Tag Archives: retirement

Anxiety 401k: Parents’ Over-compensation

Parents’ disorder: anxiousrexia money nervosa. Kid’s inheritance: moolah hoarding? Saving your style.   — BadWitch

Readers Are Spellbound & Perplexed…

Dear GWBW — I’m 25 and my parents…are so freaked out about their financial situation… they’re insisting I put ¾ of my salary towards my retirement. I think that’s way too much, help me get them to get off my back! I’m being responsible, but how do I tell them nicely that just because they neglected to take better care of their own stuff, that I’m not doing the same thing and a better planner than them? I am planning on staying at home another year (to save up a downpayment, I’m almost there!) and they really want to help me, but I swear every other conversation in this house is about my retirement. Old Before My Time

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Dear Old Before Time,

Three-quarters of your salary does seem too much towards your retirement at your age — and yet there’s no time like the present for retirement savings! Investing is all about understanding and embracing your risk tolerance and balancing it with your current life age/stage toward attaining your ultimate financial goal values (e.g., education, home ownership, retirement. Go find yourself a good mentor or professional financial planner). You are just starting out. Since you don’t mention having debt but saving for house down payment, I will assume your presentation of your finances is accurate and speak to that. The only person I personally know who started saving for his retirement first from age 19 on, and then started buying rental property(-ies), was my college BFF. He paid cash for everything (then was shocked he hadn’t built credit) and saved every penny — but he has indeed been set for retirement at minimum 25 years ahead of his. While that is some amazing and awesome peace of mind (especially in these continuing uncertain economic times) I believe it’s important to choose to live a balanced life (cheap can evolve into miserly as habits set, but it’s important to live within your means while meeting your needs, too), and that starts with our thoughts, and yes, I’m still talking about saving and investment here.

Money is emotional.  Much like your investment style, weigh whether your relationship with money (How you are in relationships with others is a strong indicator of how you are with your money, i.e., do you wait for others to take care of things, or are you straightforward and assertive with people? Think about everyone close to you and I’ll be surprised if you can find an exception to that) is a subconscious manifestation of your parents’ worried projections, or if it’s more a reflection (and practice) of your own values — that’s the real financial goal I would focus on attaining.

Bless your blessings,

BadWitch

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Dear Old Before Time,

Well, your parents have some good advice for you, though they may be a bit over-zealous. Here’s the thing: compound interest is your friend. The more you can put in now, the bigger your win at retirement time. Though 75% of your salary seems a bit extreme as you start to save for your new life, the more you save now, the more your money works for you over time.

David Bach, author of Automatic Millionaire and Start Late, Finish Rich, offers a chart that compares the amount of savings three individuals have by the age of 65. The first starts saving $250 per month ($3000 per year) at 15 years old and ends up with $1,615,363.40. The second person starts at age 19 contributing the same $250 per year. But with 4 less years of investing ($4800 less in investment) our second investor has $1,552,739.35—more than $62,000 less than the 15 year old investor. Our last investor starts investing $250 a week at 27 (12 years later than our 15 year old investor; $14,400 less in capital) and earns $1,324,777.67 by age 65—$290,585.80 less than our early investor.

In other words, start early and set up a set amount automatically deposited into a compounding interest retirement account. The more you put in now while your overhead is low will go a long way towards working for your continued solvency through retirement. Some to house savings, some to retirement savings and some towards enjoying your life—do that and see life blossom before you—with a strong foundation to support you.

Good luck and happy savings,

GoodWitch

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See Dad Retire. Retire, Dad, Retire.

When dad won’t hang it up, retire, move along…and make room for the Boomers who are next… Helping parents transition out of the workplace.   — BadWitch

Readers Are Spellbound & Perplexed…

Dear GWBW — Our dad’s 79 and won’t retire (he’s a big wig in a medium sized store chain). We think his work would love for him to, but he just refuses to go, and has even gone as far as sabotaging training for his replacements (plural!) in the past. How can we get him to move along? Money’s not an issue for our parents.   — Kids of Hanger On

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Dear Kids of Hanger On,

First off congrats! Your dad seems sharp as a tack (that he shows his vital signs by being stubborn as a mule is another matter). Realize how lucky that makes him and his family, and your view might shift a degree or two about his lack of pastoral daze. Your dad has clearly found his purpose and loves it. If his employer isn’t more aggressive in replacing/retiring him (this surprise me; most employers do have a policy about retirement and/or transitioning out partners by a stated age), he must not be doing everything “wrong.” I hear that you want your father to “move along” but money (whether limited or a lot) is not the only consideration for people who love what they do — for a lot of people who feel connected to their work, working for a living is far more about “living to work.” Having said that, I’m going to make an assumption here (based on his gender and generation) about dad and say that he likely erroneously mistakes his identity with what he does, and that’s the part you all would like him to slow down and separate from in order to better enjoy his well-earned personal life. Fair enough, all around.

Start the shift from 40 hours a week, to 24, with 20 or less as a written end-of-the-year goal. Better yet, if his employer is on board, a well-defined role of “consultant” can help him transition faster, with dignity. Encourage his transition actively when you notice the benefits from him owning his own time, like when he looks happier, more fit. Encourage him, especially when he’s a real grump/jerk about this transition. Mom might likely have more sway in role of assertive facilitator than you kids do, but ultimately your family unit should productively aim him towards semi-retirement by laying that groundwork with researched (or continued support of) alternative suggested activities for him to do (he’s a Doer; a sudden end to activity will only unproductively make him feel he’s been pushed off a cliff). Encourage him to ask for help which is probably new for him. These alternate hobbies/long-lost interests simply help a focused, and vitally engaged person have somewhere else — another or unexplored aspect of their intellect and soul — somewhere to put all that energy. Kindly remind him you know he’s shifting not dead, and soon he’ll buy that vowel on his own, too.

The bottom line to your parents’ happiness (and associatively, health) is compassion and helping dad give himself permission to relax and refocus his life force.

Rest renews,

BadWitch

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Dear Kids of Hanger On,

If your dad isn’t the one who’s spearheading his own retirement, I have to ask, why are you? Is he forgetting things or showing other physical or mental signs that he can no longer handle the work? If yes, well, then there should be some serious, truthful conversations about taking care of his health.

If, however, he is mentally and physically up to the challenge and is unwilling to step down, my suggestion is to let him be. If your dad is happy getting up and going to work everyday, why mess with a good thing? Focused work in an environment in which your dad feels competent and vital is good for his emotional health, mental acuity and longevity.

But I don’t want to under address your concerns. 79 is not a spring chicken, but, you really are only as young as you feel. As conversation over extending the age of retirement around the world, it throws into sharp focus our need to redefine “retirement age.” Everyone is not ready to retire at 65 and, of course, some people can’t wait that long. It is a personal decision that in my mind reflects how much you love your job. Apparently, your dad still loves his.

If you are concerned about him over-taxing himself, maybe compromise. Get him an assistant who will take some things off his plate and allow your dad to focus on specific projects and tasks. Be sure he knows this assistant is not his replacement. You may be able to have him cut back to a part-time schedule. Just remember, he is an adult. Let him make his own decisions.

All I can say is, my dad continued to work well into his 70’s. Now, at 86, he has discovered the joy of the exercise bike in the gym downstairs. He still drives, well. He is vital because he continues to feel independent, inspired and inquisitive. Perhaps your dad is doing the same thing—which is the best way to actually act your age.

Keep an open mind,

GoodWitch

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