We paused our retirement savings when my husband quit his job to become a SAHD.
As a former financial advisor, it used to make me embarrassed to admit this. At 30 and 38, we’re likely in the category of receiving a reduced or non-existent social security benefit the way things are currently going.
So, why would we do such a thing? Are we crazy? Will we ever be able to retire? Here are five reasons that we decided to pause our savings for retirement and why we’re okay with it.
#1. We Started Saving Early
One of my first “real jobs” after graduating college was for Jenny Craig. I was a manager and remember trying to enroll in their 401(k) plan and being informed that I wasn’t old enough to participate!
I was 20 years old and not old enough to save for retirement. How sad is that? At the time, I didn’t know better to go and open up my own Roth IRA, otherwise I would have.
Needless to say, I started my career in finance shortly after turning 21 and learned all of my options at that time. Almost all of my contributions since then have been made into Roth IRA’s or Roth 401(k)’s.
The employer match of a 401(k) plan automatically goes into a separate account, which when I left the employee side of our company, meant I needed to convert it into my Roth IRA and pay the taxes on it it instead.
In this scenario, the employer gets the tax deduction for contributing the match on my behalf, which is why I needed to convert it to my Roth or roll it to a Traditional IRA instead (I chose the Roth for the obvious future tax-free benefits).
Regardless of the tax nuances, I did get started sooner than later and all of my current retirement savings are in a Roth IRA, meaning it’s growing both tax-deferred and tax free. Score!
Article after article has been written illustrating that getting an earlier start is more impactful (over the long-term) than saving more. We’re marking it a win in this column.
#2. We Wanted to Raise Our Own Kids
Let me start by saying there is absolutely nothing wrong with having your kids go to daycare. We have had some phenomenal caregivers in the past and it’s been a very healthy experience for us and our children.
The thing is, is that we wanted to be the ones to raise them. We didn’t want to miss out on all of the firsts with our second (like we did with our son). We want to be able to fully take the blame for them needing a therapist later in life!
So when our second was about to arrive, we ran the numbers and realized if we cut quite a bit (including our retirement savings), we could just make it work and live off of my income. My husband put in his notice and started staying at home with our kids when I returned to work after a short six-week maternity leave.
We haven’t looked back. Although he has some long days, he hasn’t once seriously considered going back to work.
I’ve even since quit my job to freelance full-time for the web. It’s our plan to start saving again for retirement, I just need to continue to build my income to do so.
#3. We’re Working Towards Becoming Debt-Free
I’ve written previously on here about our journey towards becoming debt-free. This can be equally important when planning for goals like retirement, because the compounding interest effect works in direct opposition to saving and building your investments.
I figure by decreasing and paying off our liabilities, our retirement need should be less, especially if we enter retirement mortgage-free. So if we need to replace less income (due to our lessened expense need), we shouldn’t need as much to retire on.
Paying off debt will also get us back to saving for our retirement again sooner. It’s our goal to have our last consumer debt (our second mortgage) paid off by the end of this year.
Doing so, will free up quite a bit of discretionary income, which we can then funnel into our IRA’s (as well as probably pay down our first mortgage with).
#4. There Are No Guarantees in Life
If we don’t do certain things now (like be the ones to raise our children), we might not have the opportunity again in the future. None of us know our date of death, which makes retirement planning such a puzzle in the first place!
Not knowing, doesn’t allow us to throw caution to the wind and start spending a bunch of money we don’t have, but it does help to rationalize carrying out our value system and trying to spend as much time as possible with our family. There’s still a way to balance the then with the now.
#5. If I like My Business, I May Work Longer
With recently launching my freelance business full-time, it’s my hope that I continue to be as in love with working for myself than I have been so far. I’m hoping that being in business for myself – being truly self-employed, will be the key to enjoying my work more.
I’ve never had trouble working or the idea of having a job. I don’t like doing something for 40 hours a week (or longer) that doesn’t fulfill me or entice me to work harder to build something worthwhile.
I’m not sure where this whole working for the web full-time will lead me, but I’m willing to take the chance, work hard and enjoy the fruits of my labor. I want to wake up excited to work everyday. I’m a firm believer that work is good for us – there’s no reason that it can’t be enjoyable too!
We’re not currently saving for our retirement. Although there may be some missed opportunity (rate of return and compounded interest), we have some really strong why’s behind our decisions – namely our two children and our future goals.
We did start saving early and we’re working towards becoming debt-free, which are both in our favor. There are no guarantees in life and we’re working towards building a business that we can work at for years to come – not something that we’re in a hurry to leave and retire from.
Our goal is to build a business around our lifestyle – to be able to do some things now, instead of waiting to retire to do the fun stuff!
What do you think? Are we crazy? Or do you agree?