As with most people, being vaccinated has given me the courage to go out a bit more. Okay, a fair amount more.
One painful bar bill aside (well, two actually), I don’t spend a ton when we go out. Usually it’s a drink or entree where we have trivia. But it adds up, which means less money going toward retirement.
So I find myself torn between “I’m (mostly) safe! Let’s do EVERYTHING, damn the cost!” and “Heeeey, remember how we want to keep saving big time for retirement?”
The duality is quite acute — probably partially because I don’t know what will happen with my income in the future.
Why I’m scared (but maybe should be)
I’ve gone into this in -depth in the past, so I don’t want to repeat myself. But the short version is that I have an exceedingly well-paying remote customer support job with a company that has seen a big spike in competition.
My boss doesn’t seemed concerned we’ll go under but does admit we’re not growing the way we used to hand have taken some small hits. And if I ever lost this job, even a similar one would pay maybe a third as much — and at 43, I’m pretty far behind on saving for retirement. Not compared to the average American, but in terms of being able to live off my savings.
The company has very few employees, and I’m significantly better at my job than the other customer support gal — and I’ve taken on extra duties recently. Plus we have a pretty solid, loyal customer base, so our income probably won’t dip too much? And if my boss were seriously concerned about the company’s future, I doubt he’d have given bonuses out last year.
I tell myself all of this and know it should calm me down. But it doesn’t. I have anxiety, so I can’t banish the “OK, but what if?” from my brain.
Which will I regret more?
So I’m scared about how well I’ll be able to take care of future me, but also worried about taking care of present/near future me.
I wonder things like “What if I can only contribute to retirement for a few more years and end up broke in my old age? Will I hate my past self for all those specialty drinks?”
And at the same time, I ask myself “What if things don’t go horribly wrong and I’m fine — or they do but I’m still fine? Will I hate my past self for not enjoying the present and always worrying about the future? Especially if it’s a future that never comes to pass?”
Thus I have this super fun tug of war in my head every time I go out or otherwise consider spending on non-necessities. I start to ruminate about whether I should do without the item and be safe (risking missing out on enjoyment) or whether I should indulge here and there (risking financial issues in the future).
Obviously, I want to make sure I’m not being reckless with money and to make sure future me is taken care of. But I also feel like maybe I should make sure I enjoy myself now. Not just because I may be underestimating my company’s future, but also because… What if I’m not?
What if, in a few years, I do lose this job, and I have to live a much more financially careful life? Which would I regret more: not having invested the money or not having had fun while I could still afford it?
Again, I honestly don’t know.
Living in the present and the future
While I know it’s vital to make sure future me is taken care of, I also think it’s important to have good memories — especially if life without this job will be harder regardless of what I do.
And I think this is something that many of us financially conscious folks struggle with. We fight to find a balance between saving carefully so that we can secure a comfortable future and still making sure we live at least somewhat in the present. It’s like having two money-nerd angels bickering on your shoulders about every purchase and priority. And it’s exhausting to feel like you have to justify most or all non-necessities.
Meanwhile, I have the additional layer of “Okay, I can afford it now because I’m still putting away lots of money — but that may not always be true. So is it still an okay purchase?”
Maybe this attitude surprises you, since I know my spending diaries and reports can sometimes be a little nonchalant about outlays. But I assure you, much hemming and hawing and justification (and examination of the justification) has occurred before any purchase I report in those posts. Except maybe takeout. But actually yes, sometimes even takeout.
This is an incredibly draining way for so many of us to live. So we need to figure out how to combat the anxiety so we can make better decisions and enjoy all stages of our lives. Which means we need to figure out how to calm our brains.
First things first
The first step is that we have to stop planning so much.
I know that probably sent panic through every anxious brain reading this. But notice I said “planning so much.” We can still plan. But we need to stop planning at our current rates.
If you don’t have anxiety or know someone who does, you probably don’t understand just how much time and energy people with anxiety spend planning for scenarios that never come to pass.
Recently, I found myself planning how I’d cover for a friend in case she took actions I knew she’d never take. But my mind thought about how, if she were drunk, it could possibly happen — except it wouldn’t — so I should be prepared in case anyone asked. About something I was 99.99% certain would never happen. But ya know, just in case… I wanted to be ready with an explanation.
So yeah, it’s safe to say that we wear ourselves out trying to safeguard ourselves/loved ones from so many things that don’t ever become reality.
We do all this planning to give ourselves a sense of control. We reason that if we can plan, we’ll be ready if bad stuff happens. And if we know it’d all be taken care of, then we can calm down. Which sounds like solid logic, but it doesn’t actually work that way. Instead, we end up just kind of constantly ruminating over possible scenarios and just generally having constant low-key worry in the back of our minds.
The plan’s the thing
Don’t get me wrong: It’s good to have a plan for certain bad, at least semi-plausible scenarios like job loss. (It’s why I made my emergency budget.) That’s prudent.
But obsessing about that plan and trying to cover all possible variations of the bad scenario? That’s just a tremendous — and futile — energy-suck.
And yes, we may occasionally make a small tweak here or there, most of our “planning” is just us running through the same plan over and over in our brain, waiting for it to give us a sense of calm.
We think that if we have a full plan, if we tell ourselves over and over exactly what we’d do, it will calm us. But it doesn’t. In fact, I think it can make things worse.
Late night budgets
Back when Tim and I were struggling so much with his student and medical debt without much income, sometimes I’d lie awake, my mind racing, freaked out about money. So I’d get up and write out a budget to soothe myself that it would all be okay.
Except the real numbers weren’t good, and I wasn’t soothed. So instead, I’d decrease the spending in various categories until I saw a leftover dollar amount that could make me feel like we were making progress. Then I’d be able to sleep.
And yeah that was a problem because the numbers weren’t based on reality. So I’d spend the next week freaking out as we invariably overspent in each category I’d adjusted. Which just heightened my anxiety further and led to more sleepless nights, making me make more implausible budgets. It was a vicious circle.
Anxiety begets anxiety
So yeah, making plans for certain scenarios is fine, but the more you dwell on potential scenarios — and the more you’re trying to “solve” ones predicated on so much uncertainty — the more anxious you get.
Because, knowing that so much of what you’re trying to plan for is unpredictable, you become obsessed with trying to cover all possible variations of a scenario. And even if you somehow actually do manage to plan for all permutations, you then dwell on tweaking the ones where the outcome isn’t as positive as you’d like.
In other words, excessive planning doesn’t actually help.
It doesn’t stop uncertainty, it doesn’t keep currently unforeseeable stuff from cropping up and ruining the plans we so laboriously crafted — and most importantly, it doesn’t actually calm us down long-term. But it does a great job of preventing us from enjoying the present good conditions we have while they last.
So we need to stop leaning so heavily on that tactic.
Easier said than done
Of course, it’s easy to say “Stop worrying so much.” We anxious folks don’t have a switch in our heads we can just flip off and on. “Okay, time to fret. Okay, time to relax.”
So I think in the end you have to come up with what will inevitably be an upsettingly vague plan. That is, a plan for the most basic version of a scenario — job loss, illness, etc — with as few niggling details as possible. Because if something bad happens, it likely will contain variables we didn’t foresee. So we need to stop trying to anticipate them all.
Instead, we just need a very rudimentary plan: If one of us gets laid off, the other can ask for overtime, we’ll hit pause on daycare and obviously, the unemployed person will send out a ton of resumes; if I, as a single person, get laid off, I have researched my options for government assistance and will apply immediately; if I/we get sick, then I/we can ask this friend/that parent to come help.
If we stop trying to plan for all possible variables, then either we will have saved a ton of energy if the scenario never actually occurs, or if it does happen, we’ll be less upset when it doesn’t look quite the way we’d planned for.
Basically, it boils down to this: We may not be able to stop worrying, but we can limit how much energy we pour into that worry. We can tell ourselves “I don’t know if this will actually happen and, if it does, how it will really go. So I have a basic plan, and that’s the best I can do; so I need to go focus on something more positive/productive. “
The $90,000ish question
So I decided to try this for myself.
I decided that I’d probably have plenty of warning if job loss was coming — the other woman being let go, being asked to take a pay cut (in which case I’d cut back on spending to keep my saving rate high), etc. So the scenario I crafted was five years at the current saving rate and then $0 in contributions thereafter. In that case, what difference would it make if for the next five years I invested, rather than spent, $200 to $300 a month?
I had to employ some investment/retirement calculators — all of which managed to give me a slightly different answer. But basically, $300 a month invested for five years would be about $91,000 more in my portfolio by age 70.
And yup, that’s a lot of money. But that’s not what I wanted to know. The question is what effect it would have on my retirement income. And that’s a very different story.
Assuming a 3% drawdown, the extra $91,0000 equates to about $230 more a month in retirement. So essentially, I’d be foregoing $300 to get an extra $230 later.
Obviously, that’s an oversimplification. First, that money would continue to accrue interest throughout my retirement. But more importantly, if losing my job means that I won’t have enough money to retire on, an extra $230 could be crucial to staying afloat.
But when I estimated my portfolio value when I’m 70 — again, assuming five years at the current rate, then not a penny more — I found that I’d have around $1 million. And once I stopped gaping at the screen/trying to figure out what error I had made because clearly there was one, I realized this meant I’d be okay in retirement.
Sure, $30,000 a year (assuming a 3% drawdown) won’t stretch as far in 27+ years. But that isn’t my only resource.
First of all, as long as I’m living in this house, I’ll have the guest house to rent out — and I’m sure I can get a much higher monthly rent if need be.
Second, and while I wish this weren’t considered a controversial stance, I’m assuming I’ll get Social Security benefits. Because unless politicians flat-out abolish FICA tax, the SSA will always have some amount of money for retirees.
So I went to the SSA website and plugged in a worst-case scenarios: $12/hr part-time starting next year and accounting for the anticipated drop in benefit amounts. And it looks like I’d still get around $1,000 a month.
And honestly, even if it were less than that, I’d be okay. Not living large, but doing okay. So I’m trying to hold on to that.
Because yes, there are a million different ways that things could look different than my calculations. I might get a huge pay cut soon and not be able to keep up my current pace or lose my job in three years, not five. Or have to retire before 70. Or have to go into an assisted living facility. Or there could be a huge market drop around the time I’m retiring.
But it’s impossible to tell how likely any of them are — or whether maybe I’ll still have my same job/pay 27 years from now. And it makes no sense to try to plan for every contingency when those contingencies are all predicated on things I can’t predict the likelihood of, let alone control.
So for now, I’ll concentrate on “I’ll probably be fine” — even if the most likely of my probably-unlikely scenarios comes to pass.
And when my brain invariably sends up an image of me as a financially precarious senior, I’ll remind myself how unlikely it is and that I’m not going to be in financial ruin because I was willing to spend on a social life.
Oh, and I’ll invite that stressed out older me to join present me for a specialty cocktail. Because they’re pricey but apparently I’m able to afford them. Within reason.
How do you guys balance wanting to enjoy the present and saving for the future? Anyone else have a strategy to calm down an anxious brain?