You know what’s hard to hear?
Despite all the talk about retirement planning, and all the information available on the web, millions of people still aren’t saving for retirement. As a direct result, American workers don’t have enough to retire comfortably. According to the Employee Benefit Research Institute, only 51% of workers over the age of 55 have less than $50,000 set aside for their retirement savings.
What’s even more discouraging is the excuses that most people give for not saving for retirement even when they understand the significance of their choice.
As a former financial planner, I heard these excuses and I heard them often. Today, I call out 17 of the worst excuses for not saving for retirement.
Do any of these sound familiar?
1. It’s Too Early in My Life
Table of Contents
- 1. It’s Too Early in My Life
- 2. It’s Too Late in My Life
- 3. My Employer Doesn’t Offer a Retirement Plan
- 4. I Don’t Have Any Money
- 5. I Can’t Think About THAT Right Now
- 6. I’m Afraid of Investing (or, More Appropriately, the Risk of Investing)
- 7. I Don’t Need to Save – I’ll Be Inheriting Money…
- 8. I Don’t Need to Save – I Have a Can’t-Miss Business Opportunity
- 9. I Don’t Need to Save – My House Is My Retirement
- 10. I Have Too Much Debt
- 11. I Don’t Plan to Retire
- 12. I Don’t Know Much/Anything About Investing
- 13. I’ve Never Had the Discipline to Save For Retirement
- 14. It’s Impossible to Save Money in This Economy
- 15. The World’s Going to Hell in a Hand Basket – Why Bother With Retirement?
- 16. I’m Covered At Work
- 17. #YOLO
- No More Excuses
This is probably the favorite excuse among the very young – like twenty-somethings, fresh out of college. They reason that retirement is so far away – and that there’s so much to do between now and then – that saving for retirement is somehow even counter-productive.
If you are using this as an excuse, you need to understand that you are missing out on taking advantage of the very best years of your life to save for retirement.
To put it simply, the earlier in life you begin saving for retirement, the faster and easier the process will go. You might even find that if you start saving as soon as you’re out of college, you will have enough money saved up by the time you’re 35 or 40 that you will no longer need to fund your retirement – and you’ll still be comfortable by the time you actually do retire.
Seriously, one of the biggest factors in retirement isn’t so much what you put in as how long it’s been there. Starting early gives your nest egg time to give you great returns based on a little thing called compound interest.
2. It’s Too Late in My Life
You know those twenty-somethings from number one who thought it was too early to start saving? Sometime around 40 or 45, that excuse becomes “It’s too late to start saving for retirement.” This is also a convenient excuse for those who never gave retirement a second thought – until now.
Even though this excuse sounds more reasonable, it’s still just that – an excuse.
Here’s the thing: You’re still better off having something saved for retirement rather than nothing. At worst, a relatively small retirement portfolio can be a very large emergency fund for your retirement years. And, after age 50, you can contribute more per year than you previously could, to help you make up for some of that lost time.
3. My Employer Doesn’t Offer a Retirement Plan
This puts the blame for your lack of retirement savings squarely on your employer.
If your employer doesn’t offer a retirement plan – or you simply refuse to participate in it – and you don’t make any other provisions, you will most likely be broke by the time you retire. And logically, that means that you probably will never be able to truly retire.
You are the only one responsible for saving for your retirement. Not your employer, your parents, your spouse, or anyone else. If your employer offers a plan, enroll immediately. If they don’t, open a Roth IRA and start contributing. Or, better yet, do both. Like I said, something is better than nothing.
4. I Don’t Have Any Money
If you don’t have any money, then how are you paying your bills? How are you even living your life? If you are merely surviving, then you have at least some money.
What’s probably closer to the truth than not having any money is that retirement simply isn’t a priority for you.
Some people become savers in life because they make the choice early to prioritize saving over spending. That’s not a casual commitment, either. It often means consciously choosing to live at a very low level, and sometimes to do without things that many people consider to be necessities.
Even if you have a relatively low income, you can still make choices that emphasize saving money for retirement. And don’t forget the fact you still have the ability to make money now while you’re still working.
5. I Can’t Think About THAT Right Now
This is the confusion crutch – I can’t think about retirement because I have too much going on.
Every one of us, at virtually every stage of life, has to balance multiple obligations and priorities.
It’s easy to ignore retirement as a priority because it’s a really long-term goal, but retirement will be a priority at some point in your life, and when that time comes, you’ll be too busy stressing about that to take care of other responsibilities. Don’t put that stress on yourself.
The time to begin saving for retirement will never be perfect.
Whatever you’ve got going on in life, carve out some time, attention, and money to make saving for retirement one of your priorities.
6. I’m Afraid of Investing (or, More Appropriately, the Risk of Investing)
I can appreciate this excuse – almost. But it collapses when you consider that the biggest risk of all is doing nothing.
Let’s say that you do nothing in your lifetime to prepare for retirement. When retirement comes, you will be left with nothing. Nada. Zilch. Zip. That’s a BIG risk, wouldn’t you say?
Or, take this for example: instead of investing in the stock market for retirement, you put all of your money into certificates of deposit at your local bank, which pays less than one percent per year. If inflation is averaging 3% per year, your CD savings will be worth a little bit less – 2% – each year. Over 30-40 years, your CDs will be worth less than you bought them for.
Is that really avoiding risk?
7. I Don’t Need to Save – I’ll Be Inheriting Money…
This one is an epic example of a feel-good excuse – I’ll be inheriting money so I don’t need to do anything for the future.
What if you have a falling out with a rich relative from whom you expect to inherit? What if that rich relative decides that he or she likes someone else better, and decides to exclude you from the will? What if the rich relative experiences a financial collapse, and there’s no money left to inherit?
Or what if the rich relative experiences a bout of temporary or permanent insanity that isn’t discovered until he blows his entire fortune in the casinos?
That’s a lot of what-ifs. Do you want your retirement riding on such uncertainty?
You need a backup plan, even if you expect to inherit a lot of money. And that’s what a retirement plan will give you.
8. I Don’t Need to Save – I Have a Can’t-Miss Business Opportunity
I hope your business opportunity works out for you – really, I do. But let’s get back to that backup plan thing: there has to be a Plan B just in case Plan A doesn’t turn out the way you expect.
Reality often takes unexpected and disappointing directions. A well-funded retirement plan can be your backup, just in case reality decides not to cooperate with your plans.
Businesses fail all the time for many different reasons. Don’t cash in your future for a business opportunity in the present. It could all be gone in a year. Or less.
9. I Don’t Need to Save – My House Is My Retirement
You know that warning about putting all of your eggs in one basket? If you plan to rely on your house for your retirement, or any other major asset for that matter, all of your eggs are sitting in one basket, leaving you with very little if anything to that basket.
Retirement, just like investing in general, requires a healthy amount of diversification. Continue to plan on your house as one major component of your retirement. But diversify that plan with a well-funded retirement account, as well as a large amount of non-retirement financial assets. That’s the only way to ensure a truly comfortable retirement.
10. I Have Too Much Debt
One of the reasons that people have too much debt is that they don’t have any assets, particularly the long-term variety. Without any assets to offset the debt, you’re forced to rely on either current income or credit to pay your bills and cover emergencies. That’s no way to live.
You can break the debt cycle in your life by concentrating more heavily on building up savings and investments. A retirement plan is a perfect foundation because it is the longest-term investment you have, and once you have it, it can provide the kind of security that will encourage you to create other asset accounts.
If you don’t save money somehow, you’ll always be in debt, and you’ll be trapped in a vicious cycle.
11. I Don’t Plan to Retire
You may not plan to retire, but your employer and your own body may have other ideas. Even if you do plan to work well in your sixties, even your seventies, there will come a time in your life when you will no longer be able to work. When that happens, a well-funded retirement plan will be your best friend.
It’s fine if you don’t plan to retire. Just make sure that you have another plan, just in case the work-til-you-drop strategy doesn’t pan out.
12. I Don’t Know Much/Anything About Investing
Most people don’t, but they invest for retirement anyway. For one thing, there’s plenty of information about investing available on the internet, and it’s actually free. You can do research and you can join investment forums to help you learn. You can also get plenty of free advice on investment broker websites. It’s important to remember that investing in the stock market doesn’t have to be “high risk”. There are plenty of ways to invest that are safe.
And failing everything else, you can simply put a big chunk of your retirement portfolio into index funds and ride them up over the next few decades. You still won’t know anything about investing, but you’ll be getting the benefit from doing it anyway.
13. I’ve Never Had the Discipline to Save For Retirement
Here’s a secret: Very few people have the discipline to actually put money into their retirement or savings accounts once they deposit that check. That’s what payroll savings contributions are for. You don’t have to have any discipline at all. You simply need to make a decision to do it, and then decide how much you will contribute. Then you’ll be done.
No discipline will be necessary. And for what it’s worth, discipline isn’t something we’re born with; it’s something we acquire through preference and habit. You can do it, too.
14. It’s Impossible to Save Money in This Economy
There is some merit to this claim, but the flip side is that the uncertainty in the economy makes it even more necessary to save for retirement. If you know you can’t count on a job, or a pension from a given employer, then you must create your own.
Instability should be a call to action in your life. You are the person who is most responsible for your retirement, remember?
15. The World’s Going to Hell in a Hand Basket – Why Bother With Retirement?
So if your worldview is all doom-and-gloom and you don’t save for retirement because you think you won’t be able to have a retirement, then why bother with anything at all? Why get up in the morning? Why go to work every day? Why pay your bills?
This excuse is based purely on fatalism, and that isn’t the answer to anything. It’s the ultimate excuse to justify doing nothing at all.
Don’t play that game. And even if the world is going to hell in a handbasket, you can mitigate at least some of that outcome with a fat retirement plan. At least then, the last few years of your life will be less stressful and more comfortable than what you may have experienced up to this point.
16. I’m Covered At Work
This excuse is often used when it comes to life insurance and disability. A slight variation – when it comes to charitable donations – is “I gave at the office.”
In whatever variation, and for whatever purpose, it’s nothing more than a pure excuse.
What if the retirement plan you have work isn’t adequate? What if the plan is in trouble somehow? What if your employer is in trouble at some time in the future?
Even if you are covered at work for retirement, there’s no substitute for having your own plan. And if your employer plan works out just fine, then you’ll have two plans in retirement.
And as everyone knows, two is better than one.
I saved the worst excuse for last. YOLO – You Only Live Once – is, yes, the worst excuse ever for not saving for retirement. If Excuse Number 15 is based on fatalism, YOLO is based on its twisted first cousin, hedonism.
While doing whatever you want often works well when you’re young, healthy, and in your prime income-earning years, it tends to wear out with age, just like the human body does. And that’s why you still need to save for retirement, no matter how much happiness you’re trying to grab along the way.
And here’s something else that might please the most committed hedonist – pleasure and happiness tend to feel a lot better when they’re backed up by a full financial tank. It means you can prepare for a more challenging time in your golden years, but still enjoy the pleasures of today – though admittedly you’ll have to cut back on them a bit to fund your plan.
No More Excuses
There will come a time in your life when the excuses for not saving for retirement over your lifetime will become increasingly hollow. You can expect that to happen as you move closer to retirement age. But you can spare yourself that grief by ditching the excuses and committing yourself to get started right here, right now. You don’t have to hit it hard, just get started. Once you do, you’ll get better at it with time.
Then when retirement comes, you’ll have your large and growing retirement plan to savor, rather than a lifetime of excuses.