Retirement investing: Powered by Emotion
June 1, 2007
It’s time for Step One of Financial AA: self-inventory!
I know that my cash flow leaves much to be desired. I’ve cut expenses to the bone. Ruthlessly trimmed anything that wasn’t absolutely necessary to keep the family warm/cool, dry, clean and fed. And transported. Even swallowed my pride, a few times, and still doing it to try and reach an understanding with the job so that I can pay my Completely Trimmed bills. So why in heaven’s name have I not reduced my retirement savings?!?!
Well, at first I just plain forgot. You know how you’re supposed to save first? How you’re supposed to have that money come out of your paycheck before you ever see it so you’re not tempted to use it? Dang, but that works!! I saw it when I logged onto Yodlee, and each time the deposits registered. But in my budget?? Nah. Never remembered that sucker. I made the goal, put that on autopilot and seriously locked it out of my mind.
When it finally occurred to me that – really – I needed to change to make this budget work with all the increased household expenses, I still balked. I had some good reasons. But they were emotional. Fear. Worry. Caution. And, Pride.
Fear: What if I never increase the savings to the current contributions again? What if I get used to having instant gratification and start saving like a pansy? What if I lose the ability to work? What if, what if, what if?
Worry: If I stop now, I’ll never save enough for retirement! I can’t ask my kids to do for me what I’m doing for my parents! And if I don’t have kids? Then I’ll definitely be up a creek!
Caution: Aren’t I supposed to be contributing as much as possible now to maximize the amount of time my money has to grow? Is reducing the contribution REALLY the best or only resort I’ve got left? Won’t that mean losing [insert outrageous sum here] worth of compound interest?
And my good friend, Pride: I really really really want to hit 10K in my 403(b) this year. In January, I set the goal. If I give up now, that’s what we call “failure” because I failed to meet my goal. And I really want to see it reach that “magic” number before I feel like my efforts weren’t half-arsed.
Yep. My own independence is kicking me around the block. How’s that for irony?
I’m not going to give up retirement investing entirely because there’s no way I’d forgo a 2-to-1 match, but my 403(b) is not me. I am not my 403(b). If it’s a little smaller right now, that’s ok. There are other obligations ogling my cold harsh cash, and if the office can cough up a (little) extra money to help me out, I can give myself a raise, too.
