Perspire to retire!

I was all fired up to save for the future. Then I found out I was a day late and about, um, $90,000 short.

Published August 4, 2008 11:37AM (EDT)

Recent gloomy talk of recession has given way to even gloomier talk of stagflation, that dreaded combination of rising prices and slow growth. But until a few weeks ago, I'd remained calm about my financial prospects. "Let the Chicken Littles of the world worry!" I told myself. "I'll just cut up my credit cards -- once I pay them off -- and then I'll sock away plenty of money for the Even Greater Depression. We'll be a family of scrappy but satisfied bean eaters! Our neighbors, with their updated kitchens and their enormous home equity lines and their brand-new cars, may gawk at us now, planting tomatoes and splashing our feet in the baby pool instead of going to the movies or shopping at the mall. But soon, they'll be packing their stainless-steel appliances into their covered wagons and heading east to look for work, while I smugly stand here, doing dishes in the 100-degree heat of my un-air-conditioned Los Angeles home and feeling proud that all of our penny-pinching finally paid off!"

I was so excited about my savings plan that I made an elaborate Excel chart to track how much we could save each year in retirement funds and college savings funds and emergency money funds until, thanks to the magic of compounding interest, each fund would swell to an impressive size. I showed these big numbers to my husband to demonstrate how going without new clothes and a new surfboard for another year (or 10) was eventually going to pay off. Naturally, I didn't tell him that we couldn't actually save that much for retirement and college and emergency funds all at once. But it was so much more invigorating to see all of the numbers getting bigger and bigger that I couldn't resist.

After all, I had memorized the main strategies recommended by every financial planner in the book: Max out your retirement savings, put away money for college well ahead of time, try to pay your mortgage off sooner, set aside enough cash to cover six months of expenses and cut up your credit cards. If I didn't envision a world where we could do all of the above, then there was a "hole" in my financial plan. All of the experts warned against holes. Holes rendered comfortable people destitute. Better to suspend my disbelief, disregard the laws of space and time, and aim for the stars!

So we stopped eating out. We stopped seeing movies. We stopped buying meat that wasn't on sale. We stopped considering even small purchases. Those (slightly unrealistic) Excel charts assured us that we were scrimping now to ensure a glorious financial future later, one free of worry and stress in which we'd relax in a nice, old house with big windows (and central air). Our kids could attend the colleges of their choice, and we'd take yearly trips abroad, mostly to sit around in pretty places eating delicious, exotic foods.

Then one day I decided to try out an online retirement calculator, just to reassure myself that we were well on our way to not just a secure financial future but also a rosy one. I plugged in my age (38), my current retirement savings (respectable), my desired income upon retiring (50K) and a few other figures, and pressed "calculate" with a little smile on my face, ready to be praised for my prudent savings and congratulated on the happy, golden years ahead.

Instead, I read these words:

"To retire with an inflation-adjusted retirement income of $50,000 for 20 years would require $3,075,744.65 in savings by the time you retired at 65. You need to save an additional $47,613.58 each year to reach your retirement goal."

Sweet Jesus. Three million dollars? Forty-seven thousand dollars a year? How is that even possible?

Hold on. Maybe my husband's figures would be a little more promising than mine. He had less saved, sure, but he'd also be retiring sooner, since he was seven years older than I, and obviously this calculator was a little too sensitive to inflation. I plugged in his age and savings.

"You need to save an additional $64,943.35 each year to reach your retirement goal."

Deep breath. OK, but what if we combine our retirement savings? Even though my copy of "Smart Women Finish Rich" cautioned me against depending on my husband to secure my financial future, desperate times call for desperate measures. What if we aimed for a combined income of 80K a year, and aimed to retire 25 years from now? As tough as it was to picture my already absent-minded husband working at age 70, that would give us more time to save.

"You need to save an additional $93,397.05 each year to reach your retirement goal."

Unbelievable. Why doesn't it just say, "You're screwed. Prepare to toil away for the balance of your days on earth"?

Suddenly, an activity that was supposed to make me feel secure and satisfied instead became an exercise in extreme torture.

Which is probably why I spent the rest of the day doing it. I found calculators that took Social Security into account (without asking you to input the odds that Social Security will still exist in 20 years). I found calculators that included how much I will (theoretically) set aside each year, and calculators that predicted my chance of reaching my retirement goals, based on the historical returns of my particular investment style (fearful but aggressive, just like the most dangerous sorts of dogs). As each sad forecast flashed back at me, instead of growing more depressed, I grew more masochistically driven to crunch a slightly different set of numbers. I used doomsday-pathetic rates of interest, while raising inflation rates to harrowing peaks. I wrote off the predictions of some of the more forgiving calculators as hopelessly optimistic. Eventually, I began to derive a perverse pleasure from generating the most ridiculous numbers possible. I entered a world of fantasy, predicting how much I'd need to be able to stop working in 20 years, 10 years, five years. Finally, I pretended I had a million dollars right now, just to see the words I was looking for:

"Congratulations! You already have $23,741 more than you need in savings."

Ah, that felt good. Until I thought about it for a minute: Someone who has saved a million dollars by age 38 should be congratulated for being able to live off $50,000 a year in 20 years, with enough left over to buy a car?

Toying with retirement calculators was so exquisitely painful (and such a profound waste of time) that by the next day, I had upped the stakes with college savings calculators. How much should we be saving each year to send my 12-year-old stepson and 2-year-old daughter to public, in-state universities? One thousand dollars a month, of course. (Private schools would mean saving 2K a month.) Now let's see, let's throw that 12K-a-year minimum in with the 93K a year we're supposed to be saving for retirement, and what do we have? One hundred five thousand dollars a year in savings. Now tell me, who has an extra 100 G's lying around each year, aside from some of your more enterprising rappers? Even if my husband and I don't have an additional kid, even if we somehow manage to start saving one-third of that amount in 10 years, barring some personal financial disaster -- which the experts tell you that you should never, ever rule out -- where does that leave us? Goodbye, nice old house. Goodbye paid-for college educations. Goodbye exotic, delicious foods.

Now, look, I know I'm still lucky. Obviously I'm not standing in a line to pay a week's wage for a little slab of goat meat while my family starves in a fly-infested hut. I also don't have a major health problem that's left me impoverished. I don't have parents who haven't saved a thing for retirement, and are going to depend on me if their health fails. I have a job (at the moment) and so does my husband. My mortgage is big by national standards, but it's small for Los Angeles, and it has a decent fixed rate.

Of course I'm lucky, and some might even say that I've made bad, spoiled, selfish choices. Next time, have fewer kids! Next time, get a real job, slacker TV critic! Tell your kids they'd better do well in school and get scholarships or they're not going to college! Let the little brats work their way through school! Let them graduate with enormous loans, like the rest of us did!

And of course I agree that kids should learn the value of hard work. But should they do it while they're in college and ostensibly working hard already to get a good education? And after they graduate, when they're saddled with huge debts and have to spend most of their income just to pay them down, how will they feel about work then? Won't it seem sort of pointless to work so hard when they're still in debt, year after year, despite their best efforts to get rid of it? And how will they afford anything, when they're in enormous debt? By making their debts even bigger with credit cards, that's how.

It's true that hard work can be very satisfying. But let's face it, if there were a "hard work calculator" out there somewhere, replete with supporting charts and graphs, it would demonstrate that the value of hard work is diminishing as the costs of food and insurance and college and retirement rise exponentially. While the current financial crisis sinks its teeth into our ability to make ends meet, hard work becomes less and less viable as a means of salvation, no matter how many times Ben Stein scolds us about it.

Meanwhile, all of these books keep assuring us that if we do the right things, we'll be able to feel reasonably secure, fund a few of our big dreams and retire comfortably (all based on the assumption that our economy will continue to grow the way it has for the past 50 years, of course). And while some retirement calculators are less brutal than others (college savings calculators are uniformly brutal), they all make me wonder how people with average or below-average incomes are expected to get by or remotely manage to retire. For them, saving $3 million has less to do with hard work than with winning the lottery.

Not surprisingly, the Bureau of Labor Statistics has recently revealed that the number of older workers not only has been growing over the past decade but will also continue grow at an alarming rate over the next few years. The agency predicts that the number of workers between the ages of 65 and 74 will balloon by 83.4 percent from 2006 to 2016, and the number of workers over 75 will explode by 84.3 percent. I have to wonder if my husband and I won't be among those beleaguered, aging workers!

Sadly enough, the impossibility of it all fuels my obsession. Now that I know my retirement goal requires me to cease all spending while bending the laws of space and time, I'm more fixated on it than I've ever been before. I reread and underline passages from my copy of "A Million Is Not Enough," its title the emotional equivalent of "He's Just Not That Into You." I stalk my ideal number like a scorned lover stalks the object of her affection. I don't care if my number ran away with a trust fund hottie years ago -- he loves me, damn it, I know he does! I just need to lose a little weight and stop paying too much for long distance.

I revise my savings charts. I revisit the online calculators, throwing in my new, more aggressive savings numbers. Over and over and over again. I assure myself that it will work; those calculators must be wrong. Hard work and prudent saving will pay off somehow! The inflation of college costs will have to be kept in check at some point. My husband will get steady raises. Alternative sources of energy will be developed, the economy will rebound, we'll stay healthy, our kids won't present any unforeseen financial needs. I'll write a bestseller and it'll start raining gold Krugerrands, and then a big, pretty rainbow will come out and a herd of pigs will fly by.

After a few weeks of visiting every online financial calculator in the known universe and tweaking and retweaking my Excel charts and reading the same old crap about the magic of compounding interest and the importance of portfolio rebalancing and the white-hot returns of emerging-markets funds (leavened by dire talk of performance chasing, of course), I'm completely overwhelmed. A hobby that started out as relaxing and eventually became some mix of obsession and masochism has finally settled into total numerical saturation. I'm going to bed with figures lodged in my head, dedicating my last conscious minutes each day to searching for that little corner of unnecessary spending in our budget, looking for a way to make all of those numbers work out perfectly, struggling to make the numbers, even when they do work out, soothe me into thinking that I won't break down and get a pedicure or buy a dishwasher or go to a nice restaurant for the next 15 or 20 years.

And finally, I start to consider how old I'll be in 15 or 20 or 25 years, when all of this saving finally starts to pay off. Fifty-two, 58, 67 years old. Will I be healthy enough to enjoy my money, or will I be hobbling around wondering why I didn't live it up a little more back when I was young and vivacious and still had teeth in my head?

So I take a deep breath, and I make a new, realistic savings plan, one that isn't all that impressive and doesn't grow very fast and doesn't qualify us as "Millionaires in the Making." We'll save as much as we can for retirement, and see how it goes. We'll try to put a little aside for college, if we can. We'll do what we can to avoid financial ruin. These days, that's about all most of us can hope for.

More important, I'll stop torturing myself with these stupid online calculators. I'll go running with my dogs and my kid instead, thereby reducing my future healthcare costs by untold sums, decreasing my stress, strengthening my bond with my child and planting me in the present, a place that's pretty great, even when it's 100 degrees outside and the floors are hot under my feet and the dishes are piling up in the sink. We'll save up for a dishwasher and central air, and we'll start making a healthy yearly donation to UNICEF, for families who can't.

Yes, I know. This is where you want me to write something sweet and pithy about how money can't buy you happiness. Maybe in 15 or 20 years, when I have some money, I can tell you that for sure.

By Heather Havrilesky

Heather Havrilesky is a regular contributor to the New York Times Magazine, The Awl and Bookforum, and is the author of the memoir "Disaster Preparedness." You can also follow her on Twitter at @hhavrilesky.

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