My retirement – what to do?
January 17, 2011 14 Comments
As many of you may remember, my school recently suspended our matching retirement for 6 months.
I have been debating over what to do with this.
I contribute 6% of my salary to retirement. Previously my job matched that 6%. Also, they give 3% non-matched (that hasn’t been canceled). So for every 6% I was giving – my work was giving 9% (3% + 6%) – so in total a value of 15% of my income was being invested to my retirement. Not too shabby!
Obviously I have a few options:
- Keep my contribution the same. If I keep my current retirement contributions, then for the next 6 months a total of 9% of my salary will be put towards retirement (3% by my job, 6% by me). I won’t have to worry about paperwork. But I also won’t be getting any free money from the matching deal.
- Eliminate my contributions. I’ve considered eliminating my contributions for the next 6 months to 0%. I’ll still have the 3% that my employer will contribute, so I won’t be pulling out entirely from the retirement game. The end result will be I’ll have an extra $250/month (approx) that I’ll be able to put towards whatever I want. In 6 months this would mean $1,500 that I could be putting towards my debt.
- Reduce my contributions. Another option is a half way point. I could essentially match my employer and put 3% of my salary towards retirement and the other 3% towards debt. A pro of this is that if I forget to change my contribution level in 6 months I’ll still be getting SOME match.
Honestly, I don’t know what the best thing is to do. I usually have some inkling for the “correct path”. I don’t want to “sneeze” at $1,500 towards my debt. But it feels like retirement money contributed NOW will increase in value a lot more in 30 years than just the $1,500. But then again, eliminating $1,500 worth of debt will save me a lot of money in interest. Can you see I’m torn?
I’m also afraid that I’ll get used to having that extra money and forget to change my contribution levels when the 6 months is over. Or worse – that they’ll make the change permanent. Which, if they do, I’ll wish that I had left my contribution levels the same.
Does anyone else feel like retirement is just some acceptable form of gambling?
I get that I need to contribute to retirement. But without knowing what the stock market will do in the future, without knowing how inflation will occur, without knowing if I’ll even need retirement or I’ll work till I die, without knowing THE FUTURE – it is impossible to know how much I’ll need to save.
I feel like every time I contribute to my retirement I’m buying a lottery ticket and hoping that I’ve picked the magical amount that will allow me to be safe and secure when I reach 70 (apparently my new retirement age according to social security).
Maybe 3% savings would be enough. Maybe 20% savings to retirement still won’t get me to a comfortable level of retirement living. Maybe I’ll die next Thursday and this entire debate is pointless. Maybe I’ll live to be 134 years old and run out of retirement money at age 95.
It all seems like a big gamble – and one that you really can’t win it. Can you?