Why We Save for Retirement Even Though We are Still in Debt

In my last post, I told you I'd get into retirement later... well, it's later.

I've said before that both my husband and I make good salaries and we both contribute towards our company's retirement plans, well above the employer match. Including employer matches we contribute 22% of our pretax income to our retirement.

I am a teacher and my district automatically takes 10.2% of my paycheck and deposits it into my CalSTRS account.  I also contribute to a 403b; I allocate an additional 12% per month to my retirement. Each month, out of my paycheck, I am putting 22% of pretax dollars towards my retirement. My district also contributes towards my CalSTRS account at the rate of 10% of my paycheck per month. Including my districts contributions, I am saving 32% of my salary per month towards retirement. Not too shabby.

My husband also contributes to his work's 401K and his company gives up to a 3% match.  They also give 6% profit sharing at the beginning of each calendar year. Including employer contributions, the husband is putting away 22% of his pretax dollars towards retirement.

I think we doing very well contributing to our retirement and I hope that we can continue to do so going forward. Our goal is to max out the husband's contributions sometime during 2017 and then to eventually max out my contributions as well. My 403b won't probably be maxed out until 2019 or even 2020. Once it is finally maxed out we will reevaluate our retirement and decide what to do next: invest, Roth IRA, IRA, etc. Those are our long term goals for saving for retirement. Hopefully we will be comfortable in our retirement and live a life that we can enjoy.

I know that actually contributing to our retirement now is one thing that is keeping us in debt longer. Those percentages translate into around $1200 in after tax dollars. That is money that could help us to quickly pay down our debts, build our emergency fund, and help us to get a month ahead with our finances (3 of my major financial goals!). However, both the husband and I feel we waited too long to start saving for our retirement and so we are having to play catch up as it is.  

As far as retirement goes we have two very different examples to follow. My parents are very comfortable in retirement. Their house is paid off, they buy whatever they want (within reason), vacation a couple times a year, and generally really enjoy their retirement. This is the example we want to follow.  However, on the flip side, the husband's parents are a different story.  Although in their 60's they just bought a brand new luxury home they can't afford long term. His mother retired last month and is already looking for "part-time" work so they can afford all the "extras" they want, and because of this, the husband and I are constantly worried about their financial health and how it will affect us in years to come. We determined early on that we don't want to be a burden or a worry to our kids and we don't want to have to work to afford retirement.

For us, it's worth it to be in debt a few months or years longer in order to be secure in retirement. I get that it's maybe not the most financially sound plan, but the peace of mind is worth it.