When I was 19, I got my first internship at a big bank. They offered a 100% 401k matching program and after learning more about the wonders of compound interest in my Finance 101 class, I was pumped! I studiously calculated how much a single $1 would be worth by the time I retired—assuming a 12% rate of return and factoring in the 100% match, it would be worth a whopping $326 I discovered. Holy crap! What if I had $1,000 in there, that would be more than $300k. And what about $5,000? Well, that would put me over a million dollars!
This was exciting to me, even if it was far into the future. Being ahead of the game and starting on retirement young was so motivating for me. And so I did contribute and continued to do so when that internship turned into a full time job after I graduated college—a job I would have for another four years.
When I was 25, my 401k was at $35k, a number I was very proud of. I mean that would be $3.3 million at retirement. But then I did something inexcusable. I liquidated my entire 401k and spent it. It was a totally impulsive, spur of the moment decision. What did I spend it on? Well I’ll save that for another blog post. But in literally one second, the idea of having many millions of dollars by the time I was 65 just stopped being exciting to me. There was something shinier and more fabulous in front of me. That's the funny thing about money. What can take years of discipline to build can be so easily wiped out in an instant.
It took me years to begin contributing to my 401k again, purely because just the thought of my 401k would make me embarrassed and ashamed of my reckless decision. But I do reflect a lot on how I can go from one perspective, a more responsible and future-conscious one, to the other end of the spectrum, a more reckless, YOLO-centric perspective that is only focused on the now.
Retirement is not exactly known to be the sexiest topic in life, especially when you’re under the age of 35. But the irony is it gets harder to plan for it later in life. So it’s super important to start thinking about when we have time on our side. I had to change my whole thought process in order to get me to start contributing again to that 401k. Here are some shifts in thinking that I made to my perspective that have helped me to get excited about the world’s most boring topic:
Fall in Love with your Senior Self
We live in a youth obsessed culture where everything young is idolized. Even in the business world, the media is more in love with the idea of a young college drop out genius than an experienced and measured qualified person to run a company. As we all know, this perspective often leads to terrible results. This focus on young devalues the great experiences that older generations get to experience. Sure, a younger life may be more captivating on a screen, but what about all those fulfilling and rich experiences older people have that the rest of us don’t get to see. What this creates is a fear in us of getting older. We start to believe that after a certain age life isn’t even worth living.
But changing this perspective is important. Especially since there are so many examples of senior citizens who are thoroughly enjoying their lives. I mean look at the Golden Girls! Sure your life may be different at that age, and you’ll want different things, but the idea of being older is not something we should fear. Quite the opposite. We should all look forward to getting older, when life can be slower and we get to do the things we actually want with no fucks given. I mean seriously though. Seniors have no chill, they don’t give a fuck. That is exciting.
Think about the upside
How many times has doom and gloom been associated with the topic of retirement? Healthcare costs are rising they say. Social security will be bankrupt they say. The world will be under water they say. Another reason why it’s so hard to think about retirement is because it’s just so stressful. The idea of being a penniless sixty-something begging for healthcare at the steps of a hospital, is a visual that’s all too common when thinking about retirement. But here’s the thing. When working towards a goal, it’s way easier to think about all the great things that will come with accomplishing the goal than to be worried about all the negative things that will happen if you don’t accomplish that goal.
Instead of thinking the worst case scenario, think about the best case scenario. Being in your 60s with millions of dollars in the bank, getting to do whatever you want and not beholden to anyone, is a pretty great scenario to work towards. Not beholden to an employer or even what society expects of you. Because after a certain age our media doesn’t even bother to place standards or expectations. You can actually just do you. True freedom.
Be okay with not having your shit together
A big reason why it took me so long to start contributing again to my 401k was because I really felt like I didn’t have my shit together. And a big reason why it was so easy for me to contribute at 19 was because I was doing it early and at that point I knew I had my shit together. The fact is a lot of people don’t contribute to their 401k because they feel like they have too many problems today that they need to deal with. And the conventional thinking is to try to get your shit together today and then you can worry about retirement.
But here’s the truth. It’s okay to not have your shit together right now because you’ll never have everything down to perfection. It’s okay to just live in a constant state of incompletion. And it’s important to just accept that there’s no deadline for you to make sure everything needs to be perfect. Incremental progress is still progress. And most of all, accept that you don’t have to wait until today’s problems are solved to solve tomorrow’s. Life does not work in such a linear fashion.
The good news is that there are so many tools and resources out there that make contributions for retirement pretty easy. The hardest part is just setting things up. After those automatic contributions are set up, you can forget all about it, but still feel a sense of security knowing that your future is being taken care of. I’m happy to report that I did eventually resume contributing to my 401k and in fact I have way more than what I had before I spent it all--thanks to my aggressive catch up contributions and this wonderful bull market we’ve been having over the years. But in addition to those factors, a big part of my success has been because entire mindset has changed about retirement. And mindset is everything when it comes to making the best financial decisions.
And away we go
This is the beginning of a beautifull friendship. In the meantime, are you curious to know what emotions drive your spending? Take our quiz to find out