Retirement Savings Emergency!

I have a friend – let’s call her Allison – who’s kind and generous. She provides financial and emotional support to less fortunate friends. She donates money to worthwhile causes. She’s a lawyer whose job it is to help poor people in Family Court. She’s fun, funny and nice to those around her. That’s the good news.

The bad news is that even though Allison is in her mid-fifties, has a good career, and makes over $100K per year; she burns through every penny she earns. Her job is tough and stressful so she uses spending therapy – clothes, jewelry, hair, mani-pedis – to compensate. She lives to take expensive and exotic international trips to temporarily escape her difficult life. She’s a classic Oblivious Wage Slave.

She also trapped under a mountain of financial stress. Every little financial hiccup is a crisis because – hey, where’s the money going to come from? She regularly gets financial life-support from her 81-year-old dad but he won’t be around forever to provide that support.

All this stress is taking a toll. So she chokes down a bucket full of meds to help manage it.

Worst of all, her stress will continue indefinitely because she has no retirement savings and no pension other than Social Security. And we all know it’s tough retiring on just Social Security. When her dad dies, he will leave her a small inheritance but nowhere near enough to fund her retirement.

The painful reality is that Allison has a genuine, dial 911, do-not-pass-go, Retirement Savings Emergency! And she’s definitely not alone. One of my favorite bloggers, Financial Samurai, recently wrote about this in Retirement Savings By Age Show Why Americans Are Screwed. There’re lots of people in their 40s, 50s, and even 60s who have little or no retirement savings.*

Mrs. FF and I find this ubiquitous lack of saving for retirement strange and mysterious behavior. How do these people sleep at night? I’d be a hot mess.

We started saving for retirement when we were 25 and got our first real jobs. The amounts were small in the beginning but I understood the power of compound interest. So we always maxed out our retirement contributions and tried to save even more in after-tax accounts. This continued right up until the day we FIREd.

Really Stupid Comic #11

Helping Allison?

Anyway, I can’t help everyone with a Retirement Savings Emergency, but I’d like to at least help Allison.

Allison obviously should save more for retirement. Heck, if she would save just $500 a month for 15 years with a 7% annual return, she’d have almost $160K at the end. That’s way better than the big goose egg. So why doesn’t she and others like her just do it?

The problem isn’t knowledge or access to personal finance information. Everyday we’re all peppered with articles on how to save more for retirement. You can cut-down on eating out, downsize, move closer to work, take cheaper vacations, and so on. This stuff is easy to find unless you’re living under a rock.

The problem is motivation. I’ve periodically had conversations with Allison about saving money for retirement. Allison usually replies with something like “I live like a peasant and only live for today.” Or “I’m going to work until I’m 70 and then live under a bridge.”

I’m not sure where to go with her replies because it’s clear she doesn’t want to talk any further about it. I feel like smacking her up the side of the head and yelling “WAKE UP!”. I’m as frustrated as a dog pawing for his just-out-of-reach bone.

I obviously can’t force her to talk about saving for retirement. And so I ask you – what would do to help Allison? Or is there really nothing I or anyone else can do?

If I could cajole her to talk more about retirement, I’d help her see that she’s in the midst of a Retirement Emergency and a very grim future unless she changes now. Here’s what I’d tell her to do step-by-step:

  1. Register at the Social Security website and find out how much you will actually get from Social Security when you stop working.
  2. Imagine your future self living just off Social Security. What can you no longer afford? How will you feel about no longer having or doing those things? In other words, try to feel some compassion for your future self! Go meet people who’ve been forced to retire but didn’t save enough. How are things going for them? Do they wish they had saved more? Do you want to live like they do?
  3. Come up with an ideal retirement date and lifestyle goals. And take the time to learn about the Rule of 25.
  4. Figure out how much you need to save to hit that date and lifestyle. You can use FIRECalc like I did to figure out how much you need to retire.
  5. Realize you have a full-blown Retirement Emergency and PANIC! Panic is good because now you’re motivated to do something!
  6. Calm down, roll up your sleeves, and figure out how to get Freaky Frugal. You can make a budget, cut monthly expenses, save more, and invest wisely. It’s never too late to get started! See how close you can get to your ideal goals and try to make a game of it. I’m here to help you.

Of course this is all hypothetical because I doubt I can ever convince Allison to do any of it!

Thanks for reading! Do you know anyone like Allison? Any suggestions on what to do?

* Allison is a perfect example of why the US either needs to beef up Social Security or create some sort of Basic Income. Some people are Freaky Frugal either by nature or nurture and many, many, others are not.

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  1. You have great ideas on the illustrating the bigger picture of retirement.

    I was thinking something more tactical might help, maybe show her how to automate savings and investments. Possibly if the money never makes it to the bank account she won’t spend as much??

    1. Turning Point Money – That’s a really good idea!

      Unfortunately, I forgot to mention something in the post. Years ago, she had a live-in boyfriend that convinced her to start a retirement savings account. After they split up, she had a personal financial crisis and raided her retirement account to help fix the problem. So no more retirement account. Is there a way to motivate not to raid the account?

      Maybe I need to convince her to create an Emergency Fund first. I don’t think she has ever had that. Does that make sense?

  2. It’s so tough because people don’t always want advice to improve their situation. They can get downright hostile when it comes to anything money-related. If your buddy is OPEN to it and wants advice, then I think your recommendations are wonderful. I can’t imagine why she’d work so long in an awful job before looking for alternatives; poor thing.

    1. Because she needs to support her lifestyle! That is the problem with lifestyle inflation. She can’t easily find work that will support her level of spending so she is trapped in her job!

      1. Zack – What you said is true – she has to support her lifestyle. But I forgot to mention in the post that her job does help others less fortunate. I think she takes some pride in that and it’s part of the reason she stays in her difficult job.

    2. Mrs. Picky Pincher – You’re right about not wanting advice because it turned out she read this post and got really pissed. I expected her to get angry at first, but then maybe consider my points after she had time to reflect. I’m not sure that’s every going to happen. It makes me both sad and frustrated.

      Note to self: Never provide unsolicited advice!

      So do you have any tricks to find out if someone is open and wants advice? Or do you just wait until he asks for advice?

      1. Oh shiiiiiz! Sorry to hear she wasn’t super thrilled about this post.

        I have this problem a lot, both with readers on my blog and people I know in real life. I KNOW there’s a better way to do things, but if I just come in, guns blazing with money advice, they’re going to reject it. In fact, sometimes it can have the opposite effect and inoculate them against frugal-living arguments at all.

        The best thing is to lead by example. For example, I had a friend complaining about making payments on her student loans, and how it was really hard. I said, “Aw man, that totally sucks. I feel you. We just paid off my student loans in 7 months and it was hard.”

        I give the advice in the frame of telling about my life. If they want to know how I do things, I tell them. But it’s more like saying how *I* do things, and not telling them what to do directly. I acknowledge their feelings, commiserate, and then give a sneaky alternative for them to consider.

        It’s actually pretty effective.

        1. That is really excellent advice and I’m going to follow it!

          I’m a former software engineer so whenever I see something broken, my immediate reaction is to try an fix it. That works great with stuff or software. With people not so much. I need a better way and your way makes sense.

          Thank you so much!

      2. Yikes! I’m sorry your friend was upset by your attempt to help her. I feel you on the desire to fix things. My first career was in electronics engineering. That was something I had to work on with my wife because she would complain about something and I would respond with what she could do to fix it. The problem is she just wanted to vent and for me to understand how difficult things are. She interpreted me telling her how to fix her problem as a lack of understanding how difficult it is and of blaming the problem on her or taking the other person’s side (depending on the problem). I have since learned that people need to know that you fully understand their problem before they are willing to accept advice. Try to fully understand everything from her perspective until the point where you can paraphrase what she says and she says “that’s right”. Only then should you even attempt advice.

        Mrs. Picky Pincher is spot on in her advice. “Being stressed at work is a terrible feeling. I was really stressed at my job too until I learned my spending was causing my stress” or “I used to feel the need to spend a lot of money on clothes but then I started to realize that it required me to work many more hours and the time wasn’t worth it”

        I think that Vicky Robbins has a gentle approach to reducing spending if your friend becomes more receptive or for future conversations with different friends.

        1. Zack – Yep, us engineers do struggle with people problems sometimes. You’d think that after countless jobs and over 33 years of marriage I’d have better people skills. I’m still a work in progress and I need to work on those listening and playback skills. 🙂

          Thanks for the great link! Your Money or Your Life is one of my favorite PF books. I may write a post about it in the future.

  3. I think your friend should be more appreciative of you wanting to be involved and help her. That said, I think there are a lot of people out there that just have their own way of looking at things and don’t want to listen or be helped. I’ve got friends that I can tell just wouldnt be into the whole FIRE concept or talk. You made the effort and you see the reaction you’ve got. I’d drop it and not spend any more of my personal time or energy on it. Your friend should really wise up here. She’s mid-50’s and making $100K+ but how long will that situation last? Will she keep the same job until she’s 65 or 70? Its a cruel world out there and things can change fast. Living that stressful job into my 60’s or 70 isnt something I’d want to do. What if she had to cut back or bail out of work to take care of her father? Helping other people is good but no doubt she could scale that back some also. I’ve done ok, but I wish 20 years ago someone would have taken just 1 minute or less to mention or plant the FIRE seeds with me. No doubt it would have got me thinking and I would be in an even better position today.

    1. Arrgo – I have the exact same concerns. How long can she continue to do a job that so stressful? There’s nothing to fall back on except the Bank of Dad. But you’re right – I need to drop it and move on.

      “I’ve done ok, but I wish 20 years ago someone would have taken just 1 minute or less to mention or plant the FIRE seeds with me. No doubt it would have got me thinking and I would be in an even better position today.”

      Oh God, yes! If I’d read Mr. Money Mustache or found the Your Money or Your Life book much sooner, I probably would have retired at least 5 years earlier. Maybe even 10 years earlier. Oh well.

  4. This is a tricky one and apparently reading from the comments your friend didn’t appreciate the post. You come from a good place Mr. FF, but unless your friend is willing to seek financial advice you may not be able to help her on this one. Kudos for trying.

    1. You’re right – my friend definitely hated the post. She used terms like “none of my business” and “bridges have been burned”. So I definitely damaged that relationship.

      Still, I wonder if she had been willing to listen, would my advice have been sound? Or is there better advice?

  5. Yes totally agree about people NOT wanting unsolicited advice. I have the same problem with my sisters recently. They were planning to put in a huge amount of their savings into the hands of a Fidelity Mutual Fund advisor. I had already set them up with an account for index funds a few years back. I talked to them and sent them information about the amount that fees would eat up their savings and how much it would cost.

    No reply to my email.

    They don’t want my advice, even though they know I’m a PF blogger!

    People need to WANT to change to be able to change.

    1. GYM – I’m sorry to hear your sisters. Watching family do dumb things with their retirement money is really hard especially when you know it’s easy to do better. And you’re right – people have to want to listen and change; you can’t force them. 🙁

      I feel like PF should be a required course in high school. Heck, maybe there should even be a mandatory national test to verify the material is being assimilated. I actually took an elective PF in high school and it was the most useful course I had. Typing – now called keyboarding – was a close second. 🙂

      Thank you so much for sharing!

  6. This is so hard because you really can’t help people who don’t want help. And I’m so sorry your friend didn’t take the post well! I know it was written with great intentions!

    My mom is 54 and no where near prepared for retirement. Some of it isn’t her fault, my parents’ divorce didn’t leave her with much to work with and she was re-entering the workforce after 20+ years as a stay-at-home mom. Not easy. But she also hasn’t adjusted her lifestyle to her income post divorce, and that retirement age just keeps getting closer. When she says, “I just can’t live on $70k a year,” my head wants to go KABOOM!

    I’ve tried to talk to her about it many times, and it usually results in her saying “I’ll be fine.” Then shutting the conversation down. I know she’s stressed thinking that if she doesn’t figure it out she will end up dependent on my husband and I, but not talking about it isn’t helping either of us!! For my own sanity, I just build her moving in with us at some point into our FIRE numbers.

    1. Thanks for sharing your story! You’re mom’s response sounds similar to my friend’s response. I view it as the equivalent of closing your eyes, covering your ears, and yelling “BLAH, BLAH, BLAH. I can’t hear you!”.

      You’re really smart to build supporting your mom into your own plans. If you end up not having to support her, then you’ll have a really nice bonus! Do you think if she knew you were planning on supporting her, it would change her behavior? If so, for better or worse?

      I got really lucky with both my parents and in-laws. My parents were always Freaky Frugal and my Dad had an old-fashioned corporate pension. I never worried for a second about them when it came to finances.

      My in-laws are the opposite of Freaky Frugal, BUT my father-in-law was a professor who worked until he was 70 and got a very nice state pension. So I never had to worry about them either. In fact, he’s taking some of the pressure off Mrs. FF and I because he still helps support some of her siblings. I hope he lives forever. 🙂

      1. My mom knows, at least in loose terms, that we have built in having to support her. I think it both makes her feel somewhat ashamed of where her finances stand, but also that I’m just ridiculously conservative and that she will be fine. She and my younger brother tend to have rose colored glasses when it comes to life and finances.

        Mr. RtR and I are lucky with his parents at least. They both have good pensions, solid savings and own their home. We occasionally worry about elder care for my MIL as she never wants to leave her house, but their assets should be able to support whatever she needs and that is years away.

        1. It’s too bad your mom doesn’t appreciate the fact that you plan on helping her if necessary. I’m like you – I’d rather be conservative than optimistic when it comes to finances. Otherwise, there is a chance I end up having to live on a diet of Ramen Noodles. 🙂

          I’m really glad you lucked out with Mr. RtR’s parents. Money can help solve or ease a lot of old age problems.

  7. I agree you can’t help people who don’t want to be helped but you can try. I think you need to take it very slow. Sometimes it is not just motivation, people just get overwhelmed. Maybe if you breakdown everything that you feel need to be fixed and tackle each one at a time, she may be more receptive (once she starts talking to you again). When her next financial crisis happens, pick one thing she could spend less on and how it would have paid for this latest crisis.

    1. Caroline – You might be on to something with your baby steps idea! Maybe I redlined her Discomfort Meter which made her just want to shut down.

      As you suggest, I could have first waited for the next financial crisis. Then I could have helped her identify something to spend less on so that she could use the savings to establish an Emergency Fund. Then I could have worked with her to grow the Emergency Fund.

      I think trying to get her to start a Retirement Account before she has an Emergency Fund is a mistake. She would just raid the Retirement Account during the next financial crisis as she has done in the past.

      Thanks for the suggestion!

  8. It is incredibly difficult to watch someone you care about continue with “addictive behavior” whether that behavior is bad money management, drugs, or alcohol – they are all similar.

    Clearly Allison is in denial about the consequences of her behavior. Unfortunately we cannot change other people. Unsolicited advice is perceived as judgement and criticism and no one wants to be judged and found lacking. The stark reality is you need to decide if you will accept Allison where she is in her life or if you can’t, then you need to move on. Either way involves emotionally detaching from someone else’s actions.

    I love your big heart in wanting to help Allison. It is very noble. You want her to find the freedom and security which you have found. I also love that Allison is devoting her career to helping others.

    1. Libby – Very well said!

      Allison is a “good” person in that she helps others, but you’re right – she’s in denial about the future consequences of her behavior. I feel as though I’m watching a train wreck happen in slow motion.

      Allison wants nothing to do with me for now, but if she changes her mind I would just accept Allison where she is. There is really nothing I can do unless she decides she wants to take responsibility for her future and plan accordingly.

  9. Oh man… That’s rough. First she’s got a “Better to burn out” mindset. Then, she actually READS YOUR POST. It’d be funny if she weren’t in such bad shape financially. I do believe though, that with her income and a change in mindset, she could turn around that ship any time. Sadly, many in our society don’t make six figures but have similar spending habits. So yeah, I guess we can chuckle a bit – and hopefully your friend will see the good intent behind your message here.

    1. Cubert – Honestly, I thought she might read the post. She knew about the existence of the blog, but never indicated to me that she read it. If she read it, I thought she would first get pissed and then reflect on what it said. I got the first part right. 🙂

      You’re correct that she still has time to turn things around as long as she can keep the job she has. She’s in her mid-fifties and it gets harder and harder to find new jobs at the same salary as we get older.

      By the way, I love your name!

  10. There’s also so much self-inflicted pressure people put on themselves to spend. We see ads on TV, posters for new homes coming in our area, things that friends and family have and somehow rationalize that we deserve that too. The ending result is not paying ourselves first and obtaining very short-term gratification.

    1. SMM – Well said!

      People consume all this stuff thinking it’s “normal” and will make them happy. The reality is that most consumption make us unhappy and leads to long-term financial stress. It’s hard to think outside the box when media, friends, and family all give the same implicit buy-more-stuff message. I think it helps to find frugal friends (virtual or otherwise).

  11. I am a state prosecutor. I am 57 yrs old. I work 60 hours a week, give or take. I do have a pension coming to me. I can draw at anytime after 60, but if I keep working, it keeps going up. I have no credit card debt, just a mortgage ($37,000) and a Toyota Yaris payment….lol. I have a kid in college, who plans to attend law school, so I will be working to send him, and that is where my extra cash is going for now and the next few years.. He will go to a state school, hopefully. Yes, the work is stressful, but your friend also needs to realize no matter how much “good” we feel we are doing for society, and no matter how stressful the work is (I do murder trials, I know about stress) we also need to take care of ourselves. Fancy clothes and vacations are optional. There really is no excuse on her part.

    1. Cindy in the South – Thank you so much for sharing! It helps me feel better about the whole situation with my friend.

      I wish my friend could be more like you and I hope she reads your persuasive comment. You obviously have worked hard to take care of your future self and you’re still planning on putting your kid through law school which is not cheap. I’m impressed.

      There really is no excuse on my friend’s part.

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