Can you save more than $5.09/day? You’d better start!

By Caitlin Kelly

If you want to scare the shit out of almost any American — those who don’t have a defined-benefit pension guaranteed to them — which knocks out most workers, ask them how much money they have saved for their retirement.

retirement (Photo credit: 401(K) 2013)

The median figure, among those aged 55 to 64, (i.e. an age group, traditionally, potentially planning/hoping to retire within a decade or less), is a mere $63,100.

The median among all Americans is a staggeringly low $10,890, (minus the value of a home and/or vehicle.)

When New York Times writer Jeff Sommer recently wrote that $1 million wouldn’t do much, more than 600 readers weighed in with comments, prompting him to tackle the subject again the following week.

My math works like this — if, when (if) you graduate from college at 22 and start working immediately, you begin saving $5.09 every day, some $36.00 every week, or $144 every month, every year without a break — and with no accrued or compound interest from investing that money — you’d end up with the $63,100 median figure.

Surely we can do better?

For some people, right now, saving $5.09 every day, all seven days of every week, is impossible. Their living costs cannot be trimmed in any way, and/or their wages are too low.

Many fresh graduates, and older workers, are unable to find paid work in this economy. They are stalled, frustrated, broke, angry. Some carry enormous debt burdens of homes underwater or student loans they cannot discharge through bankruptcy. Some people are very ill, or have very ill family members for whom they must add the cost of care and the time it takes — i.e. unpaid labor — to do this as well.

But…for the rest of you, snap that wallet shut!

The culture that most Americans live in is one that continues to glorify and fetishize spending lots of cash, (or credit, mostly), acquiring tons of shit that’s new and shiny and cooler than everyone else’s — whether an Ipad or Ipod, phone, car, house, vacation, clothing, whatever. You can blow easily thousands of dollars on a freaking baby stroller, if that somehow seems essential to you.

Television and social media and the internet bring very rich peoples’ lives into our own. We can press our greasy little noses against the impenetrable glass wall of their luxuries and whine: “Why not me?”

You can go broke even trying to keep up.

saving and spending
saving and spending (Photo credit: 401(K) 2013)

I’ve been lucky. I grew up in Canada, a nation that still chooses — with much higher rates of taxation — to heavily subsidize college education. My annual tuition, from 1975 to 1979, (yes, really) was $660 a year. I was able to put myself through university and graduate debt-free.

I’ve also been able, since my second year of university, to sell my writing, photography, editing and translating skills to others — and had the developed skills, delivered on or before deadline every time, to make them want more of my work.

I’ve been fortunate, since the age of 22, to be able to share housing on four occasions, which helped cut my living costs in two expensive places — suburban New York and Toronto.

I’ve been grateful for good health, so I have never lost months or years to debilitating illness(es) and treatments that would have prevented me from working.

But that’s one side of the ledger — the getting side.

I’m also cheap as hell, when necessary, and it was necessary for years on end, especially when single paying $500 a month for health insurance, and facing three recessions in my industry.

I’ve chosen to stay in a one-bedroom apartment for 25 years. Would I prefer a second or third bedroom or bathroom? A backyard and fireplace and verandah? Hell, yes. But did I want to assume a much larger mortgage payment and longer repayment term? No. Nor the stress of fearing potential homelessness. Ever.

I’ve been saving 15 to 25 percent of my income every single year for years.

Our ironing board recently broke. I paid $4.30 at our local thrift shop for another one. Score!

When my income bottomed out to a terrifying degree in 2007 to 2009, I took a part-time retail job ($11/hour no commission) and bought my clothes and shoes from consignment shops.

Until my ex-husband moved in, I had no television. Until my second husband moved in — when I was in my early 40s — I did not have cable or a cellphone ($200/month saved right there.) I drove a used, paid-for car, as we still do.

A friend of mine runs her own company, an investment fund, literally managing millions of other people’s money. She drives a Mini Cooper, not a Mercedes or Lexus or Range Rover, the vehicle people expect.

“That’s how I got a million dollars,” she says, with a knowing smile.

We plan to be mortgage-free by 65. We have no children. We will have multiple income streams, one of which is our savings. Adding to them is a non-negotiable part of our life, as automatic, necessary (and boring!) as brushing our teeth.

Here’s an interesting, helpful and smart post from about how to face up to the reality that we all need to save (more!) money and invest it as wisely as possible.

Are you saving for retirement?

If not, why not?

If not, how do you plan to pay for your living costs in your 70s, 80s and beyond? (People insist they will keep working. Find me the employer willing to hire a 75-year-old.)

41 thoughts on “Can you save more than $5.09/day? You’d better start!

  1. Great post – it really got me thinking about our own lag in savings. Right now we’re working our butts off to pay down all of our tedious credit card debt. We definitely had an issue with making purchases we can’t afford, some how thinking we ‘deserve’ it. So screwed up.
    Now that we’re paying down large amounts of our credit card debt it kind of feels like we’re in savings purgatory. It’s slightly depressing to think that we’ll pay all of our debt off in the next 1-2 years only to start saving from a big fat zero!
    There is NO way I want to keep working in my 70’s or 80’s. Time to buckle down…thanks for the inspiration!

    1. My husband and I have had that argument many times. If we all got to buy all the stuff we feel we “deserve”…!!!! 🙂 But it comes down to (sigh) what we can afford and YET (possible, sometimes) that which also makes us happy. For me, that can be a $10 bunch of fresh flowers.

      I do both…pay down my credit card debt (yes, I have some) while also saving the maximum allowed every year for my 401(k) tax deduction. I think it’s probably possible to do both…but it depends (of course) on how much debt you have and at what APRs. I use only credit card, Amex Blue, with a 10% fixed APR. It’s higher than I’d like but it’s better than many others.

      I have NO desire to work into my 70s. I really hope to hop off the treadmill at 65. I will probably work in some capacity, but for my own amusement and additional income, I hope. Not for necessity.

  2. It sounds like you have been very smart and frugal, Caitlin, the frugality out of necessity, too. I truly am sympathetic for kids that are graduating with huge loans to pay off. Even if they get good jobs they will be paying off those loans for decades. Something is wrong with this scenario. My husband and I are already retired but had been saving since we were married. Want to hear a good one? When banks first started offering CD’s, we bought one, all we could afford, at 14.5% interest, fixed for 30 years. We still are congratulating ourselves on that one. We are comfortable but I still have this nagging feeling that at 62, I should get a job that actually pays something. Art does not pay.

    1. Thanks. A lot of it is luck — not having been hit with some crazy shitstorm of financial disaster, as well. I was lucky to learn, young, about saving money and living on my own at 19 on a budget; there is tremendous financial illiteracy out there as well.

      Congrats on that CD! I still remember the 80s and 18% interest on CDs, etc. Sweet.

      Art never pays, unless you’re John Currin or someone at his level. Journalism is not a high-paying field, so you learn to live on/with less as well.

  3. Yup, I’m already saving for my retirement. Been doing so since working full time in my early twenties. But you already knew that. 🙂 And so do my other readers of my blog which reflects my frugal perspective, a perspective that never leaves me wanting for anything – including, so far, my retirement nest egg.

    I too remember those high interest rates in the ’80s. High-return Canada savings bonds helped pay my way through my subsidized university undergrad.

    1. One of my CS bonds actually doubled in value. I wish…

      It’s interesting that, if you’re making an adequate income, (i.e. not low-wage and/or coping with a huge family,) it’s assumed that saving money means never having fun. Not true.

  4. Sobering stuff. My husband and I don’t have debt except for our mortgage. We have spent a butt load on college for our two children and as a result we haven’t saved as much as we would have liked. We are still in pretty good shape God willing we can continue to work for about another 10 or so years into our low 60’s.

  5. Great post. I’ve been thinking about this subject more and more as I approach 30. I’m trying to save, but one of the things that’s holding me back (aside from having very little $) is that so much of the advice I find about saving for retirement hinges on the assumption that I’m working full-time for an employer who offers a retirement program. And with interest rates so low, I don’t know where to put my money. Any advice about how to get started the right way?

    1. Interest rates are awful, true. I’ve never once had an employer-offered 401 (k) so I’ve always managed my own money, from my 20s onward.

      If you’re in your 20s, you’ve got the time to make some bolder moves — i.e. putting some of your money into more-aggressive equity mutual or index funds. There are some really good personal finance books written by women — I like Alison Griffiths’ and Manisha Thakor.

      Alexa von Tobel has also created a site for young women called LearnVest…

      The most crucial question, if anyone wants to manage your money, is to ask first if they are a “fiduciary” — which means they have to keep YOUR needs in mind, not just make money for their firm.

  6. Working for 5 years I put $10k into a 401k, which I was pretty proud of. Of course we’re using that money to finance a move and we’ve needed to buy a few things for it – but we’ve stuck to significant sales and used goods where we can, and buying quality to last a long time where we can’t. We’re allowing ourselves two luxuries, a nicer camera to document our time abroad (a significant portion of which was paid for by gift cards horded for months), and Kindles (because we are heavy readers but can’t afford to cart large amounts of books to and from London.

    We’re also selling our car (thank goodness, I will not miss it and the money it costs to maintain) and we found an old bond in my name that got lost in my parents files that will give us an extra 1k. J. didn’t nearly use all of his student loan money, which we are using to set ourselves up in London. We’ve decided that once we’re settled, the money left from my 401k and the retirement cashout I got, plus the car profits are going into a retirement savings account. And we’ll continue to put 10% of all income into it as we’ve always done.

    And, after this planning and commitment and years we think we’ve been pretty damn responsible for a couple of kids who married at 23, we still worry.

    1. Sounds like you are way ahead of the game…the fact you managed to save so much so quickly (on a not-great salary) is really impressive.

      The costs in London are crazy high. You’ll be glad of having that fund started.

  7. Bravo! In Germany you can’t use a credit card at Ikea. In fact a lot of places don’t take credit cards. And most credit cards take out the balance from your checking account each month. Americans get really pissed off when they realize this after month one. The Germans just scoff at them thinking “Why the hell would you want to carry a balance?” We don’t have a lot of things, but we save, we travel, and enjoy our debt free life.

    1. Fascinating! This is why I enjoy blogging — I learn so much.

      But Germans also have a very different social safety net as well. I doubt (?) that Germans ever have the need to pay for medical care, for example, let alone with a credit card.

      1. Health Care is amazing, and contrary to popular American belief, I have never waited to see my doctor. I walk in, sit for maybe 5 minutes and walk into an office where my doctor is already sitting. We chat for a few minutes, then he might give me prescription. Then I walk across the street to fill prescription, it takes 5 minutes.

        If I were pregnant and I was given bed rest, my insurance would also cover the cost of someone coming in to clean, shop for me, do my laundry, etc. And then there is PAID maternity and paternity leave.

        Ok, I’ll stop ranting now.

      2. I hear you!

        The women of the U.S. put up with the worst treatment by a democratically-elected (hah) government I can imagine, certainly given the wealth of this country. No one seems to connect “family values” with actually helping people become parents without fear and financial stress, of losing their jobs, etc. Employers own everyone here.

        I wonder if any Germans, anywhere (?) question the cost of the taxes that support this?

      3. Thanks…interesting stuff.

        There is tremendous propaganda put out by the AMA and others about socialized medicine (like Canada’s) and it’s 99% bullshit — it’s meant to protect their economic interests, no ours.

  8. I particularly like the way you link lifestyle choices we make in our high-earning days with planning for retirement. Too many people are short-sighted IMO, living for the day and unfortunately, falling for the tricks of marketing and advertising. I’ve had a much better quality of life since giving up television (not for financial reasons), I never buy or read glossy ‘women’s’ magazines, and I don’t go to malls for leisure time. Marketing strategists prey on human weakness, desire, and emotion and they are highly successful at inducing us to spend, spend, spend. Thanks, a very good article.

    1. Thanks much…

      My mother essentially shamed me every time I spent money on something non-essential. She lived so frugally it was ridiculous — except it left her with a ton of $$ which she is now spending at $5,000 a month for a small nursing home room. I have seen all this firsthand.

      I worked in an upscale mall from 2007 to 2009, part-time, and wrote my second book about it. I hate malls! Here’s the link to the book…

      I live in a suburb, where if I want to buy anything more than stamps or groceries I have to get in my car and drive somewhere or travel 40 minutes into NYC. That has an inhibiting effect on silly spending. I do spend $$ when traveling and on vacation because I actually have time to do so, and enjoy it. I’ll splurge occasionally, but saving is never not an option, no matter how much fun it prevents…and it does.

      I think some people have no idea what they spend/save/invest. I know to the penny.

  9. Very interesting and thought-provoking article – really makes me want to start planning my future better as a young person.

    I’d love to read more articles by you about what it means to be an American (or at least to be a Canadian living there). From a European perspective it’s always enlightening to hear about the real way of life in the US; a lot of the time to us, it tends to be seen as an almost fantasy-land, and we don’t get a lot of perspective on the daily struggles and worries of the American people, unless they’re featured in some god-awful reality show.

    Again, great article, thanks for sharing 🙂

  10. Steve

    Plan for retirement? That’s a joke right? Why? Our government will sell you a retirement package for your vote. Over half of Americans alreadywon’t even work to feed themselves or take care of their own children. We have it made here! Everything is free, or haven’t you been here long enough? Now they want to keep the borders open and take care of anybody in the world that can get here. Retirement? A vast percentage of our population is retired already. LOL

      1. Steve

        They? I always vote and I refere to them as “they” because no matter who I vote for it is always they and never “WE” meaning the people. Frustrated by political impotence? ABSOLUTELY!! You aren’t? I continually see my rights as an American citizen being constantly trampled on by a runaway federal government and I feel completely helpless to do anything about it. Frustrated you ask? I’m not quite sure that word adequately describes it. What frustrates me most is the number of my fellow citizens that don’t seem to care as long as they get theirs. My solution?…. How about we start with ten feet of rope and a wobbly stool?

  11. I see these much older people at my job search groups and I want to weep for them. I am quite thankful that I have always been disciplined (not quite as regimented as I would like, but) with money and pray that I will therefore not be one of them in 20 years.
    Great post, I’m going to share it with a financial adviser friend.

      1. I did not, thank you for sharing. I am a hair away from 50 myself (strange to say) and think that we in this range are still better off – as your story points out – than those over the traditional retirement age who are looking.

        Do you have a book, or plans for a book, of your previous stories?

      2. I have a book proposal I spend more time talking about than working on. I’d like to get it sold, but balk at the unpaid work to get it finished, (she whined.)

        I’ve already published two NF books — if you visit my website, links are there with sample chapters of each.

  12. barbfreda

    Shared this with my two boys, one working, one at law school. They graduated from college debt free, a major accomplishment in the US. We have one more to send to college; hope we can do the same for her–and we did it without really touching our own savings (any financial advisor will tell you NOT to spend your savings on college ed. for your kids, who have their entire working lives ahead of them…WE do not…)…We are aggressive savers, And at times I think too aggressive. But it’s pretty satisfying to have that money in the bank.

  13. The sad part is that saving to the exclusion of everything else is no way to live life. But it’s your only choice if you want to retire and not die on the streets.

    Strange world we live in.

    1. Yes and no. If you are will/able to moderate your material desires, live well below your means — you do not have to eat ramen every day for decades. The difficult part is Social Security. People my age will, just, barely have access to it….younger workers, probably not.

  14. As a teacher, I’ve got a pension waiting for me (unless the system crashes) if I spend at least 27 years in the public school system in Kentucky. It automatically saves about 11% of my pay. On top of that, I try to save an additional 10 %. It’s all about choices for me, because I could have a bigger house, nicer cars, etc. None of that interests me, and I’m fortunate to be able to save some for retirement.
    The consumption mindset and economic growth model of more more more has infiltrated most people far too much.

    1. Thank heaven for a pension! One of the many challenges of saving money is figuring out how to invest and grow it, which is often intimidating.

      When the American economy is based 70% (!?) on consumer spending, this is the model we have. I agree that spending $$$ for its own sake is silly, but I suspect it’s fairly common.

  15. Good post Caitlin. Fortunately, unlike a lot of people I know, my 12-year-old Day Job has a forced savings plan and I will have a gov’t-job pension waiting for me in 13 years that will make it fairly easy not to move in with my daughter…or a tent somewhere. Still, like you, on top of that, I save about 20% of my income and live below my means. I thrift, haggle & trade when I can, buy my cars used with cash, have a lot of cheap fun, save up for big trips vs charging, and dodge sales and debt like they are the anti-Christ. IT’S FUN bucking the consuming-til-you’re-broke-as-hell movement. Kind of like a game even of seeing how much money I can keep in my pocket while still having a life I love. So far, so good.

    1. Thanks for sharing your story.

      The more we save, the less fear and anxiety we will face later…getting old is tough enough! Every time I think of blowing a lot of $$$ ($500+ is a lot of money, and even $100+ gives me pause) I think about what else it might be used for, or saved.

      I am like you…I try to get the cheapest version of some things and see it as a game. But I also splurge on things as well.

Leave a Reply to C. Cancel reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s