Many Grownups put off saving for retirement, but don’t be scared! If you start saving now, you’ll set yourself up for financial success, say Joanna and Johnny of Our Freaking Budget.

People tend to be more productive when given a short deadline. For instance, I put off figuring out a Halloween costume until the very end of October. But as soon as I hear about a Halloween party happening the next night, I’m suddenly pulling out all the frozen meat from my freezer and stringing a dress together for my best Lady Gaga getup.

A task, project, or goal can usually be salvaged, even when procrastination comes into play. My graduation from college is a testament to that. But there’s one task where procrastination simply won’t do: saving for retirement.

We all know we need to be saving for retirement. And yet many of us put it off. After all, what’s a year of procrastination when we have another 35 years left to save? And then there are all the unknowns. How long will I live after retirement? How much will I need for retirement? And how on earth do I save that much money? Combine all those questions, and it’s no wonder we dread, procrastinate, and cower from the very thought of retirement savings.

But while starting to save for retirement may seem scary, even scarier is putting off saving. So let’s tackle each retirement unknown right here, right now, to expel any and all retirement-saving nightmares.

How long will I live after retirement?

No one knows the answer to this question, but this is certainly a case where it’s best to be over-prepared. The last thing I want is to be dreading my 80th birthday because I’ve only saved enough to last me through my 70s. The truth is that post-retirement life could last 30 or 40 years. And that’s assuming scientists don’t crack the anti-aging formula and make us all look and feel as young and vibrant as Betty White well past 100 years old.

How much will I need for retirement?

As is the case in most personal finance topics, this answer varies wildly based on a number of different factors: age at retirement, cost of living, years in retirement, Social Security benefits, and health concerns. But don’t panic—everyone can figure out his or her own answer.

So, what types of expenses will one have as a retiree? The answer is mostly the same ones we have now. We’ll still eat, pay bills, have car repairs, and travel. But there will also be some major differences. For starters, we will likely have paid our mortgage in full, and hopefully our children are grown and taking care of themselves (and wildly successful and paying all our bills). On the flip side, our health care expenses will likely go up, especially if long-term care is necessary. And we may want to budget a little extra to travel and visit children and grandchildren.

It’s worth taking a few minutes to think over your expected retirement expenses and come up with a hypothetical monthly budget. This will help to establish a baseline number of what’s needed to get by in retirement. From there, you’ve got a starting point and can build a cushion with any extra savings.

When my husband and I estimated our retirement needs, we started by asking ourselves how much money we’d need to get by in a given month—in other words, our monthly budget. From there, we took that number and multiplied it by 12 to get our annual living budget. Finally, we multiplied that number by the number of years we anticipate we’ll be in retirement. (We said 30 to be on the safe side.) Finally, there’s a big complicated formula to account for inflation (that annoying thing that turns us into old folks who say, “I remember when movie theater tickets were $4!”), but we’ll keep things simple and multiply the final retirement number by 2.5 to adjust for the future value of the dollar. And three calculations later, bam, we’ve got ourselves a retirement savings target.

Do I really need to start saving right this second?

In short, yes. Yes, yes, yes. I used to be a doubter, thinking that saving for retirement could start once I started becoming a real adult. As a recently graduated 22-year-old with my first full-time job, I saw retirement contributions as just another scheme to take even more money out of my paycheck. How dare my employer even propose such an idea? It only took me two years to finally realize that my stubbornness and naiveté was way out of whack.

Many companies offer a 401k match, which means they will match their employees’ retirement contributions up to a certain percent. My company, for instance, matched 100 percent of what I contributed up to 3 percent. So if 3 percent of my monthly salary was $100 and I put it toward retirement, my employer would throw $100 of their money into my pot. For free! And who doesn’t like free money?

But perhaps the biggest argument for starting to save for retirement today, more important than the free money, is the magic of compounding interest. Every single year that retirement savings have to grow makes a huge difference. Compounding interest makes money babies, and then those babies have babies. Procrastinating even just a couple years could be the difference in hundreds of thousands of dollars in the long run. Seeing those numbers helped us realize that the only frightening thing about saving for retirement was not actually starting.

How on earth do I save that much money?

I’ve saved the best for last. This question scared and paralyzed Johnny and I from acting more than anything else. When we think of saving a few million dollars, we feel defeated before we even begin. It’s impossible to imagine saving such a large amount of money while we’re still in a phase of life where we rely on Taco Tuesday to keep our food budget in check. Luckily, we don’t have to. We only need to save a fraction of what we need for retirement, and compounding interest will do the rest. That is, as long as we give compounding interest enough time to work its magic.

We also need to realize that retirement savings is a marathon, not a sprint. Little by little, the money we’re putting away will add up. And by taking advantage of an employer’s retirement match, the amount we’re saving can be doubled with no extra money out of our own pockets. My husband and I currently don’t have the option of a 401k match, so we’re maxing out our Roth IRAs each year. If we both contribute $5500 (i.e., $11,000 per year) until we retire, we’ll have put in a total of $385,000. That’s a lot of money, but it probably isn’t close to what we need saved for retirement.

But here’s the fun part: Assuming that little chunk of change gains an average of 8 percent interest over the next 35 years*, we’ll have over $2 million sitting and ready for us when we retire. How’s that for a trick and a treat?

So let’s revisit the question: How on earth do I save that much money? Simple. Start saving now and let compounding interest do its thing.

The things we are most scared of are often the things we most need to face. Unless it’s spiders. Or clowns. Or snakes. But when we’re scared of saving for retirement, we need to face it. And hopefully that’s what we just did. Saving for retirement doesn’t have to be scary or stressful. It can—and should—be boring, slow, and consistent. If we’ve got those factors, we’re all set. Instead of fun-size candy bars, our trick-or-treaters will be getting $0.50 to invest in their first retirement fund. And then we’ll be the “weird retirement people” whose house gets skipped over next year. On second thought, we’ll just stick to fun-size candy bars.


Joanna and Johnny are the writing duo behind Our Freaking Budgeta personal finance blog documenting the joys, pains, and realities of living on a budget. From the basics of saving and getting out of debt, to venturing into the wild world of basic investing, they document their journey through young adulthood while exploring their love-hate relationship with their “freaking budget.”

*Assumes a hypothetical 8 percent annual rate of return. Of course, actual returns can be higher or lower, and there is no assurance any particular rate will be achieved. Variations in returns, contributions, withdrawals, and other factors will affect your total earnings.

Any third-party resources or websites referenced above are not under Society of Grownup’s control. We cannot guarantee and are not responsible for the accuracy of the resources, websites, or any products or services available through such resources or websites.

While we hope the information in these materials are useful, it’s only intended to provide general education. It’s not legal, tax, or investment advice, and may not apply or be useful to your specific financial situation. If you need advice geared to your personal financial situation, you are encouraged to schedule time with a financial planner.

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