Washington Post columnist Michelle Singletary offered new rules for retirement savings in “Forget what you’ve heard. Here are the new rules for post-pandemic retirement,” and we are going to discuss two of them that relate to retirement planning.
“Old rule: Make retirement savings your No. 1 priority.
New rule: Make paying off debt, especially high-interest debt, a priority.”
Someone who considered making it a priority to pay off debt might have been told that it would be better to concentrate on saving for retirement before the pandemic. However, now Singletary writes that carrying high-interest debt for years or even decades can get the way of your ability to save for retirement. Debt that you need to pay off to free funds for retirement includes credit cards and even student loan debt (no it’s no considered “good” debt anymore).
Of course, if your employer offers to match your retirement savings, you should use the highest percentage you possibly can, so that is one instance where you need not hold back on retirement savings.
“Old rule: Save at least 10 percent of your income for retirement
New rule: Aim to save 15 percent of your income for retirement.”
The article acknowledges that not everyone is able to put away 15 percent of their income but if you can you should try. Perhaps before when people were advised to save 10 percent, those who could afford to save more didn’t but now they should. And if 15 percent seems out of reach, you can get as close to it as you can, growing your retirement savings as things become more stable.
Your regular expenses are going to increase (not to mention the increased costs of hobbies and leisure activities).
And of course, with any financial planning “rule” old or new, you are not obligated to do what others do if you aren’t sure it will benefit you and Singletary acknowledges this:
“Of course, there are exceptions to every rule so consider your individual situation. Do what works for you. But at least be sure you are intentional and realistic about the projected retirement income you’ll need.”