Don't Fret and Pay Attention

Rachel and her husband want to know if they can continue to afford not contributing to their retirement. They're renting and on Baby Step 3 at 30 years old. Dave doesn't advise changing the steps.

QUESTION: Rachel in San Francisco and her husband want to know if they can continue to afford not contributing to their retirement. They’re renting and on Baby Step 3 at 30 years old. They only have $7,000 in their retirement funds. Dave doesn’t advise changing the steps.

ANSWER: You’ve got to be able to finish up your emergency fund and a good down payment on a home in another year or year and a half. That’s going to keep you from being able to retire with dignity if you start at 34 rather than at 32? It’s a good thing to be nervous about it enough to come back to it, but let’s think logically. Run your numbers and ask yourself when you’re going to be able to retire with dignity. Can you retire with dignity if you start at 34? Yes. You’ll have to put money in there, and you’ll have to put more than if you started at 22, but you’ve got a couple of things to do. That’s get your emergency fund built and do the other steps here. Get the house down payment saved. I don’t think this is a deal breaker. If you told me it’s going to take nine years or something, then we’d have to stop and think about it.

Your husband doesn’t have enough income to buy a house anyway, so we have another issue. That’s the income side of the equation. You’ve got to solve that anyway. When you get that solved, a lot of these other problems start to move away once you have an income to address it with.

I predict that three years from now, you will have a good down payment, you will have your emergency fund in place, and you will be starting your retirement. Don’t fret. Pay attention. Be intentional. You do need to pay attention. The difference between worry and concern—be concerned enough to do something about it. Don’t fret and worry. I wouldn’t do that. And don’t do that to the point that it causes you to do something silly like do these things out of order, which would be a bad plan.