I’ve written time and time again in the last year about how much I’ve learned from the PF blogosphere: budgeting, investing basics, debt payoff strategies, frugal tips, and more. But there’s one post in particular that makes me groan every time I see a variation on it. It’s the “parable of the savers,” and you’ve seen it at least a hundred times if you’ve been reading around PF blogs for long. You know the one: John invests $5 a year starting at age 5, and stops at age 20. When he’s 65, this total $75 investment has grown to $3,000,000 through the magic of compound interest. Jane, meanwhile, lives it up, buys expensive cars and too many pairs of shoes, and doesn’t put anything away until she’s 45. She’s making a good salary by then, so she socks away $5000 a year, but she still only ends up with $150,000, and has to live in a van down by the river and eat cat food in her old age.
OK, OK, so my math might be a little off there — my PhD is in a much-maligned humanities field, after all — but you get the idea. And I get it too: this “parable” (with its attendant charts proving visually that ants are wiser than grasshoppers) isn’t really aimed at 36-year-old me. It’s aimed at 20-25-year-olds and is meant to induce them to pay attention when the HR rep hands them the 401(k) paperwork during orientation. Fair enough. But honestly, every time I see it I shudder deep in my ancient bones, then have to talk myself down from the ledge.
I’m also never quite sure how I feel about the focus on earning more. I mean, don’t get me wrong, I’d like to earn more. But I struggle with the fact that my skills and interests have never been oriented towards fields that do things like “give raises.” 🙂 People in the for-profit sector seem to move jobs frequently, picking up a spare $10K here and there as they go; while there’s a tiny bit of room for negotiation in academia, new jobs are few and far between, and major raises tend to come only two or three times in a person’s career. So for me, earning more in an effort to save more would probably mean giving up a field that I love for one that I…don’t love. I’m not saying I’d never do that, but it means that the words “earn more” carry some substantial angst along with them.
Here’s the thing, though: if all my years as a leftist have taught me anything, it’s that capitalism doesn’t usually have my best interests at heart. And I’ve started to wonder if the parable of the savers and the gospel of Lean In isn’t, just a little bit, like all those ads trying to sell me on the idea that if I just injected some Botox or dyed my hair, everything would be great. Banks want us to earn more and save more so that they have more capital to play with; if it also benefits us, that’s a byproduct. So, I think I’d like to resist the discourse of the market even as I use it, just as I resist the discourse of beauty ads even as I buy and enjoy nice clothes. (Look, I have a Ph.D. in the humanities. I’m contractually obligated to use “discourse” once every ten blog posts.)
*First of all, reality: while it would have been nice to have started an IRA at 19, that is seriously water under the bridge. I’m here now, and I’ve socked away $15000 in a single year. There are about 30 years until I reach retirement age. That is plenty of time. In fact, if I keep investing at least $15,000 every year, I could even retire in my late 50s or early 60s. Are you 45 with nothing saved? You’ll also be fine. It would be better if you could put away more like $23500, maxing out your 401(k) and IRA contributions [for Americans], but even $15K a year should grow to over $500,000 by the time you’re 65, and $875,000 by the time you’re 70. Added to Social Security, you will achieve a standard of living higher than approximately 99.999% of all humans who have ever lived. It will be fine.
*About that: Social Security is going exactly nowhere — or rather, if those of us who are in our twenties and thirties now are not collecting Social Security when we’re old, we’re going to have much bigger problems than that, because it will mean we’re in some kind of anarchic nuclear winter where the U.S. government no longer functions at all. While I like to gloom-and-doom it about the government as much as the next person, in fact, can you imagine the scene if Social Security was really cut, especially when the fix is actually so easy? It’s a no-brainer to raise or lift the payroll tax cap. Those us over 35 (ahem) can clearly recall what happened when W tried to “privatize” Social Security. Namely, nope. It’s easy to talk about repealing or cutting Social Security, and a hell of a lot harder to actually do it. [Tragically, it is much easier to kill social programs that are aimed at helping the poor exclusively, but Social Security isn’t one of those.]
*I started late on retirement, but early on developing the skills to ride out rough times. There are some reasons why I didn’t have a retirement account until this year. I was a freelancer, then a graduate student, in an expensive city, for the 13 years following my college graduation. In that time, I became a strong, capable, independent person. I successfully navigated New York on an income well below the median: finding creative housing options and affordable food and services, bartering for cultural opportunities (for example, ushering for four afternoons a year netted me a museum ID card that got me into every museum in New York for free), figuring out how to get health care when I didn’t have insurance, rustling up enough side hustling to keep me afloat when my main gigs were slow. All that critical thinking liberal arts colleges are always going on about served me well: I was able to figure shit out when I needed to, and I’m very confident I could do it again if my bank account isn’t flush in middle or old age. Would I rather not have to? Sure. But I definitely could. The benefit of being kinda broke for a while is that you learn how to deal.
*I’m (mostly) not a late starter because of moral failure, and humanities majors aren’t necessarily fools. OK, maybe a little moral failure…. Without the travel I did in my 20s, I could have had less debt coming out of grad school. But anyway, the version of the parable of the savers that drives me craziest is the one that involves the late starter starting late because he/she blew through everything partying in his/her early years. I think we all know that this is in fact untrue: some of us are late starters because of heavy student loan debt, others because we have or had low-paying jobs in important, societally necessary fields like education, nursing, food preparation, social work, and so on. And yet: spending years of my life reading, writing, and talking with people about what we’ve been reading, has made me a happier person, and I’d like to hope a better one, kinder, more insightful, more attuned to the difficulties of the world and the delights of those around me. I can’t count these years as wasted even if I won’t be eating off of golden plates in retirement, and I can’t count them as worthless even if wisdom doesn’t reliably compound at 7% per annum. If the worst happens after all and I really do end up in that van by the post-apocalyptic river, at least I’ll have the consolation of philosophy.