For most of my working life, I was not self-employed. I worked for companies and schools. These companies and schools offered things like 401k’s and 403B’s. Some of these plans were mandatory, and some weren’t. I think the first company I worked for had a plan that was not mandatory. If you invested at a rate of 4% of your pay though, the company would match it at 6%. You could invest at any rate beginning with as little as 2%. So, as a single mom at the time, I invested at the smallest amount I could, which was 2%. I didn’t get a company match.
I really didn’t care at the time. I was still in survival mode and thinking about monthly expenses like rent, food, and utilities. I made a very small amount as well, as I didn’t yet have a college degree. I worked in The Benefits Department and was essentially a clerical/customer service rep. That’s how I was seen, anyway. And that’s how I was paid. In the early 1990’s, I made around $20,000 annually. This is what I used to pay for everything and support two kids. I didn’t get child support. I wasn’t on welfare, but I wasn’t exactly in the investor class.
I worked that job for 7 years. I drove the same Ford Bronco II that I had driven over The Rockies in with my kids in 1992. I had a couple of accidents in that car (only one was my fault! I swear!) but none put it out of my misery, and I would always just patch it up and keep going. Yep, I had an ’89, ’90, ’91, ‘92 Ford Bronco II. I called it “The Broncosaurus.” By the year 2000, I owed zero on that vehicle, so it was just insurance and gas I needed to be concerned with financially. I wanted to keep it that way for as long as possible.
In the spring of 2000, after 7 years with my first Colorado employer, I had made up my mind to leave my job and to complete my education. I knew I had some money in my 401k that I could float on for some short period of time. I put in my 2-weeks’ notice. Scary! I had decided to get a degree in Human Resource Management, which is basically what I had already been doing for years. It made sense. And I enjoyed the work. So, I had put in my notice at my first employer and decided that I was going to find a better paying job and finish my degree one way or another. So, one morning on my way to work, I stopped for a coffee and then, as I pulled out to make a left-hand turn, I was hit nearly head on by a big pickup truck coming at me invisibly from the other side of the line of traffic. Traffic was heavy, and I couldn’t see around the cars and trucks which had correctly left the intersection open for people who wanted to turn left or go straight through. So, I made my left-hand turn into the opening and was surprised when I got to the other side by the guy in the pickup truck who was driving in the left-hand turn lane in the other direction. (Actually, there wasn’t a left-hand turn lane there, but one further up … another story…) Fortunately, I wasn’t injured in this accident, but I did have to climb out the back of the vehicle because the doors were jammed by the head on collision. So there went my very minimal 401k money. I used it to buy another car. I had to keep going to find my next job.
In retrospect, I do wish I had felt confident in investing my full 4% so I could get the company match, but I just didn’t at the time. Had I done this, I would have had a lot more money to work with when I left that job, but as a single mom, I did what I felt I had to do. As they say, “life happens.”
My next job had a mandatory 403B plan. The rule was you had to enroll at 4% after one year of service. It was still hard to do this when the time came, but I ended up working there for another 7 years of my life, and during those 7 years, I made a lot more money on my retirement plan. I was never on track to become a gazillionaire, but it gave me something.
Now to be clear, I’m not a financial advisor or consultant. I don’t claim to be one. I don’t have a degree in finance. My degrees are in Human Resource Management (and some other stuff like Psychology & Religious Studies) I have no plans to get a degree in finance either. Also, I’m not selling investment plans or vehicles. I’m not a licensed securities broker. I’m just noticing what I experienced and suggesting that if you find yourself in a similar situation, you MIGHT consider upping the contribution level in your 401k or 403b at work. Learn to live on less if you can. Retirement may seem about a century away from now, but it will roll around. These company-sponsored retirement plans do seem to pay off better than a regular savings account, especially over the last few years when savings accounts have not been paying anything at all. Well, I guess they’re paying a little bit now because of inflation.
One of the books I read when I did develop an interest in such things was called The Millionaire Next Door. I really liked that book and I think I’ll be reading it again soon. Most of the millionaires interviewed in that book recommended investing in your retirement plan at work at the highest level you can. Get the company match and the average 12% annual return on your investment for as long as you can. Think long term. Sometimes that’s easier said than done, I know.
Deep inside, I have the heart of an artist, a minister, or maybe a teacher. My goal here is to share my personal experiences in the hopes that my readers will do better than I have. I’ve made plenty of mistakes and didn’t get the ideal early start in my adult life. Despite my various errors in judgment, I was able to retire without debt about 5 years early. A person who is diligent can do much better, and many have.
I would like to invite you to follow my blog and receive these short stories by having them delivered directly into your email inbox. There is a link on my page to do this. For today, it will take an extra click, but in the future, it’ll be automatic, which is so much easier.
Journey in Joy