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
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 Dailyworth.com 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.)