Disclaimer: I am not a financial advisor and, while some of the sources in this story are financial professionals, you should read this as general guidance and consult a financial professional about your individual situation.
I can pinpoint the exact moment when I lost the motivation to save for retirement.
I was sitting in a claustrophobic conference room across from a retirement advisor. I had a job then and this guy worked for the plan my employer bought into. He was supposed to help us calculate how much of our paychecks to contribute to our 401(k). I had always contributed something. 5%. 10%. Whatever I thought I wouldn't really miss. But when he asked me what kind of retirement I wanted to have, I must've said something pretty grandiose because his recommendation was:
90% of my paycheck.
I was 29. Living in San Francisco. Making low six figures. Paying an obscene amount in rent. Obviously, this plan wasn't going to work. He knew that. 90% was a joke or a reality check perhaps. The conclusion we came to was that my vision for retirement wasn't going to happen. And that's where we left it.
After that, I lost the motivation to save for retirement at all. I still did it while I was on payroll, but once I went self-employed, I slowly gave up the habit. I know that I'm not alone in having erratic savings routines or being uninspired to build up retirement accounts. Generating a living wage is hard enough. Now, I have to create my own social safety net too? How the hell am I supposed to do that!?
It's an uncomfortable truth to know that no one will take care of you if you cannot take care of yourself, but it's the reality for many of us living in countries where the public systems are insufficient. The average Social Security check in the United States right now is about $2k USD/month and that varies quite a bit based on how much you've paid into the system and your marital status. In Canada, it's lower. The current average Canada Pension Plan payout is $877.01 CAD/month (about $622 USD) and the maximum Old Age Security payout is $827.17 CAD/month (about $586 USD). These figures depend on your work history, your marital status and your residency length though there are additional supplements to beef this up to a slightly more reasonable number (closer to $1.6k CAD). On top of that, we keep hearing that a lot could change by the time we age into these programs.
Suffice it to say, us North Americans need to be saving something.
I may have fallen off the retirement wagon, but I recognize that, even though I may not get the retirement of my dreams, I should still have a plan to not be destitute and fully reliant on the state. In search of inspiration and ideas on how to go about this, I turned to our community of entrepreneurs and financial professionals to hear what's working for them.
Picture yourself on an island
Retirement planners often say you need a vision for your retirement in order to figure out how much funding you need. Living in a trailer down by the river is much cheaper than becoming bi-continental with a second home in The Alps. When I was younger, I envisioned a posh retirement surrounded by the material things I cared about then. Now, I'd be happy to maintain my fairly low cost lifestyle as is.
Having an idea of where you're headed is good, but Melissa Moreau says it's common to revisit this vision over the course your life. Melissa is a CPA, wealth and grief coach in Ontario and she works with widows whose plans have completely shifted after they lost their partner. "It's a very gentle kind of process. It's like an uncovering," she said, sharing that sometimes it's a multi-year endeavor looking as far ahead as you can. Even though I'm not a widow, I appreciated this perspective because I find picturing myself 20-30 years from now to be pretty damn hard.
Another thing that can get in the way of creating a vision is your relationship to money. Personal finance coach Ceres Chua likes to start retirement discussions by identifying the money script behind someone's behavior. Money scripts are the underlying beliefs that influence our financial decisions and they're a common framework for finance pros who help people through money mindset blockers. Are you money avoidant? If so, you may be putting off setting up or contributing to your accounts like me. Are you a money worshipper? Then, you might be endlessly chasing more cash. Regardless of your money trauma, Ceres recommends "removing your own psychology from the decision" and starting with small, automatic contributions without waiting for a perfect plan to be in place.
Find your kindred spirits
One thing I noticed from everyone I spoke with about retirement planning is that it's more of a group project than it sounds like—especially if you start young.
Connecting with the FIRE community made "retirement feel relevant right away" which motivated Aneisha Velazquez to get started saving. "I’d been frustrated for a while of being stuck in this limbo of 'I work to live, can’t get ahead' and I felt there has to be some way out of this loop. That meant I was ready to listen when I found out about FIRE (financial independence, retire early). I first heard about it through Roshida Dowe from her YouTube channel, who talked about it along with the idea of Black women taking career sabbaticals," she said. Aneisha's a small business bookkeeper and she later turned her email to me about her retirement journey into this blog post.
The FIRE movement has to be one of the most popular finance fandoms. There's several communities around it, a million books written on it and tons of experts sharing their methods to retire early. Bailey Lang told me about Mr. Money Mustache, who they said was a "classic" source for reading about FIRE though their first recommendation was the Facebook Group City Girl Savings, run by money coach Raya Reaves. That's where Bailey found the best guidance from the helpful, friendly community there.
Bailey's a book coach in Ohio who goes by The Literary Witch and they had already decided they wanted to retire early when they met their now husband of five years. "We talked about money pretty much from our first date and, we realized we have very similar goals. We have very similar philosophies about money. It's something we both find interesting and enjoy talking about. It's become a site of real connection for us rather than conflict," Bailey said. They combined their finances when they got married and they regularly review their savings and investment accounts together, playing with different compound interest calculators and making projections about their future.
For systems strategist Devin Lee, she found her savings style through books, podcasts and a sit down at her bank. "Did you know you can just ask your banker for free financial advice and they will talk with you for hours?" Devin commented on my Ask The Legends question about retirement. I did know that but I've watched too many heist movies to chill at the bank for too long. She also highlighted some experts she follows including Carol Cho, Amanda Holden and Vivian Tu (a.k.a. Your Rich BFF).
Finding your guru or community of likeminded people can make you feel less alone in whatever financial state you're in. Hearing all these names reminded me that I was a big fan of Suze Orman in high school. She used to be on Oprah all the time telling people they were spending too much money. "YOU CAN-NOT AFF-ORD IT!" I've since moved on from Suze and I have no interest in the FIRE movement, but I clearly need to find my retirement posse if picking this habit back up is going to be successful.
Choose your style of saving
The reason I don't save for retirement now is not that I don't know how to do it. It's that I'm prioritizing short-term savings over long-term savings. But I was surprised to learn there were so many different styles of saving for retirement. Here I was thinking everyone was just maxing out their retirement accounts, moving into regular investment accounts and then stashing the rest in high yield savings accounts.
For Bailey and their husband, they prioritize investment accounts over retirement accounts. That's because they want to retire at age 50 and, in the United States, they'd pay hefty penalties for withdrawing that money out of an IRA or 401(k) before age 59½. Bailey has a retirement account from a former job and their husband has one at his current job, but they set up a Vanguard investing account together and they make weekly deposits to it no matter what the market is doing.
When you work a job, it's easy to siphon off a percentage of your paycheck into a retirement account. It's less obvious what those contributions should be as an entrepreneur with variable income. To solve this, author and freelance writer Lindsey Danis takes 12% off of every check that comes in and moves it into retirement accounts. She started at 5% and gradually moved it up to 12%. "The money comes off the tip for me, so I never feel like I'm trading off money for retirement vs money for travel, etc. But I think the mindset adjustment came earlier for me. When I left the employer world behind, I had to come to terms with knowing that the only person who was going to save for my retirement was me," Lindsey said. She's married and her spouse has a more traditional work retirement set up, but that hasn't changed this percentage habit.
Designer and writer Megan Eckman and her husband currently contribute 20% of their annual income to a combination of retirement funds and investment funds. They start by maxing out their ROTH IRAs, then their SEP IRAs, then money market accounts until they hit their goal for the year. Calculating annual contribution instead of monthly is something Ceres recommends to her clients too. Take your annual target and divide it by 12. That becomes your monthly contribution. But Ceres says it's ok to pause contributions some months and boost contributions in other months. She calls this her Floor-Target-Ceiling model where Floor is a month you can't contribute, Target is when you hit your goal and Ceiling is a make up month when you have extra cashflow.
Financial professionals nearly always recommend automating as much of this as possible so you don't have time to second guess yourself or forget to move the money, but Leo Aquino offered us some different options here. Leo's the founder of Queer and Trans Wealth, a personal finance journalist and a financial coach. They too recommended a "set it and forget it" method, but said that could take many forms. You could auto-deposit from your bank account into your IRA, you could use an automation app like Sequence to automate a percentage of your income (instead of a fixed dollar amount) or you could use a mobile app like Acorns to round up your purchases and contribute the difference to your retirement.
If none of those feel right, Leo says you can "front-load your retirement savings during high-revenue months," meaning contribute bigger amounts manually when you have better cashflow.
For most of us, it makes sense to prioritize contributing to retirement accounts first because they have tax advantages in both the U.S. and Canada (and they're even more flexible in Canada because RRSPs and TFSAs don't have early withdrawal penalties). But if you're planning to retire earlier than 60 or you have more to contribute than the regulated annual limits on these accounts, you may also want a regular investment account, a high yield savings or both.
Consider ways to lower expenses
Sitting with that unhelpful retirement planner in San Francisco, it felt impossible to lower my expenses to the point where I could even come close to my retirement goal. I know now that sometimes it takes some pretty drastic life changes to make room for savings and that's part of why I no longer live in San Francisco.
Before founding her successful systems business, Devin Lee had plenty of ups and downs in her years of self-employment, but she said, "No matter what is going on, I always prioritize saving." Sometimes, that has meant doing No Spend Months—where you try to limit your spending to only essentials like rent, utilities, transportation and food—before a big trip or in times of lower income. I love the concept of No Spend Months and I religiously watch Bradley on a Budget for ideas of how to save money daily though I will never be reusing my dental floss like he does.
Lowering expenses is also something you could (and probably should) think about as you approach retirement. Housing tends to be the biggest cost so taking on a roommate or moving into shared housing might make sense if you can handle it. Renée Sylvestre-Williams, a Toronto-based journalist and author of The Singles Tax, said there's "increased interest in pooling resources to own property and live together in retirement. I've interviewed people who have rented together, bought a home together or created a development cooperation and build a condo."
I'm extremely on board. I lived in co-housing in Atlanta and I saw how advantageous it was, not just for money saving, but for the community help you might need as you age. Having housemates or neighbors checking on you. Getting rides to the doctor. Asking someone to pick up your meds. Not to mention all the free food people are always giving away.
Another thing you could consider is having a retirement job, something different from what you're doing now, and ideally it's something that fulfills other parts of your life and isn't just for the money. Melissa told me, "My father-in-law, when he retired, he had a good pension, but he decided to take on a mail route. It got him some exercise. It was social. It got him out of the house every day. There was structure and routine to his life." Other people she knows have become gas station attendants or strawberry farm workers just because something about those jobs suited them. "Maybe you've always wanted to work at a bookstore or be a coffee barista and you couldn't make the numbers work. Now's your time to get to do that," Melissa said.
You don't want to have to work in your retirement, but working for fun might make sense for you and it can bring you a little extra cash.
Make it a habit
Ideally, saving is a habit. I get that. I don't do it. But I get it. So, how do you make it so?
Jen Mayer, the founder of Fully Funded and Accredited Financial Counselor based in New York City, says you need to build it into the cost of doing business. "Existence isn't just rent, food, lifestyle. It's all of that plus healthcare plus retirement," Jen told me. That means if your current income isn't covering all of that, it's not high enough and/or you need to cut your expenses.
Jen says a lot of entrepreneurs are just "going off vibes" when it comes to setting a target income and that it's worth having a brutally honest conversation with yourself as to whether or not that's sufficient for everything you need. Sometimes, these brutally honest conversations have her clients changing their business models, their offers or their target audience. Perhaps a pivot to enterprise is in your future!
When Aneisha began contributing to retirement savings, it was less about how much she could deposit and more about building the habit. "Investing less than $100 a month felt really small compared to online advice that said to contribute $20 a day to get started. But I did it anyway," Aneisha said.
For those going a manual route, you will appreciate Bailey's Monday money ritual which was inspired by a workshop Amelia Hruby did on finance rituals. Every Monday, Bailey checks in on the household finances and makes the investment deposit. They told me they used to check every day so pairing back to once a week has been much healthier and easy to maintain.
Retirement savings is an unfortunate obligation of how we age in North America. Our knees are getting bad. Our hair is falling out. And we have to sock away cash for when it all gets even worse. You can't count on your government. Even the good one (Canada) is punking out on its old people.
Listening to all these different approaches gave me visceral reactions to what I liked and disliked. I heard "just start" from nearly everyone—meaning just start saving, start investing—but I think maybe the thing to start with is learning how others do it. It's an easy first step. It's free. And it will quickly illuminate which path you want to go down and who you want to go down it with.
I don't know that I'll ever get that same motivation back I had in my youth when I thought my life was going to turn out differently (and honestly be a lot more expensive than it is now) but soaking in these options, I'm inspired to try again. I see more possibilities than "save 90% of your paycheck" and I have the most control over my income that I've had in a long while. Making a living wage is hard month after month, but if I make saving for retirement a mandatory part of that living wage, my future self might just catch a break.
Which retirement savings style is most like yours? Add your take on this story in the comments below.
