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I have been working since the age of 14. I am now 45 with two (almost) adults, living at home still and attending college. I have been a single mom for the past 10 years and my kids’ sole provider.
For a good portion of my life, I was low-income. It’s only been in about the last 10 years that I haven’t felt like I was drowning financially. I am a penny pincher — I don’t buy new and I love to save, so I feel like I have the right mindset.
But being that I live in Southern California, it has been a bit challenging trying to save for retirement. I have managed to put away around $55,000 in I bonds, savings, a basic emergency fund and a 401(k). I am leery of investing because I don’t feel like I have enough that I can just lose it without taking a huge hit.
I currently only make around $45,000 per year, and I fear I will never be able to retire. I plan on moving out of California in the next five years (after my kids graduate from college), but at that point, I will be 50 and looking for new employment. It’s scary and starting to weigh on me pretty heavily.
Is there hope for retirement? I feel like I need advice and a little hope.
-K.
Dear K.,
You’ve raised two kids in Southern California on a $45,000 salary. I’d say you’ve earned your blackbelt in frugality. You know you’re behind on retirement savings. But given your circumstances, having $55,000 saved is still a pretty big accomplishment.
Saving and (sorry to say it) investing are essential to retirement planning. But lifestyle is an oft-forgotten part of the equation. When you find joy in saving instead of spending, you can get away with less retirement savings than someone who’s in constant pursuit of shiny new objects.
Now let’s talk about the saving and investing component. Investing is pretty much the only way someone with an ordinary income can build a large enough nest egg to retire.
You don’t need to start picking your own stocks or…
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