I'm well aware that the past five years since the financial crisis have been rough for many more families than just ours. And I'm willing to admit that compared to some, we haven't been hit as hard. This doesn't mean though that we weren't significantly affected by the financial crisis, housing market collapse, and the ensuing "Great Recession" that followed. Here are some of the ways in which our finances and retirement planning were most impacted over the last five years.
Retirement Plan Match…Gone
Five years ago I left my regular employer who matched 5 percent of my paycheck with about 3 percent of their own to become self-employed, losing out on that aspect of my retirement plan in the process. More recently, my wife's last employer did away with their company match completely, and her current employer provides a pitiful match, so much so that we don't even contribute.
While we've maintained our previous retirement accounts even though we aren't currently contributing to them, my personal account has only just gotten back to even with where it was at the third quarter of 2007.
Health Insurance Premiums…Skyrocketing
Our health insurance premiums have skyrocketed from 2011 to 2013. We thought it was bad enough in 2012 when our premiums went from about $93 a week to $121 a week, but now they've gone up by about another 25 percent to just over $151 a week. This means that we're forced to put even more money that would otherwise go toward savings and other investments toward insurance premiums.
To combat this cost, we've cut in other areas like our food and entertainment budget, our meals out, and similar budget items; however, it's still an unexpected cost and a hefty one at that.
The Housing Market…Collapsed
We thought we were entering the housing market at the right time and in the right way. We saved up a big downpayment of nearly 40 percent and we waited until the beginning of 2008 after home values had dropped about 10 from their peak. We thought they had come down as far as they would go, not realizing that they still had about 30 percent to fall, taking with them all of our downpayment and some of the equity we put into the house while we were there. This sucked over $150,000 out of our pockets and left a gaping hole in our retirement planning.
In an effort to make up for this lost equity and severe setback in our retirement plan, we sold our home, pulling any remaining equity from that first home that was in a neighborhood with still dropping home values, downsized, and put that equity into a smaller, cheaper home in a better area and that we could own outright. The savings we recognized in being mortgage free and having much lesser housing-related costs helped get us back on track with our retirement planning but still left us bruised, battered, but not defeated from the beating we took over the past five years.
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More From This Contributor:
- Banking & Budgeting
- retirement plan