By Eric on July 28, 2011 16

Why We’re Not Saving for Retirement (Yet)

In our post about Building our Discipline Muscle, Courtney asked a great question. What does our plan for retirement savings look like? And if you’re not saving for retirement, what about all the money you are losing out on while not saving in your 20s?

Those are great questions, and this is something that comes up in our own discussions from time to time. The answer comes down to sticking with a plan that Dave Ramsey has developed over the last 20 years. If you haven’t yet, I strongly encourage you to take his class, Financial Peace University. It will change your life if you allow it to. It changed ours for sure!

Basically, Dave says that until you are consumer-debt free (everything but your mortgage), you shouldn’t be saving for retirement. He’s not saying to pull out the money you have already put in, but rather just put your contributions on hold until you can finish your debt snowball. The point is that you focus with all of your intensity on paying off your consumer debts, one at a time, until they are all gone. Once you have all of your cars, student loans, credit cards, furniture, etc., paid off, you will be free to use that extra income on other things. The next step is to build your emergency savings fund, and then your retirement savings.

We are currently working on saving up our emergency fund, so our retirement is still on hold. We should be done in another year and then we will start putting a hefty amount of money into our retirement account every month. Until then, we stay the course. We are praying that our house sells quickly and we can use the proceeds to catapult our financial plan by fully funding our emergency fund and jump starting our retirement savings.

When we attended Dave Ramsey Live! in KC for my birthday this year, he handed out an example that put my mind at ease in regards to this subject. Here it is:

So this is what we cling to right now. We are both 27 and still have time to work the plan. It’s tough, but we try to remember that it’s a marathon, not a sprint. Our debt-free story has already come so far, and we are super pumped to see how far we can make it before retirement.

What are your thoughts around retirement savings? Anyone else on hold for now?


Husband to Kelsey. Father to Rooney. Follower of Jesus. Born and raised in Iowa. I like blogging. Bulleted lists excite me. Thanks for stopping by.

  1. We just became consumer debt free this year, but have been saving for retirement all along through our work, so now we are debt free, have a good start on retirement and can now more aggressively save. It took serious discipline to make both happen at the same time and to be fair to others in the same boat, our only consumer debt was our two modest car payments

  2. If your company offers a 401k match, you are throwing away some “free” money by not at least matching.

    • We also would have been throwing money away by not paying off our loans as soon as possible. We will soon put 15% into our retirement funds rather than the traditional 5%.

      • I didn’t mean to sound like I was scolding you – just didn’t want you to miss out on anything!

        • I understand! Unfortunately we did have to miss out on it for a couple years because of our poor financial decisions early in our marriage! But we’re getting back on track! :)

  3. Thanks for the post! Doing some of my own calculations is the only reason why I’m not too stressed about not saving for retirement just yet. I know Dave Ramsey says the average growth rate of the S&P over the last 30 years is 12%, but that does not factor inflation. With inflation it’s a little over 9%. My personal goal is to save at least $1 million for retirement after accounting for inflation, but I’m wrestling with whether or not that would be pleasing to God. Retirement will look different for everyone, but stashing away lots of cash seems to me more like conforming to the patterns of this world. My current rule of thumb is that I will not save more for retirement than I give. That may change over time, but for now I have peace about it.

    • Great thoughts Courtney. One great thing about building up money for retirement is that when you pass away, you can leave some of the money to charities, and the rest to your family. So, essentially you could also tithe or even give more money away when you are gone.

  4. Your posts sent me on a little excursion of web searching. You speak often of Dave Ramsey … so I now, at a very “old” age, am working on some financial security. I applaud you two for being so driven and strong. I am now the proud owner of “The Total Money Makeover” by Dave Ramsey, both the book and workbook, and have his radio show on the Ames radio station on my list of favorites online. Thanks for your blessings … you truly have been blessed to be a blessing!

  5. I’m also curious if you are really not enrolled in a 401K plan at your work (if they match).

    • They do match and we were enrolled until we realized that by paying off our debt and saving for retirement at the same time we would be watering down our ability to reach our financial goals in a timely manner. We are excited to get back into it very soon.

  6. Interesting post! Do you have any suggestions for any of Dave’s books that I could get until I save for the money to take the actual course?

    • The “Total Money Makeover” book is very similar to Financial Peace University, except it’s meant to be read and worked through on your own vs. attending a class for 13 weeks.

  7. OOOH that makes me nervous! I keep trying to push my husband into saving more for retirement. He assures me we’ll be okay. I am with Courtney above. I wrestle with honoring God and saving for retirement. In pushing for more retirement savings, is that what God wants? Or should I be giving that away and be at peace with what we are saving?!

  8. What an interesting view on the topic. I worked day in – day out in the retirement world for three years and, obviously, maximizing savings for retirement when your younger was pushed down my throat. So of course, I put in the max the company matched, but it did leave with less money in my pocket. I never thought of it this way and now think of it as very enlightening… must. take. that course!

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