Tired of Saving for Retirement? Try This!
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My husband, a third year medical student, was studying during a break at the hospital when he overhead a conversation. A nurse asked another nurse if she should take money out of her 401(k) to pay for a trip to Mexico.
She had been overworked lately and desperately wanted to use some vacation time to take a break. The other nurse said those four little words that have wrecked countless families’ finances: “Honey, you deserve it.”
My husband sat there and listened to the whole conversation, including the part where the nurse went into her 401(k) at work, transferred $5,000 for her vacation, and then actually booked an all inclusive resort.
I honestly couldn’t believe he just sat there and let it happen! I was actually incredulous. “Did you tell her about the fees? Did you tell her what a bad, bad, bad idea that was?” He didn’t.
He said it wasn’t his place. As a student, he is apparently incredibly low on the totem pole and didn’t want to do anything that would affect his ability to get recommendations for residency, including butting into someone’s conversation. However, I still can’t get that nurse out of my head. It’s an example of the bad advice we’re given every day about what we should be doing with our money.
Buy Life Insurance!
I’ve been collecting examples of the worst financial advice around over the past few months, and this story serves as the inspiration for this last installment of my series. That one nurse gave advice (“You deserve it) that will affect her co-worker’s finances forever. She’s not the only one who has encouraged someone else to change their retirement savings.
My friend Matt Becker from Mom and Dad Money said the worst financial advice he ever received was from an insurance salesman who told him “to stop contributing to my Roth IRA and use the money to fund a whole life insurance policy instead. Needless to say, I didn’t take the advice and decided to look elsewhere for my insurance needs.”
Spend now, Think later!
It seems like our world has permanently shifted to a “buy, buy, buy” society instead of a “save, save, save” society. Somehow, stories emerge all the time about people who withdraw their retirement savings or stop contributing to their retirement accounts to fund the life they want rather than the life they should have.
I even recently heard a radio commercial that listed all of the great things you could buy with your tax return. I doubt my plan for my tax return (to max out my 2014 IRA) would make for a very good commercial. It’s just not sexy to save and invest in your retirement. It’s much more appealing to have the large house, the newest car, and the best clothes.
A final plea from your future self
Trips to Mexico are great. I’d pretty much do anything to be at the beach with a margarita in my hand right now instead of a dirty diaper and a snow shovel.
However, I know that this phase of my life is just that – a phase. Some day, all of my budgeting and saving and bypassing the more luxurious things in life will pay off. I’m committed to investing in my retirement fund even while in student loan debt.
I’m passionate about telling others about the importance of saving for retirement, of maxing out your company’s match, and of reducing your expenses.
Simply put, don’t take money out of your retirement fund. Not to fund a whole life insurance policy. Not to buy a new house. Not to go to Mexico. Your future self will thank you.
What’s the worst financial advice you’ve ever heard? What have you had to give up to save for retirement? How do you resist the urge to spend now rather than save for later?