7 Legitimate Reasons to Delay Saving for Retirement
7 Legitimate Reasons to Delay Saving for Retirement Skip to content
Pursuing your career may mean moving from one city to another, acquiring a new wardrobe, or accepting an internship in order to secure full-time employment. Becoming successful may mean you’ll experience periods of inconsistent income, particularly if you are working on commissions, or if performance bonuses constitute a significant portion of your compensation. If you work for a small company, even one with great potential, you may not have health insurance or other important benefits that you must purchase individually.
You own shares of Apple, Amazon, Tesla. Why not Banksy or Andy Warhol? Their works’ value doesn’t rise and fall with the stock market. And they’re a lot cooler than Jeff Bezos.
Get Priority Access 2. You Are Building an Emergency Fund
While you may not know the details of the unexpected events that will arise in your life, you can be certain that surprises will occur sooner or later. Cars break down, roofs spring leaks, and a sudden illness can play havoc with planning and create financial chaos. A prudent person prepares for the unexpected by building an emergency fund equal to six months’ worth of after-tax income before trying to begin retirement savings. 3. You Are Starting a Family
Even on two incomes, the cost of everyday items like dishes, hand tools, furniture, and kitchen appliances can be great. Add one or two children, the loss of one income, doctor bills, baby clothes, and school expenses, and even the best personal budgets can be destroyed. Fortunately, these expenses eventually decrease, freeing up income for savings. Taking care of family today is a higher priority than saving for retirement tomorrow. 4. You Are Protecting Your Family and Assets
Loss of life, physical function, or assets are unexpected events we all hope to avoid, but for which we must be prepared, since the results can be catastrophic for us and our families. The consequences of such disastrous calamities are best handled by purchasing insurance. Health, disability, and life insurances can protect you and your family from the financial consequences of illness and premature death; homeowners and automobile insurance indemnify for losses from fires, flood, accidents, and theft. If your choice is to pay necessary insurance premiums or make a deposit into a retirement fund, do the former. Pro tip: If you need to pick up life insurance or any other types of insurance, PolicyGenius makes your job easy. They will give you quotes from all major companies so you know you’re always getting the best rates. 5. You Have a Child With Special Needs
Meeting the current and future needs of our children are paramount in every parent’s mind, especially if a child has a mental or physical disability. In such cases, retirement planning is secondary to building a fund for long-term care or assistance. Parents of children with a disability should seek professional legal advice to maximize the options available to the child through government and private programs, tax and trust laws, and prudent investments. 6. You Are Buying a House
Buying a home makes sense for a number of reasons: Psychological Security. Your home is your castle, the place you call your own. Owning a house provides a sense of permanence and stability that humans instinctively seek.Forced Savings. Houses are long-term investments and are financed by long-term mortgages. As you make payments each month, your equity in the house grows and the mortgage decreases. Home equity is often the largest single asset of retired individuals, and can be a source of cash through refinancing, HELOC through Figure.com, or reverse mortgages.Stable Housing Costs. A fixed-rate mortgage remains the same throughout the term of the mortgage. During inflationary periods, the money paid tomorrow is worth less in buying power than the money you have today, so future payments actually costs you less. If you are a renter, it is likely that rents will increase as time goes by as the landlord attempts to keep up with inflation.Potential Asset Appreciation. Until the recent recession, houses had enjoyed year after year of price appreciation primarily due to increasing construction costs of material and labor, unique location (a house takes up a particular space in a particular community in a particular town or city), and inflation. The financial successes of the last decade promoted an over-supply of housing nationwide followed by the mortgage security implosion; as a consequence, home prices have remained stagnant, even falling in some areas of the country. As the economy recovers, it is likely that residential homes will return to their historical pattern of annual price appreciation. 7. You Are Investing in Your Education
According to U.S. Census Bureau statistics, a male college graduate earns, on average, $2,233 more per month than a high school graduate, and a female college graduate earns $1,550 more monthly. According to the College Board Advocacy & Policy Center, a master’s degree is worth, on the median level, an additional $1,266 monthly for a male, and $875 for a female. College graduates are less likely to lose jobs or suffer wage decreases during recessions, and generally have access to jobs with better benefits. Investing in a college degree is one of the best decisions you will ever make in life and justifies delaying retirement savings.
What do you want to do br with money
Popular Searches
Learn more about your money
Make Money
You need it. Learn how to make it. ExploreManage Money
You've got it. Learn what to do with it. ExploreSave Money
You have it. Make sure you have some later too. ExploreSpend Money
You're spending it. Get the most for it. ExploreBorrow Money
You're borrowing it. Do it wisely. ExploreProtect Money
You don't want to lose it. Learn how to keep it safe. ExploreInvest Money
You're saving it. Now put it to work for your future. ExploreCategories
About us
Find us
Close menuWhat do you want to do br with money
Popular Searches
Learn more about your money
Make Money
You need it. Learn how to make it. ExploreManage Money
You've got it. Learn what to do with it. ExploreSave Money
You have it. Make sure you have some later too. ExploreSpend Money
You're spending it. Get the most for it. ExploreBorrow Money
You're borrowing it. Do it wisely. ExploreProtect Money
You don't want to lose it. Learn how to keep it safe. ExploreInvest Money
You're saving it. Now put it to work for your future. ExploreCategories
About us
Find us
Close menu Advertiser Disclosure Advertiser Disclosure: The credit card and banking offers that appear on this site are from credit card companies and banks from which MoneyCrashers.com receives compensation. This compensation may impact how and where products appear on this site, including, for example, the order in which they appear on category pages. MoneyCrashers.com does not include all banks, credit card companies or all available credit card offers, although best efforts are made to include a comprehensive list of offers regardless of compensation. Advertiser partners include American Express, Chase, U.S. Bank, and Barclaycard, among others. Invest Money7 Legitimate Reasons to Delay Saving for Retirement
By Michael Lewis Date September 14, 2021FEATURED PROMOTION
While saving for retirement is important, there are times when it makes sense to delay making investments. Most people invest for retirement in a tax-advantaged plan such as an IRA or 401k with early withdrawal penalties and adverse income tax consequences. While these vehicles provide tax-advantaged growth that help your money grow, they can wreak havoc on your finances if you need to make withdrawals from them before you retire. If money is tight and any of these situations apply to you, you may want to consider deferring retirement contributions or contributing to a Roth IRA instead – in which contributions can be withdrawn at any time without penalty. Pro tip: If you haven’t set up a Roth IRA yet, you can do so easily with TD Ameritrade.When It’ s Okay Not to Save for Retirement
1. You Are Investing in Your CareerPursuing your career may mean moving from one city to another, acquiring a new wardrobe, or accepting an internship in order to secure full-time employment. Becoming successful may mean you’ll experience periods of inconsistent income, particularly if you are working on commissions, or if performance bonuses constitute a significant portion of your compensation. If you work for a small company, even one with great potential, you may not have health insurance or other important benefits that you must purchase individually.
You own shares of Apple, Amazon, Tesla. Why not Banksy or Andy Warhol? Their works’ value doesn’t rise and fall with the stock market. And they’re a lot cooler than Jeff Bezos.
Get Priority Access 2. You Are Building an Emergency Fund
While you may not know the details of the unexpected events that will arise in your life, you can be certain that surprises will occur sooner or later. Cars break down, roofs spring leaks, and a sudden illness can play havoc with planning and create financial chaos. A prudent person prepares for the unexpected by building an emergency fund equal to six months’ worth of after-tax income before trying to begin retirement savings. 3. You Are Starting a Family
Even on two incomes, the cost of everyday items like dishes, hand tools, furniture, and kitchen appliances can be great. Add one or two children, the loss of one income, doctor bills, baby clothes, and school expenses, and even the best personal budgets can be destroyed. Fortunately, these expenses eventually decrease, freeing up income for savings. Taking care of family today is a higher priority than saving for retirement tomorrow. 4. You Are Protecting Your Family and Assets
Loss of life, physical function, or assets are unexpected events we all hope to avoid, but for which we must be prepared, since the results can be catastrophic for us and our families. The consequences of such disastrous calamities are best handled by purchasing insurance. Health, disability, and life insurances can protect you and your family from the financial consequences of illness and premature death; homeowners and automobile insurance indemnify for losses from fires, flood, accidents, and theft. If your choice is to pay necessary insurance premiums or make a deposit into a retirement fund, do the former. Pro tip: If you need to pick up life insurance or any other types of insurance, PolicyGenius makes your job easy. They will give you quotes from all major companies so you know you’re always getting the best rates. 5. You Have a Child With Special Needs
Meeting the current and future needs of our children are paramount in every parent’s mind, especially if a child has a mental or physical disability. In such cases, retirement planning is secondary to building a fund for long-term care or assistance. Parents of children with a disability should seek professional legal advice to maximize the options available to the child through government and private programs, tax and trust laws, and prudent investments. 6. You Are Buying a House
Buying a home makes sense for a number of reasons: Psychological Security. Your home is your castle, the place you call your own. Owning a house provides a sense of permanence and stability that humans instinctively seek.Forced Savings. Houses are long-term investments and are financed by long-term mortgages. As you make payments each month, your equity in the house grows and the mortgage decreases. Home equity is often the largest single asset of retired individuals, and can be a source of cash through refinancing, HELOC through Figure.com, or reverse mortgages.Stable Housing Costs. A fixed-rate mortgage remains the same throughout the term of the mortgage. During inflationary periods, the money paid tomorrow is worth less in buying power than the money you have today, so future payments actually costs you less. If you are a renter, it is likely that rents will increase as time goes by as the landlord attempts to keep up with inflation.Potential Asset Appreciation. Until the recent recession, houses had enjoyed year after year of price appreciation primarily due to increasing construction costs of material and labor, unique location (a house takes up a particular space in a particular community in a particular town or city), and inflation. The financial successes of the last decade promoted an over-supply of housing nationwide followed by the mortgage security implosion; as a consequence, home prices have remained stagnant, even falling in some areas of the country. As the economy recovers, it is likely that residential homes will return to their historical pattern of annual price appreciation. 7. You Are Investing in Your Education
According to U.S. Census Bureau statistics, a male college graduate earns, on average, $2,233 more per month than a high school graduate, and a female college graduate earns $1,550 more monthly. According to the College Board Advocacy & Policy Center, a master’s degree is worth, on the median level, an additional $1,266 monthly for a male, and $875 for a female. College graduates are less likely to lose jobs or suffer wage decreases during recessions, and generally have access to jobs with better benefits. Investing in a college degree is one of the best decisions you will ever make in life and justifies delaying retirement savings.