Amanda Gibson used to teach folks about money at the Fed. Now she spends her days reading history books, raising kids, and thinking of ways to rule the world.

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