I didn't believe in saving for retirement in my 20s, but I changed my ways when I realized how much I'd have to save each month to retire by 65

woman working in office

For most of my 20s, I didn't believe in the idea of retiring. How could I? I was struggling to figure out what kind of career I wanted and, every few years, I landed at a new company, in a new industry, starting at the bottom of the heap.

On the first day at every job, I'd roll my eyes when asked if I wanted to contribute any of my monthly earnings to a 401(k) account. At 75% of the five companies I worked for in my 20s, they didn't match the contribution, which made me struggle even more with the idea of opening a retirement fund. Why plan for retirement when I can hardly plan for right now?

But as I watched my parents reach retirement age and have the money needed to stop working, my thinking started to shift. I was about to turn 32 and had been so fiercely against planning for my financial future that when I finally woke up and realized the big mistake I was making, I was extremely behind on saving for retirement.

I decided to change my ways. First, I had to settle on a goal retirement age; I chose 65, since retiring any younger seemed impossible and, by that age, I'll (hopefully) be able to use Medicare, collect Social Security, and withdraw cash from my retirement accounts without a tax penalty.

Setting up my retirement savings strategy

Now that I had a retirement age in mind, I was able to work backward. I used a retirement calculator to estimate what I should be putting aside monthly and contributing to my retirement fund, based on factors like my age, salary, and how much I've put away so far. It allowed me to see what number I should aim for.

The retirement calculator spit out a number higher than I feel I can afford to put away right now, but it gave me a goal to strive for. I've decided to cut back on my expenses by 15% to begin to increase my monthly contributions, hoping to make that percentage larger by the end of the year.

Next, I decided to catch up on educating myself around retirement funds, where I should put my money, and the kind of account to open. I read a handful of books and met with a local financial adviser who told me that, since I'm self-employed, a SEP IRA makes the most sense for me at this point.

I also made a promise to myself to attend a retirement fund management workshop, online or in person, twice a year to stay up to date on managing this money. 

Finally, I found myself working harder and making smarter financial decisions around spending and saving money because now I have a true retirement plan in place. Before, the idea of retiring seemed like a myth or a long-lost goal. But now I have an age to work toward and an amount of money I hope to see in that retirement fund when I turn 65.

I'm 31 now. It does feel like a long time away, but at least when the day comes to retire, I will be proud of how my younger self actually had a plan.

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