First Person: My Mid-life Plan to Save for Retirement

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I'm not afraid to admit I'm getting old, although I am somewhat dismayed by another number. It bothers me that my current retirement savings number is so low. According to a recent article by The Wall Street Journal, people who are age 45 to 64 are facing a true retirement crisis with skimpy retirement savings accounts worth less than $27,000. One third of those nearing retirement have no retirement savings at all. Some critics claim people in the "play-now, pay-later" generation are doomed to poverty in retirement. Although I'm a few years away from being considered a "near retiree," I also know that age 45 is just around the corner. I have to work out my mid-life plan for retirement if I want to retire at all. People define a "comfortable" retirement in different ways. I just want to afford my ordinary middle-class lifestyle without depending on Social Security benefits. Since I won't retire until about 2040, it's possible the Social Security system will no longer exist at that time.

Competing with myself, not others

It's interesting to learn that three quarters of people ages 45 to 64 have less than $27,000 saved thus far for retirement. However, I don't think it's helpful to compare myself to those individuals. Most baby boomers and the older members of Generation X will probably be able to rely on Social Security benefits to supplement their incomes in retirement. Although I have more than double the $27,000 older people have saved, I might need three or four times as much as they have by the time I retire. I am setting my own personal retirement savings goals assuming no help from the government.

Tricking myself into saving more

If I leave it all to chance, I know I won't save much for retirement. In fact, I'm actually surprised I have more than the average amount that near-retirees have saved. In order to stop myself from spending my paychecks every month, I have to be deceptive with myself. Like most people, I do set up automatic deductions from my paycheck for my 401(k). But I take it further by having multiple retirement accounts that I rarely check. By investing in target-date funds, I can put things on auto-pilot. I haven't really forgotten that I have the various retirement accounts. Still, I do tend to save more aggressively thinking about my many small accounts rather than one large one. It's a subtle trick that motivates me to save.

I am not sure what my exact retirement savings target should be, but I've played around with different retirement calculations and formulas. I estimate I'll need about $250,000, which is significantly more than the average near-retiree has squirreled away. I am confident that I'll have enough as long as I reverse the play-now, pay-later philosophy. For me, it's about paying myself first by making retirement contributions before I spend. I will be able to play later.

More from this contributor:

I've Hit My Mid-Life Income Plateau

My Mid-Life Plan to Get out of Debt

How I Tricked My Family into Saving


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