Can You Plan for Retirement When You Don’t Even Have Kids Yet?

Dollar dollar bill y’all

two queer women sitting on steps

A few months after our wedding was over and done with, I had a major heart to heart with my wife, Karyne. The TL;DR read a little like this: I SUCK at finances. She agreed that indeed, when it came to money, I was REALLY good at keeping Amazon in business, but significantly less good at keeping our finances in the black. And while she kinda, sorta budgeted via some dated spreadsheet she started back in the early 2000s, it was definitely clear to both of us that we were pretty behind on taking control of our financial shit.

I asked Karyne if she would be the head money guru in our relationship, promising that I would completely adhere to our mutually decided upon plan. We signed up for YNAB, thanks to some great advice from Maddie, and totally got it together. Or, at least it felt that way for about five minutes.

But before we get to the stressful part of the story, let’s take a minute to chalk up our wins. Because in a short span, we got ourselves well on the way to paying off some credit card debt, we got rid of a totally jacked up student loan (goodbye twelve percent adjustable interest!!), and actually started saving money for our upcoming journey of same-sex parenthood (cause that shit ain’t free!). And for the first time in my adult life, I’m living within my means, and budgeting for things BEFORE they happen instead of charging them and trying to back pay it all. Damn, it feels really good!

retirement is not a four-letter word

But while we were basking in the glow of our newfound financial badassery, the R word quickly cropped up: RETIREMENT. With Karyne turning forty next year, and me sliding into my mid-thirties, retirement isn’t as far away as it once seemed. I have a 401(k) from a former job that I no longer contribute to and is pretty small, but is invested, and Karyne has a 401(k) at her current job, plus the many from previous jobs that she rolled over into an IRA. But we’re not so naive to think that’ll cover us.

The thing is, we want to be parents. And as a gay couple, that’s going to cost plenty of money before we’re even holding a little bundle of future expenses joy in our arms. And then of course there will be years of childcare, clothing, food, dental bills, prom outfits, and let’s-not-even-think-about-college. Otherwise known as LIFE.

But still, we’re not going to be able to work forever, and saving for the future is a thing we need to think about… and think about now. Or so the financial planners tell us. So how do we navigate saving for a family, especially one we don’t know exactly how much it’ll cost to create, while also saving for that not-so-distant future that (hopefully) includes a retirement?

Even though many of us keep our finances hush-hush, I know we’re far from alone. For those of you, who like us, have just managed to get your finances and budgeting into decent shape, how do you balance saving for now, and saving for later?  How do you live for today, and live for tomorrow? How do you do it all without many panic attacks?

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  • Amy March

    The only way saving for retirement works for me is doing it first before anything else. My retirement savings come out of my paycheck before it gets to me and go into a set it and forget it account that I hardly ever look at. If I were actively choosing every month how to spend all my money, I’d be taking a vacation this summer and house hunting and saying yes to all those fun weekends away that cost a grand. But I don’t, because I actually can’t afford to do all those things and save for retirement and a hope and a prayer won’t feed me when I’m old. For me, if I’m not paying future Amy first, then I can’t afford the rest of the things in my life.

    I find the framing of this question really interesting because I don’t have kids, I definitely want them, and I’ve never linked that uncertainty to saving for retirement. I don’t know what life will bring but I sure hope it will bring getting old! In a way I think pre-kids is the best time to lean into saving for retirement because I’d rather be telling myself no than feel like I’m depriving someone else.

    • penguin

      Yep this is what we do – I never see that money (just goes right into my 401K) so I don’t miss it and don’t have the opportunity to spend that money.

    • Sara

      I do the same. My job doesn’t do 401k match, but they used to. When they cancelled it, I upped my % to match what I used to get (from 3% to 6%) and when I feel like I’ve got budget on track, I try to up it 1%. I don’t miss it. My parents always taught me investing in retirement after starting our first ‘adult’ jobs was a major priority.

    • Eenie

      This works for stuff auto deducted from my paycheck, but I struggle with maxing out my Roth IRA that comes out of my bank account. And yes, maybe you can do it through your company, but as someone with four different 401ks right now from my various jobs, I like having my Roth IRA in one spot.

      • Lisa

        You should be able to roll the four different 401(k)s into one fund–either your current employer’s 401(k) or an IRA with an independent company like Vanguard. It takes a little work, but it can help consolidate all of those loose ends. This is especially advantageous if your employer plans didn’t have great options anyways.

        For the Roth IRA, I treat those contributions as a non-negotiable of my budget and have them set up to auto-pay each month like Netflix or my internet bill. If I don’t budget for it, then my bank account will be messed up!

        • Eenie

          Yes, I actually started the paperwork for rollovers this weekend when I realized I had so many.

          • Lisa

            I have a couple of awkward accounts hanging out there (hey there, random $300 from my first job that I didn’t realize the employer was contributing), and I keep meaning to roll them into my current account. However, there was a hang-up of needing to do extra paperwork that my husband would have to sign that stalled the process. (I thought I’d be leaving Badtown U this year and figured I’d do all the husband consent forms when I rolled that account over.) Now that we’re likely staying another year, I might make sorting these out another summer financial goal.

          • Eenie

            Interesting. I did not realize that was required! I wonder if I will have to do that as well… I think one auto transitioned to an IRA with vanguard since I didn’t have enough money in it, so I’d like to move that to betterment instead. One of them has a lot of money but I’m waiting to decide if I move it to my current 401k since I’m kind of interviewing for a different job at the moment and would have to do that process yet again.

          • Lisa

            That’s at least what the TIAA customer service representative told me I’d need to do if I wanted to roll my dangling 403(b)s into my current one. I’m not sure of the rules around it, but he said something about how, since my husband would be the beneficiary if I died, he had to sign off on the consolidation. It felt like I was back in the 1950s!

          • Eenie

            Ugh he is the beneficiary. But only if I die!! I can do foolish things if I want to while I’m still alive ;)
            I don’t think he’s the beneficiary for my other one though because it was pre marriage… It’s on the to do list for July!

          • another lady

            I never had to have my husband sign anything when I rolled over my old 401K’s to my personal IRA (not Roth) and I did not have to sign anything for him when he did it. Have not hear of this… maybe because it’s a 403(b) – is that for a state or federal job or non-profit?

          • GBee

            For my 401k with Fidelity, we are required to have spousal consent only if the employee lists someone other than their spouse as the beneficiary.

          • Ashlah

            Only a small number of 401(K)s have this requirement, but I believe all 403(b)s do. It has to do with the death benefit being an annuity payment plan. Spouse essentially has to say “I understand I am no longer entitled to annuity payments if they roll over/otherwise distribute this account.” And that’s about the extent of my (hopefully not completely erroneous) understanding :)

      • I tell EVERYONE that they need a Roth. I started mine when I was 26 and broke (which is a good time to start one), and eventually I rolled my old 401K into it. You need to open it while you’re young, so it will grow tax free over time. Also, if you’re a couple of “professionals” (lawyers, etc, I’m looking at you) at some point you may earn too much to pay into it, so you need to pay into it as much as you can before your earnings (possibly) rise.

        I literally tell everyone I know, and too many people just don’t do it.

        • K. is skittish about disqus

          We missed our chance with a Roth and it annoys me every time I think about it. Which I recognize sounds like a total, “Boo hoo, we earn toooooo much” *smallest violin plays* but now we have to auto-deduct way, way more from our paychecks to catch up and we don’t get the same return we would have.


        • Emily

          Even if you can’t directly contribute – you can roll a regular 401k / IRA into a Roth IRA. You take a tax hit, but it allows your principal to grow tax free. My husband did it in the year he got laid off with his previous 401k. If you are in a profession where your whole working career has you above the $110k or so threshold (high quality problem I know) you can hack your way in – if you open a 401k Roth account through an employer, you can open a Roth IRA and roll your Roth 401k into it even if you are ineligible to contribute due to income and then roll future 401ks into it if you are down with taking the tax hit (I am always down with the devil I know (taxes today) over the devil I don’t (taxes years from now)).

          Signed, they let me do this so now I feel compelled to tell people this workaround exists.

          • Lisa

            Yes, the backdoor Roth IRA is something that gets talked about a lot in the FIRE community. Mad Fientist also has a post about the “Mega Backdoor Roth,” which could be an option for some people who are making large 401k contributions.

          • Yes, this is it!

          • Kara E

            What does it do to automatic disbursements?

            Incidentally, max income for maxing out a roth if married/filing jointly is 186K AGI.

          • Emily

            Do you mean like required minimums you have to withdraw from a 401k? If so my understanding is that roth accounts do not have required minimum withdrawals.

            If you are talking about the 403(b) issues (I think there are some additional wrinkles there ?) I don’t have any knowledge of those I’m sorry

          • There are other workarounds too. I can’t detail them, because… it all got fuzzy, but a financial advisor was talking to me about them. They involve a fair amount of paperwork, but hey.

            Remember if you have a 401K that is a LUXURY you should use. As someone who runs my own company, I don’t have one, and I wish I did!

          • Emily

            Yeah the smartest thing I ever did financially (and there were precious few smart financial moments in my early 20s…) was contribute the matching amount in my first job – they had a very generous 401k match (6 for 6 or something like that?) and I totally set my contribution to be that because my 21 year old self read somewhere that you should contribute the match and promptly forgot about it and ended up with a nice starter retirement account when I left that job.

          • Amber

            There are small business 401k plans. My job has a lot fewer employees than this site and they offer a 401k, so you could definitely do it too if you wanted.

    • Agreed. That’s the only way it’s ever worked for me either. In fact, I stopped being able to contribute to a particular retirement vehicle awhile ago, so I’m auto transferring into a non-retirement account, and it’s… not working. Because I can see it and have the long on, so I use it for sexy sexy things like a new roof. So I need to do some re-juggling, and come up with an account I don’t even know the log on for, without digging it up.

      • idkmybffjill

        Not knowing the logon to certain places saves me……. alot of money. That kind of embarasses me but also sort of makes me feel glad that I know the key to keeping money safe from myself!

    • Kara E

      Yes, yes yes. Having kids is entirely different than saving for retirement. After all, you can take out loans for us about ANYTHING (including Ivf) other than retirement – not that that’s a good idea, mind you. My hierarchy: retirement account through work (max the match if you have one! – it’s free money!), savings account (direct deposited), cash. I have never included retirement savings in my personal bottom line income – ditto the savings (for whatever). For pretty much my first 10 years after leaving grad school, my monthly cash income (like what went into my checking account) didn’t increase because I rolled every raise into savings, retirement or both.

  • AmandaBee

    I like to pretend that my retirement money is not actually my money. It comes out of my paycheck first thing, so I never see it, and then I budget for LIFE based on what’s left (i.e., what actually goes into my bank account). If it ain’t mine yet, I can’t spend it.

    Now someone remind me to set up the same system for my husband, so we both can retire someday :-/

    • emilyg25

      Same. I’m not a saver, but for some reason, I’ve always been good about retirement. And seeing a bunch of elderly relatives need super expensive end of life care has made me even more militant about it.

  • Saving for retirement has been something I’ve thought about a lot over the last 4 years. I’ve read several books, but my favorite has been The Simple Path to Wealth by JD Collins (recommended previous in HHs by Lisa!). I’ve found it super helpful and not too overwhelming because he simplifies it in a way that is statistically proven to come out ahead in the long run. I think when you’re young (as young as possible) is the BEST time to save for retirement (compounded interest!). I have missed the start-saving-intensely-when-you’re-in-your-20s boat (aside from two accounts I stuck some money in when I was 25 and left there without adding to again, which I guess is better than nothing because, again, compounded interest), but I need to get my act together asap. An unexpected and unwanted divorce at 36 made me think about my finances seriously because I realized that I needed to be able to financially save for myself because I didn’t know what might happen in the future and who will be there by side (or not) when that time comes. I realized I needed to do the best I could to try to provide for myself in retirement.

    As for kids, well, I don’t have any and most likely won’t. Aside from the overall uncertainty about kids, I definitely have financial concerns. I’m not sure I could afford to save for retirement AND have kids (even kids raised simply). I’m not sure how one would balance the two, but if retirement savings were in certain types of accounts, they could be accessed later if necessary to use before retirement. So I guess I’d do my best to keep saving for retirement and if I had kids to pay for that out of my income and try to not touch the retirement savings, but know that I could if there was a financial hardship and it was necessary. But that’s all hypothetical….I’m not sure how it plays out in real life..

  • Violet

    This is such an interesting question. We’ve talked a lot here about how there’s never really a “good” time to have kids, though there can definitely be some really suboptimal times. My partner and I had certain financial priorities we felt like we needed to hit before we would even remotely feel comfortable having kids. We think of retirement as being one of the highest priorities in the “waterfall.” Top of the waterfall is rent, electric, commuting costs. Your basic Stay Alive and Keep Working things. Next in the waterfall comes retirement and student loans (when applicable). Now that are student loans are nearly gone, we do the federal permissible max-out in our company plans, and then invest in an IRA if there’s money to do so. Whatever’s trickling leftover at the bottom of the waterfall can go to vacations, eating out, etc. Only after we had a lifestyle that we could comfortably pay for (and got ourselves some life insurance policies), did we consider our budget capable of absorbing the insane cost of childcare. Basically, we felt like we had to put our own oxygen masks on before bringing anyone else into our situation.

    • Lisa

      I like this as a tangible goal. We’re not quite at a place where we can start maxing out my 403(b), but last week we opened a Roth for my husband and are on track to fully fund both of our IRAs without issue. Hopefully now that Husband has graduated and can work more, we’ll be able to do more saving. We expect our incomes to grow substantially over the next few years, which should help accommodate the family we want to have.

    • idkmybffjill

      Agreed. We also added to the list either great health insurance, or money to absorb not so great health insurance. I happened to have lucked out and landed at a firm where birth (even with complications or a long NICU stay) and prenatal care are literally $0.00…. because having a baby alone even with no cost toward conception is very very expensive.

  • emmers

    I was lucky in that I went to a retirement workshop sponsored by my grad school, in my mid-20s, that shaped my thinking.

    For me, the main points that with saving earlier, there’s way more interest over time, and the difference can be hundreds of thousands of extra dollars, like this chart (both exciting if you save early, and terrifying if you don’t). But starting now (even if it’s small!) will always give you more money, mainly due to interest.

    And if your contribution is pre-tax (like 401k), then if you’re OK reducing your paycheck by $100, you can actually contribute more, depending on your tax bracket. Like if I’m being taxed at 25%, I can contribute $125, but my take-home pay will still just be reduced by $100, since I’m reducing my taxable income. Calculator:

    More recently, this chart by Fidelity shows how much you need to live comfortably in retirement, & is helpful. It has milestones, based on your current salary, (like trying to save 2x your salary by 35, 3x your salary by 40, etc).

    My husband and I have both seen relatives who have saved well and are OK or who haven’t and struggle, and that has impacted us. So even though we’re trying to do a lot of things right now, like pay down debt, and save for kids, retirement is the first thing we save for. Like Amy March, it’s an auto-deduction from each paycheck. If we do have kids, I want to know that they won’t need to support me in my old age. And if we don’t, I want to be secure enough that I can retire without having to worry about every little expense.

    • emmers

      Also, when I started saving for retirement I made $32000 a year, and was just scraping by (living with roommates, not eating meat very often because I couldn’t afford it, etc). So it is possible! It’s painful sometimes, but it’s important!

      • Violet

        That was me too; made just above $30K and was eating soup “enhanced” with pasta for dinner, but I figured they tell you to start early for a reason, so may as well. Then as you see the number climb up, you kinda want to save more and see it go higher.

        • emmers

          I did a lot of spaghetti noodles + cheese. And pbj every single day for lunch which sucked. I’m with you- it’s amazing how the savings grows.

      • theteenygirl

        TOTALLY possible. I started my RRSP when I got my first job after university making $38k, paying off $22k in student loans, living with roommates, and still contributing as much as possible to retirement. It sucked at the time but when I’m 65 and living comfortable I’ll be glad I did!

      • emilyg25

        I have always contributed at least enough to earn my company’s match, even when I was just starting out. Since I set it up when I set up my payroll info at hiring, I never even knew I had that money, so it didn’t hurt as much.

      • Agreed. I’m glad I started early, because I actually have found it harder to do in the two years since we had two kids (and two daycare bills) and bought a house. We’ll re-adjust (and get kids out of daycare, and finish the moving in costs). And I FULLY KNOW it’s illogical. But when I was flat broke, putting $100 a month aside felt more straightforward than it does now, with adult bills hitting me every which way.

        • e.e.hershey

          Yes – I find this too (that it’s harder to save after kids, even though I’m making more money now) and it’s strange. It seemed way easier to save when I was just scraping by! I think it has something to do with the fact that in addition to the larger amount of expenses related to kids (daycare, medical, etc.), I also don’t feel as OK with… depriving myself(?) as I used to. I mean, before kids, if I ate ramen noodles for a few days, it was fine. But now, I’m not going to restrict my kid’s food budget in any way and I also feel like I deserve a real meal myself… I don’t know. Maybe this is how lifestyle inflation creeps in.

          • It’s also just that we get hit with random large bills a lot now. Replace a roof, fix a car, car window broken, kids soccer bill, fridge breaks, and on and on. I was pretty aware in my 20s that I was broke and struggling, but at least I didn’t have For Real Adult Bills. I’m glad I used that time to save what I could, even if it wasn’t alot.

            I think also, we’ll get used to two kids and a house, and it’s just a lot to manage all at once. But yes. I can afford for my kid to take soccer with his friends, and he loves it, so I’m not going to say no just because it’s $100. And that’s a choice I’m willing to own.

  • Sarah

    I’m fortunate, in that my place of employment requires we put in just 4% and they’ll put in 11% for retirement. I heard that soon we’ll be required to put in 5% but that’s probably not the worst thing.
    Question for y’all: Staring later this year, or maybe Jan 2018, I can put my 4(5)% in a ROTH. As a 34 year-old would this be wise? Clark Howard on the radio–who is a good financial guy if maybe a bit right-wingy–seems to think go ROTH for “young” people. I don’t make a ton of money so the tax savings isn’t really that great, we have the mortgage deduction, etc. Should I put my money in ROTH or regular IRA?
    Topic of kids: husband and I definitely want another, we were just talking about it last night, but feel like two would be all we can handle financially. I think I’d like 4-5 if money were no concern. That means big house, money to hire cleaners/nannies/grocery shoppers/etc.

    • Jenny

      I found this primer on roth IRA’s helpful.
      My general understanding of them is that as long as you are making not a ton of money roths are better because the contribution deduction you get from a traditional ira probably isn’t that helpful, whereas you hopefully will be in a higher/same tax bracket when you go to take the money out, but since it’s already taxed you don’t pay to take it out.

      ETA: if you start being better off not taking the standard deduction on your taxes, it’s probably time to chat with a financial planner, as that seems to be the cut off where their may be some better options.

    • MDBethann

      So I had a Roth in addition to my 401K until our combined income exceeded the limit for contributing to a Roth IRA. With a regular IRA, the money can be taxed going in and when you take it out (depending on your income level) – essentially a double tax – but with a Roth IRA, it’s not taxed up front but can be taxable when you go to use it (depending on your income level when you’re retired). Depending on how much you plus your spouse (if you are married) earn combined, you may not be able to contribute to a Roth. If your individual and combined incomes are under the cap, then it’s definitely a useful investment tool.

      My employer offers a lifecycle fund with different target dates (my state’s 529 account program offers them too). The thing I like about this is that early in the lifecycle (like now), my investment portfolio is more aggressive/risky so I can potentially earn more (or lose big, if the market tanks). But as I inch closer to retirement (or college, for my daughter’s 529), the investments automatically become more conservative and stable, so I earn less but I stand to lose less as well.

      I’d honestly advocate a mixed portfolio, so none of your retirement/college fund/nest egg is in one basket. I’m NOT an financial person though and I really don’t like to “play” the market (hence the lifecycle funds so I don’t have to deal with mixing my portfolio myself on a regular basis).

    • Fushigidane

      The official answer to the Roth vs Regular is it depends if you think your income will be more now or after you take all the money in the IRA. With a regular IRA, the money you put in don’t count as part of your income and you don’t get taxed on it. When you take it out, everything counts as income. With a Roth you pay the income tax on it now but you don’t pay any taxes on any of the money when it comes out. So the interest was completely tax free money. Another advantage to the Roth is that you can take out your contributions at any time since you already paid taxes on it so some people like to use it as an extra emergency fund.
      Personally, even if I were closer to retirement age, I’d rather do the Roth so I know that all the money in the account is my money. With a regular account I would have to take into consideration that some of that money is going to the government.

    • Sarah

      Thanks MDBethann and Jenny. I had a ROTH at my old job in addition to the traditional IRA with my and employer’s contributions. Since my employer changed, and we moved from a Southern state to one up north with basically a lateral job move (higher cost of living) it just fell off my radar. The 11% will still be in trad IRA and I use the lifecycle funds. I like the flexibility with ROTH which you reminder me of. And yes, I hope to be in a higher tax bracket when I retire but who knows what regulations/laws will look like then!

  • Leslie A

    I recommend Betterment for retirement planning and saving. My boyfriend came across it while trying to figure out what to do with the many retirement accounts he had from previous jobs, and he has ended up rolling all of them into IRAs in his Betterment account (except, of course, for his retirement account with his current job). I have also done this and rolled over my former state teacher’s retirement accounts into a traditional IRA with Betterment (I’d wanted to do a Roth IRA, but for some reason, my only option was traditional).

    Like Amy said below, I have it set up to auto-deposit twice per month (you can choose how often it deposits this), and it helps you determine how much you should be depositing every month in order to be on target for how much you’d like to have saved by your chosen retirement age. Mine is currently yelling at me that I’m off track, ha. But, we also have a joint short-term savings account for our future wedding, and we each contribute $50 to that every month. We figured that was a little better than a savings account because we can earn a little extra on it, as an investment account.

    Check it out! We’ve found it to be better for us than the standard retirement planning situation. My boyfriend lost thousands and thousands of dollars with those accounts prior to rolling them over to Betterment, and now he’s gaining so much. I was also losing money on mine – although not nearly as much as he lost – and I’m also gaining. I could share a referral link, but I think that would probably be inappropriate, so here’s just the regular link to their website:

    • yofi’s human

      I second betterment. Love using it. Easy user interface.

  • theteenygirl

    We’re not planning on kids but the advice that I’ve been given over the years by parents, mentors, and finance professors in university has been pretty much the same: start early, pay yourself first.

    It’s never too late to save for retirement, but the earlier you can do it the better. As Amy said below, I recommend taking the money out of each paycheque so you don’t have the chance to spend it. I make my budget for other expenses with the money left over from my RRSP contributions.
    If you’re really behind on the 8 ball with saving for retirement, it may be worth getting a personal finance manager that you like to work with. My parents just got one because they’re approaching retirement and they wish they got one way earlier, just to keep them on track and give them goals. They can advise you on how to prioritize and save for your children’s future too.

  • Brooke

    This has been a huge balancing act in our lives, especially since getting married early this year. Very similarly, we started YNAB, knocked out some debt, and got on our feet about a year ago. We had a lot of moments of “how do we earn so much money and yet we NEVER have any money??”. We’ve definitely prioritized our retirement savings, but for the near future we don’t plan to increase our contributions. We each put about 10% in to 401k plans, and we have a couple of additional retirement accounts. We’ve both been lucky in terms of profit sharing from our companies, which has projected us WAY ahead for our age.
    That said, we’ve had issues with determining how much disposable income we should keep around. We know we don’t want kids (for a long time, at least) and we’re saving for a down payment on a home (sloooooow progress on that). I’ve had a lot of FOMO whenever other friends our age have been able to travel a lot in the years since graduating college, and well, we really haven’t. We also just paid for a wedding. Different circumstances. For now we are planning a large one year anniversary trip (since our honeymoon was done mega cheap and last minute, whoops) and budgeting a fair amount of money for various weekend trips, “staycation” long weekends, and going out to do things we want. We are definitely still figuring out how much we need/want to live our lives and have actually considered transitioning off of YNAB, because it’s caused a bit of hurt in terms of not feeling like we can be spontaneous. That said, I don’t think we’ll ever quite “figure it out” and since we literally JUST finished merging finances a few weeks ago, it’ll take time.

    • Lisa

      I find it interesting that you feel like YNAB doens’t let you be spontaneous because my husband and I have had the opposite experience. Since we decided on a specific amount to contribute to a vacation fund instead of saving towards a vacation-specific goal, we’ve been able to take that pool of money and apply it towards last minute weekends away, camping trips, or super cheap airfare deals. By doing it this way, we feel like we’re able to say yes more frequently to the things that matter to us instead of worrying whether we’re using money that will need to be used to pay the insurance premiums or something. Out of curiosity, would you be willing to speak a little more about why YNAB makes you feel like you can’t be spontaneous?

      • Brooke

        To be honest, with YNAB we give ourselves less money to just have fun with. We have been dedicating a very large portion of our take home pay to our down payment savings and paying off our future vacation early (because we kind of messed up on some things by cheaping out with our honeymoon and we both regretted it). I often feel more obligated to make sure we’re getting ahead on those target balance categories versus going out to happy hour, even though we don’t need to put the extra money towards those goals.

  • Eh

    For us it was much easier to prioritize retirement savings (and savings in general) before we had a house and a child, and get into the habit of living off our income without that money. So now even after buying a house and having a child we still are able to save about the same amount (but the split is a little different because we also have a education fund for our daughter). The money doesn’t come right off our paycheques but it does come out of our bank accounts right after payday so it’s not available to us to spend.

    I have a harder time living for today when it comes to money (our day-to-day budget is fine, it’s more medium sized purchases and vacations that I have an issue with). When I met my financial adviser for the first time she told me that I needed to take a trip with some of my savings (I took a three week train trip across Canada). I am getting better at not just saving money but I still find it hard to spend money on things in the right now. I recently got a decent size bonus at work and used it to buy a couple things that I have had on my wishlist for years but couldn’t justify spending $300+ on.

    • Eenie

      We’re putting a good amount of money towards student loans. About the same amount of money that child care would cost for two. We plan to roll that over into a baby fund once the loans are done if we don’t have those costs yet. Student loans have helped us save for a family! Sort of.

      • Eh

        We worked out that daycare fees were about the same as how much income we lost while on maternity/parental leave so we got used to living at that amount for a year. When my husband is done paying his student loan he is adding that to the car loan so we pay that off fast, especially since we will probably need a second car when we have a second child (well when we go back to work).

    • MC

      I *love* that your financial adviser told you to take a vacation!! I am a perpetual saver and have lots of anxiety about spending my savings so this is totally the advice I’d need.

      • Eh

        It was advice I needed at the time too (and sometimes still do). I had recently left a common law relationship and was living on my own. I was pretty scared no to have money to fall back on.

  • AP

    First I want to say: roll that old 401k into an IRA so you can keep contributing to it (and probably lower your fees too!!) I did this two years ago and it was super easy. A couple of phone calls, a couple of electronic forms, and done! Setting up your own IRA accounts online with Vanguard is simple.

    As for the rest, we have a lot of the same practices that others have mentioned. Right around the time we got married (2 years ago) we decided to get serious about making our money work for us. Our wedding/merging of finances was an excellent catalyst for this. First we got YNAB and read some books/blog resources (A Simple Path to Wealth was a definite favorite.) I rolled over my old 401k and my husband reallocated his 401k contributions to funds with lower fees. We opened Vanguard IRAs for each of us. Now we have our retirement on autopilot. Every month his 401k and HSA gets paid first, then we have auto drafts going into our IRAs mid-month. Every windfall we get (tax returns, etc.) goes into a Vanguard investment brokerage account that we can pull from in an emergency without penalty. We set up Personal Capital to help us organize it all. In short, we’ve become very hands-on with our money (whereas, in the past I just randomly saved money when I felt like it and didn’t really understand my 401k.)

    “How do you live for today, and live for tomorrow?” The balance is a work in progress. We want a kid soon, so we’ve been increasing our HSA contributions this year and padding our emergency fund to help with parental leave and child care. We find that budgeting helps us still have fun in the short term, while saving for long term. If there’s something we want, we budget for it and save up as needed. We don’t always get much instant gratification, but it’s very freeing to be able to buy something/travel somewhere knowing the money has already been allocated for that purpose. (Although sometimes it’s hard not to feel guilty afterward.)

  • Lisa

    Ever since I wandered down the financial rabbit hole a couple of years ago, retirement has become one of my favorite subjects. We’ve used YNAB to become debt free, and I’m now starting to look at the categories and figure out ways to save more for our future. As others have noted doing, I contribute enough to my 403(b) to capture my employer’s match, and I’m maxing out my Roth IRA. The 403(b) is an auto-deduction, and I have the Roth set up to auto-pay the full amount each month to Vanguard. We just opened my husband’s retirement account last week, and while he remains skeptical (he has a severe distrust of the market), I hope that over time he’ll realize how important this was.

    It’s still not perfect though. With the student loans gone, it’s become a question of how we want to reallocate the “payment” we were making each month. (Student loans were deferred so we paid ourselves a monthly amount that we used to pay them off in full earlier this year.) Some of that has gone towards retirement, some towards the car replacement we anticipate in a few years, others towards vacations. I’m toying around with the idea of creating a “baby” category that we can kick a few dollars towards each month to get us to start thinking about that decision more seriously. I take it one step at a time, one new finance goal to the next. Last week’s goal was to set up my husband’s IRA; the previous week was re-allocating my 403(b) out of pricey lifecycle funds. This week might be finally taking my pre-marriage money and moving it into a Vanguard brokerage account. Slowly but surely, I hope we’ll build up good habits that we can sustain over the long-term while keeping our priorities in focus.

    • Violet

      We also created a “Baby” category in YNAB to start putting money in well before TTC. It will mainly be used as maternity leave income replacement (I might end up working one month at 60% time just to ease my way back into work, but that means 40% of my income won’t be coming in that month). But we can also use it for anything that comes up in relation to having the baby we hadn’t already considered.

      • Ashlah

        We did this too. I actually had it earmarked as my “Baby/Fuck Off” fund, with the idea that it would either function as eventual, potential parental leave money or as “I just had to quit my job” money. It made me feel a little better about setting money aside for something that was still so hypothetical to give it two potential jobs. Now that we’re firmly on the baby train (and I’m committed to staying at my job), we’re saving aggressively to cover five months of unpaid leave between us, and I’m grateful for every dollar we were able to save early on.

  • Kara

    Something that has always stood out to me is:
    They offer loans for students, but not for retirement.

    It’s far better to start saving for retirement even if you have/want kids. Yes, paying off student loans sucks for your kids (future kids), but they don’t suck as much as YOU not being able to afford living later in life. With retirement, you need to plan for higher medical costs, think about how/where you will live, and so much more.

    We don’t have kids, and I don’t want them. I’ve been fortunate to work for a company that offered matching up to 6%. I’ve always put in 10% of every paycheck (it’s automatic), so I’ve never had that money to touch. At 33, I have about 2.5x’s my current salary already in my 401k. Sure, it’s meant that we don’t travel as much as our friends or live in the cooler parts of town, but we can afford our future.

    • Eh

      Exactly. If your kids have to take out student loans because you didn’t save for them, that’s not as big of an issue as them having to support you because you didn’t save for retirement.

      A lot of our friends are house poor. It was really important to us that continue savings and have room for children so we bought a house that was about $150,000 less than our pre-approved mortgage.

      • Eenie

        Yeah that’s a huge thing – my parents gave us a nominal amount but I took out a good amount of loans. They just didn’t have the money for both and chose retirement. Which I 100% fully supported. I had control over how much student loan debt I took on. Retirement costs are a lot different.

        • savannnah

          Similarly I just found out that my mom is stressing about retirement, and more specifically that they really want to have something left over for the kids, and I was like mom that’s sweet but please spend that $$ on a trip for you and dad or something. We don’t really want her working an extra year for us- I’d rather they retire at 68 and call it a day.

          • BSM

            This is what we keep telling my in-laws. My MIL continues to work at a job she hates, even though she’s nearly 65, because they want to be able to pass their house on to us. I don’t know how many more times we can kindly tell them that we don’t want their house! We’d much rather they enjoy themselves.

        • Eh

          My dad didn’t give me much for school (the difference between my scholarship and my tuition plus money for books) and it mostly came from the small RESP he had for me and my sister. My inlaws felt obligated to give their sons a lot of money. They have since said that they have a lot of debt from raising their sons “because that’s what you do for your kids”. (Note: it wasn’t all their sons – they also like to travel and spend money before they have it.)

          I think that my dad and my MIL both having really good pensions (and paying off their mortgages) has probably saved our families a lot of stress. They both have other retirement savings but I think being forced to pay into a pension for their whole career put them in a much better financial situation. My Dad retired at 60 (my step-mom is 64 and still working part-time), and my inlaws want to retire at 60 (two years from now – though my FIL hasn’t worked in 4 years). They are currently working on paying off some of their debt before they retire.

      • A) Agreed.
        B) Ohhhh markets where that’s possible seem so dreamy. I mean, I made my bed living in the bay area but DAMN THE REAL ESTATE COSTS, DAMN.

      • Mrrpaderp

        Those pre-approvals are such a joke. It’s certainly better than it was pre-2008, but banks are still trying to convince people to take out as much debt as possible. I wish you could give the bank a budget range and they say yes or no instead of the bank telling you how much house they think you can afford. I definitely had to fight the urge to stretch my budget once I saw that I was approved for much more than I felt comfortable spending. It’s just like a credit card – just because I can get approved for $10k (or whatever) doesn’t mean I should spend it.

        • Eh

          I live in Canada and they have put a lot more rules about mortgage approvals in over the last few years. When we bought our house they had just started putting in stricter regulations (eg minimum 5% down payments). I was told that under the old rules (eg the ones in 2008) we would have been approved for over half a million. That’s insane.

        • emilyg25

          You can! We asked our lender to pre-approve us for just the asking price of our house. “You know you qualify for a lot more, right?” Yep, don’t care. Your definition of “qualify” and mine are different.

          • Mrrpaderp

            I had no idea, thanks!

          • They told us we could buy our house based on me alone. I was like “Great don’t bother adding him in, because we cannot afford to buy whatever house THAT gets us, JFC.”

          • idkmybffjill

            yes!! Our lender was actually really great about being like, “look you’re preapproved for this much, but it would be this much in monthly payments. You surely don’t want to pay that right?”, so we talked about how much we ideally wanted to pay, and shot him an email any time we were considering an offer to be like, “okay but what if it’s this.”

        • Kara E

          Totally. The preapproval amount we got “approved” for when we bought our house 4 years ago was completely ridiculous (quite literally double what we thought was a good plan). Insane.

      • idkmybffjill

        Re: mortgage, that is CLUTCH. We bought a house for less than half of our pre-approved rate. If we’d spent our pre-approved rate we wouldn’t have been able to eat. i don’t know how they rationally decided on that number but it was DUMB.

        • Eh

          In Canada they have put in a lot of regulations about mortgage approvals since 2008. We bought after some (but not all) had come in to place but most of them didn’t apply to us because we were planning on a 20% down payment and a 25 year mortgage (who would think 0% down and a 40 year mortgage is a good idea).

          If we bought a house that was $150k more we would be paying off our mortgage after I want to retire and we wouldn’t be able to afford children or trips to see my family. We would have a big house, but we probably couldn’t afford the property taxes or the utilities to live in it.

    • Emily

      Only thing to consider here is that access to federally guaranteed loans (so those currently in the 6-8% interest range) are limited based on parental income. While private loans exist, post 2007 they are harder to come by and much more expensive (libor + 900 bps was where my private loans were at, and I had friends at Libor + 1200) and additionally often require a cosigner as student loans are unsecured with very high default rates.

      It was almost harder for me that my parents made money but didn’t save / plan / budget well than if they had legitimately been lower income / struggled. If your tradeoff is 401k vs. kids education absolutely fund the 401k, but I don’t think this tradeoff applies to bigger houses / cars (my personal pain point).

      • Kara

        Oh I totally agree with you about the 401k vs. setting aside $$ (like a 529) for kids college education–definitely fund your 401k before ever putting $$ in a fund for education. Don’t let lifestyle creep or bigger houses/cars take the place of either (funding retirement or funding kids education).

        • Emily

          Also in my experience college financial aid calculators etc. won’t take your 401k / retirement savings into account as something you could use to pay for college – but everything else is fair game (so your decision to live in a bigger house / drive more expensive cars) and counts towards the discretionary income you could be using for college (beyond basic necessities of course). Additionally at least in my recollection if one adult in the household is not working by choice they look at what that person could be making if they worked full time and that is included in your expected family contribution (at least to my recollection)

      • That loans and grants are based on parental income is a good point. However, I’d just like to point out that if your parents are lower income/struggling children often end up having to deal with school loans *and* how to financially support your parents in their old age (often coinciding with having your own kids) *and* somehow your own retirement.

        I totally agree that if the choice is between a big house & sending your kid to school, yeah, do the second one. But over a life-time, parents struggling in their old age is probably going to have the greater impact for their children.

        • Emily

          Oh totally agree – I am more speaking to the fact that the federal subsidized loan system / pell grants etc are all set up to help those who cannot as opposed to those who choose not (as they should be!) – and that all these systems see 401k / retirement savings as sacred but other discretionary financial choices as less so.

          I also was fortunate to go to a school for which the expected family contribution to tuition for those whose parents make <$100k is zero beyond $20k of debt, so I personally don't have experience with those who have loans due to parents who cannot fund their college, but rather all my peers with high loan balances are those whose parents chose other discretionary things.

          • Yeah, I have such mixed feeling on the parental income system for loans/grants. Ideally, there’d be a way of recognizing students who are financially disentangled from their high-income families, but I can see how that would be a hard one to actually demonstrate.

          • Emily

            Its really hard. I looked into it at the time and you can become an emancipated youth – but you have to be no longer living with parents / not accepting so much as a sandwich from them to do that process (at least in my limited experience)

          • Sarah

            I worked in financial aid for a few years (at the state/governmental level not in a college). In the 60s or so, when fin aid was a a federal program–LBJ Great Society and all–parental income wasn’t a factor. So the savvy students, which often were not the low-income ones, could “game” the system. Parental income is now used as it’s considered a more accurate measure of a student’s true SES.

          • Yeah, I definitely understand why it’s there — I’ve seen a version of this where I live where cash-poor but upper-middle class recent college grads are MUCH better at taking advantage of my city’s financial aid programs than the people who *really* need them because their backgrounds make them better with administrative hurdles so I absolutely understand why programs try look at SES vs. raw income.

          • Emily

            Oh I totally understand why the system works the way it does and I think it makes a lot of sense for the vast majority of people out there. However, I think there is a teeny minority of people like me where the government says “your expected family contribution is x, and you get y loans and z grant aids” and parents say “I’m not funding x, and I’m not cosigning additional private student loans”

            I do think it implicitly makes funding college for your kids to the best of your ability part of your role as a parent, which raises some interesting questions / challenges for higher income students whose parents go “I won’t.” Especially now that you can’t easily access loans in the private market for the whole shebang / pay your way as you go the way you once could 40 – 50 years ago.

  • Amanda L

    My husband is lucky enough to have a pension coming his way from his job, but it is not nearly enough for him (let alone both of us) to live on. In the last few years, it’s one of our greatest accomplishments that he now contributes a sizeable % to his 401k as well. Since I started ‘real jobs’ (not counting the 10+ years I barely made ends meet working in the sports industry), I have always contributed a decent % as well. Since I started my current role, every year when I get my raise, I immediately add that difference to my 401k. So my paychecks have stayed flat, but my contributions have increased considerably. I’m sure I’ll thank myself in 20 years.

    With that said, I’m still terrified we won’t be able to retire until we’re 75. We make and spend a lot of money. Will we be able to cut that back to 60/70% when we retire? I have been spending a lot of time thinking about passive income and other areas of investment. We anticipate being completely debt-free by the end of this calendar year with some money left over to invest. We’re both in our early 40s and are childless not by choice. Anyone have any investment blogs they can recommend?

    • Lisa

      JL Collins’s stock series and his accompanying book The Simple Path to Wealth were incredibly helpful to me. I’d highly recommend them!

    • MDBethann

      I know for us that our largest expenses are the mortgage and daycare (when #2 arrives, daycare payments will = our mortgage payments). But daycare payments will last for only another 5 1/2 years (both kids will have fall birthdays, so won’t start kindergarten until age 6) and we have a 30 year mortgage that we are actively paying a bit of extra principal on each month to speed up the day when we don’t have to pay PMI (mortgage insurance) anymore. Once the PMI is gone, we’ll probably up our 401K contributions a bit. And obviously our mortgage will be gone by the time we retire (or we’ll sell the house and downsize) so I really think our expenses at 65/70 will be much lower than they are now. That said, we’re actively saving for retirement and have been doing so since we started our gov’t jobs in our 20s – I’ve always done the amount that Uncle Sam matches, plus a bit more. Though with the changes Congress is threatening, I may need to up my retirement contributions a bit.

      But I definitely second everyone who says they pre-deduct retirement savings from their paychecks. Often, it comes out pre-tax, which saves you a TON of money in the long run and you honestly never really notice that it’s gone, so it doesn’t affect your perceived cash flow.

    • emilyg25

      We make and spend a lot too. We finally bought a house as part of our retirement plan—our goal is to have the mortgage paid off by then, which will knock out a big chunk of our monthly expenses.

  • Angie

    My parents raised me to be rather frugal so I’ve had the lucky circumstance that even though I don’t make much, I also don’t spend so much that I can’t save even without actively having a budget. I have some money in an IRA and I have enough for a down payment on a small house in the suburbs if I ever get a job that I earn enough to actually pay for a mortgage and property taxes.
    My husband on the other hand, doesn’t see the point in saving for retirement right now. I’m trying to talk him into opening an IRA this year, which we failed to do last year. We’re lucky that his expenditures are on the cheap side and while his hobby isn’t the cheapest, we’re limited by the size of the apartment we’re currently living in so he can’t exactly accumulate too many without selling off something he already has. He works for the town and doesn’t believe he’ll have a pension when the time comes. I pointed this out as a reason we need to put money away for retirement. Part of it I think is that his parents have earned more money as they’ve gotten older but that’s because my father in law is a workaholic and my husband is decidedly not. Eventually I might just open up an account for him. While we have joint accounts, he trusts what I do with our savings.

    • Ashlah

      Can you show him something like this that outlines what a massive difference it makes to save early for retirement? Do you know why he doesn’t see the point in saving for retirement right now? Does he not realize that the earlier you start, the farther your money will go? I hope you can get him to see that he’s basically choosing greater expense and greater stress for your future selves by putting it off.

      • Angie

        oooh that’s a good chart. His explanation that he hasn’t invested anything so far is that until recently he hadn’t earned enough money to save anything. This doesn’t explain his current status though. He has been good at saving money but I need to push him to even switch his money(now our money) to a bank with a better interest rate. He was doubtful when I put a large amount of money in a CD but I told him the amount of money we earn even with the small percentage is enough to buy a couch. Part of the retirement thing is he is he seems a bit pessimistic about living that long despite currently being in perfect health (besides a couple sports related injuries).

  • rebecca

    We left New York and bought an apartment where our mortgage payment is almost 50% less than what we formerly paid in rent so that has helped a lot. We’re trying to save really aggressively right now while we’re relatively young knowing that kids and a move back to an area with higher CoL are likely in our future. The biggest sources of uncertainty for us is that we’re afraid my partner’s parents aren’t being transparent about their retirement situation with us and we both have pretty volatile/complicated equity situations from working at startups, I would prefer to be more diversely invested, but figuring out the best path to that is complicated so we keep putting it off :(

    • savannnah

      Parental retirement is something I think a lot about since getting engaged. My parents have been super transparent about their whole process but my fiance’s dad and wife (I believe) are taking the ‘dont ask dont tell everything will be fine or not’ approach to retirement both with their kids and with each other and it super stresses me out and does make me think about how our financial heath could be affected.

      • Eh

        My inlaws are not open about money and never taught their sons how to manage finances. They have told us they have a lot of debt which they blame on raising kids, and not on the fact that they take multiple big trips every year or live outside their means to appear to be middle class when they aren’t. They have told us that they are working on paying off the debt. They are very concerned about how their sons and their wives manage money because they are worried that we will ask them for money (so they are always telling us that we shouldn’t spend money the way we do, not knowing our financial situation.) After their sons got married (in their mid- to late-twenties) they did finally stop supporting them financially (before they were married my husband and my BIL would ask their parents for money when ever they got in financial trouble – which was regularly). They won’t even co-sign things for my BIL because they are so concerned about him not be able to pay than they would have to pay for him and that could put their retirement plans at risk. They want to retire when they are 60 (in two years) but my FIL hasn’t worked in 4 years. My MIL has a good pension so when they do retire they will probably be fine but they will need to start leaving within their means.

  • laddibugg

    I’m not sure why anyone would think that you need to to have children to plan for retirement…maybe I’m reading the title wrong. Sexuality has nothing to do with it. Getting old isn’t guaranteed but if you die young, you’re not going to be around to wish you had planned.

    • Lisa

      I took the title to mean: how do we know how much we budget what to set aside for retirement when we don’t know how much having a kid will cost us (because our parenthood journey will be different from most) and how much we should be saving towards that?

    • emilyg25

      I read it as more: I want to save for retirement but I also need to save to pay for fertility treatments and if that works, I’ll need to pay for daycare.

      • Right. If you’re gay and at the age where you know you want kids (Kate’s partner is almost 40, so that puts you in a time crunch), unlike us hetro couples, you may have a large bill looming before you can even GET to daycare costs. And that’s generally not a bill you can finance.

      • emmers

        Exactly! Most insurance doesn’t cover fertility stuff (though there are some states where it does), which sucks. I have friends who have taken a break from trying to have a kid because they’re 2 women and they tried for a few cycles, but they don’t have the money right now to continue. I know this is probably many years away, but I think insurance should be required to cover $X worth of fertility stuff. At least something, cuz if you biologically can’t have kids without medical intervention, that sucks financially!

    • LindseyM

      I think also you could switch out the concept with whatever large current or future expense you have—like for most young lawyers it would be: how do I wrap my head around planning for retirement when I am also paying off 100k in loans?

  • emilyg25

    Think of retirement planning as a gift to your child(ren). Set by what you can now so they don’t have to worry about providing for you later. It might be that right now, saving for having the child is your primary financial goal right now, but you can still contribute at least a little to retirement right now. Compound interest is a pretty cool thing. Also, remember that there are loans for college. There aren’t for retirement.

    ETA: Does your wife’s company offer financial planning through the company that provides the 401(k). I work at a university and get free financial advice from TIAA–it’s been a lifesaver. They can help you work through competing priorities and develop a plan that works now and later.

    • a single sarah

      Seconding the financial planning. Also, check out what services your bank has. My credit union has a budget advisor. Talking to her was like going to therapy for my money.

  • itsaprocess

    We actually just met with a financial planner this month for the first time, and it was amazing. I generally enjoy finance and tracking and such, but all the jargon and options around investments made it seem super overwhelming. My husband and I don’t (and won’t) have kids of our own but will likely be responsible for our parents and other relatives as time goes on.
    For us, we were getting stuck trying to figure out answers to everything before we got started with serious investments. But ultimately, it doesn’t matter (right now) how or when we want to retire. Like, we have to make those decisions eventually so we can be more intentional with our investments, but the most important thing right now is having them in the first place. Once we get into the habit of spending (a lot) less than we make, and saving the rest in something other than a bank account, we can start to get more specific with our plans and make adjustments to align with that.
    Sitting down with an expert (we got recommendations from trusted folks with far more assets than we have) was amazing. It was a little awkward to be super open about our jacked up family situations with a stranger, but it really helped him understand our needs. He literally explained all the buckets of options to us, and showed us graphs of what we are looking at in terms of retirement while still saving money for things we need nowish. We’re both already contributing to 403b and we’re going to start maxing out our Roth IRAs. If we do just this pretty consistently every year, we should be more than fine, even in the worst case scenario. Anyway, my advice would be to get serious about cutting back on spending as much as you can. You can’t save money that you already spent. But once you have spending under control, and some emergency savings put aside, you can start investing. A good financial planner will help you figure out how to save for both long AND short term goals, and it’s a lot less scary than trying to make that decisions on your own.

    • Mer

      About 2 years ago I came in to a large amount of cash and I had no idea what to do with it. So, like you, I met with a financial planner and it was incredibly helpful. The biggest benefit was the validation that I was doing the right thing regarding my 401ks, savings, Roth IRA etc. Prior to that I was somewhat cobbling together “a plan” and hoping it was right. The CFP gave me some good background on investing, explained different types of investments etc. and was generally like “you’re doing a good job”. The validation alone was worth the price.

  • Cathi

    We’re actually in the middle of doing Real Legitimate financial planning right now. And I’m more and more coming to realize: planning requires money to plan with.

    We’re young-ish in the life game, but old-ish in the retirement investment game (early 30’s). We just had our first (of hopefully several) kids and don’t own a home (yet?). So we have a lot of things for which we will want money to be available NOW, in addition to fretting over our post-working years.

    For us, that means a mixture of legitimate retirement accounts (my employment 401k, Roth and traditional IRAs) and pure, simply investing that will hopefully continue to grow upon itself to generate both income for any given need at any given time (down payment for a house, buying a new car in cash, replacing the roof on that stupid house, paying a child’s college tuition, etc…) with no withdrawal penalty.

    But… we finally have money. Our income is triple what it was not even three years ago, so we have a small Scrooge McDuck pile of cash to get started with, as well as a healthy surplus every single month to continue investing in various ways. I have no idea how to go about doing any future planning when you’re essentially breaking even every month.

  • Fiona

    I had a high school teacher who showed me how much more you save exponentially by starting your retirement savings early. Even if it’s just a little bit, starting at 18 can set you up for a REALLY comfortable retirement. I didn’t end up getting started quite that early, but her words always stuck with me. I put some money into a ROTH IRA at 18, didn’t touch anything through college, and then started putting generous percentages (of a super low paycheck) into a 401k at 22. I met with a financial advisor who basically told me not to up the amount and I was on track for a comfortable retirement.

    • I vaguely remember that when we learned about exponents in high school somewhere, our teacher talked to us about how this applies to retirement savings.
      (Also my dad is really into retirement savings so he had me save up most of my babysitting money until I had enough to start up an IRA in high school which I am super happy about now).

      • Lisa

        I really wish someone had encouraged me to set up a retirement account when I got my first job. I saved all of that money in a bank account because that’s what I thought I was supposed to do, but now I realize I actually lost money by putting it away because of inflation. It was very disheartening to learn at almost 30 that my life savings could have (and should have) been doing better.

  • Mary Jo TC

    All I know is that as a parent of 2, I am prioritizing retirement savings OVER college savings. Kids can get loans like I did if they have to, but if I pay for their college and don’t have anything left for retirement, we’re all screwed.

    And I feel obligated to save an equal amount for both kids. My MIL has made passing remarks about having money she’d give towards their educations, but I want to hold off on that as long as possible, rather than enrolling them ASAP in private preschool, as she suggested. First, I want to make sure that all our kids (and we might not be done having them) have equal shares, and second, the money will probably be more needed later for higher education rather than elementary or secondary school, which we could get for free.

  • Bsquillo

    The compounding interest in retirement funds is actually super motivating for me, and it has encouraged me to start saving as soon as possible (because it will only become less impactful the later I start). So even if you can only budget a small amount of money every month right now, it’s going to result in a much larger sum by the time you retire.

    Like others have mentioned, I take my retirement savings off the top of my paycheck before anything else. My workplace actually requires us to auto-contribute 8% (they don’t take out Social Security because we’re a state institution), but then the University contributes an INSANE 11%. In addition to that, I contribute a few hundred dollars on my own every month to a Roth IRA- it’s set aside for retirement now, but it’s flexible enough that we could use it for other expenses like a house down payment if needed.

    I’ve only been working my current job for a year and half, and I already have over half my annual salary saved in my retirement account- it’s probably my proudest financial accomplishment so far. Sure, we don’t own a house, and we have significant student loans, but those are things we can tackle as our income grows…you can’t go back and start saving for retirement any earlier.

    • AP

      My husband and I feel similarly about compound interest. We’ve been throwing as much money as we can at his 401k and our IRAs because we’re in our mid-30s and trying to catch up for what we didn’t save in our 20s. There’s definitely a sense of urgency about it.

  • BSM

    Haven’t read all the comments here, but you can also oftentimes take out a loan from an active 401k (so it has to be your current employer) for a very reasonable interest rate. So, like others have mentioned, it’s probably a better bet to prioritize retirement savings rather than babymaking/childcare.

  • PeaceIsTheWay

    Thank you so much, everyone, for all of your tips! My husband and I have been thinking a lot about how to balance saving for now with saving for later – we’re under contract for a house and expecting our first child in September – and I really appreciate the insights of so many. We’ve definitely had our moments wondering whether we’re putting enough away for the future. I think the key is to understand what your current retirement saving habits will get you in terms of an income/lifestyle after retirement … but this seems easier said than done. We’ve tried to educate ourselves on this – we met with a financial planner – but being shown a bunch of charts predicting that we’ll get XYZ dollars per month in retirement doesn’t really make the future seem less nebulous and uncertain. I mean, it’s all just estimates based on assumptions, right? I get that the more you put away, the more you’ll have later, and I understand the role of compound interest. But that doesn’t really tell me what the minimum amount is that we must save from every paycheck now. When I was working, I put about 15% of each paycheck into my 401K, and I was happy with that because it seemed to be a relatively high percentage compared to most. I did zero analysis on expected lifetime earnings or retirement age or lifestyle – I just picked an arbitrary percentage that seemed safely conservative. Now, my husband’s is the only income and we only contribute enough to his 401K to get the max that his job will match – well under 15%, though since his income is higher than mine was, it’s probably a similar number of dollars each month. Is that enough? We wonder…

    Our big question mark risk was me leaving my decently paid job to take a stab at writing a novel. If saving for retirement had been our Number 1 Priority, then this move would not have made sense. I’m still hoping to publish and make some money from writing, but I would have made more money – and contributed more to our retirement – had I stayed in an industry that made me miserable. We chose to ‘live for today’ in this case. I’m closing in on the end of the first draft of my first novel and have not yet made a penny, and, though I’m proud of us for taking the risk, I’d be lying if I said I wasn’t nervous about what it could mean for our future financial security. At the same time, I recognize how incredibly lucky I am to have a husband with a good job through which I can get health insurance and pay the bills.

    One last note – YNAB has really helped me and husband navigate conversations about life savings goals, from retirement to kids. We recently upped the goal for our emergency fund, and I remember thinking that that probably wasn’t a conversation we would have had, if not for YNAB. A big thank you to APW and Lisa and Maddie and all the other YNAB proponents who first brought the tool’s existence to my attention.

  • Personal finances are my love … I spent year and years reading and learning everything I could before I realized that I could do that professionally and get paid (so now I’m a fee-only financial planner & a fiduciary aka what I do needs to be in my clients’ best interests, legally). I think money is an amazing tool and you can use it to buy things (like, actual physical objects) but more importantly – things like freedom and not having to work for someone.

    I think that’s what’s missing in the equation of saving for retirement – take the morality and shame out of it. Figure out if there’s something about retirement that motivates you (for me, it’s being financially independent by 40 and not having to work for someone else). It might be because you’re the kind of person who wants to be in charge and not work for someone. You might have a health issue you want to be able to manage by not having to work as much. Point is, money = optionality.

    For the nuts and bolts of how this works for us (and it’s working swimmingly – my husband and I both max our our 401(k)s = $18k each, and max out our (Roth) IRAs = $5.5k each, plus put money into taxable savings on top. And we live on the East coast, and neither of us make 6 figures.) And yes, life is still wonderful and we travel internationally. Basically I approached things with a mindset of trying to optimize life – just by tracking all our purchases and trying to figure out whether each item made me happy. Then I tried to default to the option that didn’t involve spending money (so, having a water bottle handy instead of randomly buying bottled water). That’s a terrible example because I was raised by parents who grew up in Soviet Russia without much and were really frugal, spending money on our education but not much else, so I actually never bought bottled water. But you get the gist – basically, tapping into this image I have of myself as someone who is thoughtful and resourceful and doesn’t spend money unless there’s ROI.

    So now there are lots and lots of spending items that we spend no $ on. We have a reasonable rent. I don’t go to extremes of trying to spend no money now for some hypothetical awesome retirement later – I need life to be amazing and to be in the present happy. I think that’s where people go wrong – they think they need deprivation now to have a secure retirement later (or that more $ = more happiness). But frankly, walking around the city is just as nice without stopping in for food at all the restaurants, the best experiences are with people and hosting them and cooking (or wine-ing them) can be done relatively cheaply. I marvel at how people spend all of their money – it seems like a lot of them must have some spending that doesn’t actually bring joy. Because I just have to think to myself – I love to travel and spend lots on it per year. If I do that and still can get rapidly ahead on retirement, it seems like others have room to spend on what matters and brings joy while also saving for retirement.

    I know my views aren’t typical, and I don’t expect others to be as motivated to be financially independent by 40 (or whatever age) – but preparing for a future and a time when you won’t want to / won’t be able to work is so important. Freedom is so much more appealing to me than almost anything else in the world.

  • Laura

    we don’t have kids and are both 28 – we’ve been really aggressive about saving. we’re in canada, but our tfsa’s equal our combined yearly salary and through the magic of compound interest and a brilliant investment guy are growing like crazy – we make sure to max them out every year and it’s so motivating to see them grow. we each have retirement savings as well, and we’ve saved the equivalent of a year of my husband’s salary in a high interest account. we are very lucky to have never had any debt (other than our mortgage) and healthy incomes plus my new job has an employer matched pension which i am maxing out :) honestly, i feel so much more secure about eventually starting a family because our financial house is in order – it makes me feel like, okay, we can afford childcare, a nanny, whatever if we really need it. it’s a sense of security that’s become really important to me. it’s become a marital philosophy for us to not just focus on the next expensive thing but to focus on saving for our lives for the next 10, 20 and 30 years etc.

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  • davidcurry

    I absolutely love this concept.Thanks for sharing!!

  • davidcurry


  • davidcurry

    I absolutely love this concept.Thanks for sharing!!

  • Christy

    I’m a woman married to a woman who is navigating these same questions. One of the biggest surprises from my obgyn was that IUI actually isn’t crazy expensive–maybe $1500/attempt? Which, yes, is a lot of money, but is also less than what we’ll pay for daycare each month once we have the kid. Here’s how we do money. 8% each into the TSP (US federal employee 401k-type vehicle). Automatic pension contributions. Then $500/pay (biweekly) into a joint savings account. That’s $26,000/year. That’s gotten us to a condo down payment, and next is fertility and then no-maternity-leave income replacement, then it’ll go to daycare and then college. But retirement comes first, and retirement’s what we’ll increase as incomes go up.

    • anon

      Ours (3 failed rounds) were more like 1K / a piece (with meds less than $10 a round) – but the infertility testing that led up to it was more like 4K.

      • Christy

        Were you first trying to conceive through intercourse, though? Because it’s my understanding from my obgyn that I won’t need fertility testing before trying, since there’s no evidence that I’m not fertile. Perk of having to start the process with IUI rather than as a second step. But this is all theoretical for me so far. I’m sorry you had three failed rounds.

  • TheHungryGhost

    Late to the party on this one, but you can never start saving or budgeting too early.

    Having said that, I’ve actively chosen to delay retirement savings until I have made a substantial mortgage deposit, and just about to finish house buying, I’m going for overpaying my mortgage and retirement planning now (aged 28).

    Kids are in my future, and I’d like to give them chunks of money, but honestly, the best gift they can get is to be taught financial prudence FOR THEMSELVES from the get go. My parents taught me so well that when it came to them offering me money to help with the deposit, I told them to give most of it to my financially feckless sister (don’t know why she missed the same money lessons I got – but teaching about finances should not be optional!).