Investing in Myself
MY FIRST ALLOWANCE was a nickel a week. I was five years old. I can���t recall exactly how I spent it, but I vividly remember visiting cousins and discovering they received a quarter.
It was a shocking introduction to a world where people might have much more, for no clear reason. My access to capital amounted to 52 nickels a year, or $2.60. Added to that was $1 reliably tucked in my Christmas stocking, as well as a little something from grandparents. Once my allowance rose to a dime, my total annual haul climbed to $10.
In my early teens, my parents divorced. Mom moved to the city where her sister lived, rented a duplex and got her first job. She���d gone to college, even graduate school, but had been a stay-at-home parent for 20 years. She had limited employment options. She wasn���t young and pretty, knew almost nobody in town, had two kids to watch over and no work history. Few jobs met our family���s constraints.
She ended up working the swing shift as a nurse���s aide in a rest home. That way, she could see us off to school each morning and be there when we returned each afternoon. Then she���d leave for work. As I saw how she���and we���struggled financially, I became determined to fend for myself and avoid low-paying jobs.
By then, Mom gave me $3 a week in allowance, so my income was about $150 a year, mostly spent on records and books. I sewed my own clothes, aside from T-shirts and jeans, while also raiding and deconstructing my mom���s vintage outfits for new looks. I had a passbook savings account with pretty much nothing in it.
A young couple moved in next door and we became friends. One was a graduate student who���d served as a Peace Corps volunteer somewhere in Africa. My eyes were opened to a much wider world, and I wanted to see it. The journey that followed might seem meandering. Still, I ended up in surprisingly good financial shape, in large part because my needs and wants have almost always been modest. This is an underappreciated source of financial freedom���one available to almost everyone.
College on the cheap. When I graduated high school in the early 1970s, many kids I knew received fancy presents like cars and trips to Europe. I was envious but I had a plan: Go to college and see the world. My graduation presents���a dictionary and the complete works of Shakespeare���have served me well. I still have both books.
I turned down admission to a prestigious out-of-state school because its financial aid package wouldn���t cover my expenses. Instead, I enrolled at the local university, where I had a scholarship. I moved in with three friends who���d gone straight into the workforce. In that bygone era, I lived on $100 a month, which came from my dad plus whatever I could earn from college work-study jobs.
My share of the monthly rent for that two-bedroom apartment was $28.50, plus a quarter of the utilities. We each put $5 a week into a food kitty for suppers together. We also had dinner out once a week. I walked the two miles to campus or rode the bus.
If I didn���t have enough money to buy a textbook, I���d read it on reserve at the university library. I lived just five miles from home, so I could visit often for a home-cooked meal, to do laundry and for help typing term papers. I graduated from college completely debt-free, but with little savings, possibly $100 in my bank account.
My career plan? Become a high school Latin teacher. Once I got into a classroom, however, I felt uninspired. I needed a new idea. My roommates helped me get my first fulltime position, an office job. That lasted maybe a year before I returned to college for a master���s degree, something my bosses encouraged.
I didn���t pick a major in a particularly rational way. Instead, I asked myself, of all the professors I���d met in my undergraduate classes, who seemed to be having the most fun? I settled on a master���s degree in linguistics. My plan from there was to get a job where I could travel and see the world.
I got by on scholarship money, a teaching assistant's stipend and a $1,000 student loan. It would take me six years to pay off that debt, the first of several small debts that left a lifelong distaste for borrowing. People I respect have argued that using debt can be valuable, and I���ve seen them do so successfully. But it���s not for me.
Sensitive computers. Before graduating, I applied to serve in the Peace Corps, but my paperwork got snagged. I thought about going on immediately for a doctoral degree and maybe becoming a college professor. Instead, in 1978, I moved to the city where my brother lived.
I needed work, so I looked for something with lots of openings, where they might hire just about anybody. I hoped to land a job whose skills would be useful for my future. I didn���t want to get stuck like my mom in a dead-end, minimum-wage job. I���d learned that men earned more than women, and read about why that happened. I couldn���t battle those causes head-on, so I focused on applying to male-dominated positions where few women workers had been hired and salaries were more equal.
I took a position as a computer operator, tending an oversensitive machine. It was an early networked time-sharing system that supported remote corporate clients who could access their data 24 hours a day. I worked a crazy schedule, nights and weekends, as well as days. There were just four or five computer operators providing customers with 24/7 coverage.
At night, I���d work alone. I���d back up data and reboot the computer with a length of paper tape after every electrical disturbance, such as a lightning strike near our building. During slower hours, I���d read computer manuals and write code for data reports. This work paid the princely sum of $700 a month.
After a while, I got a raise to $850. That meant I���d crossed over to earning $10,000 a year, a symbolic milestone that changed almost nothing. Those were years of high inflation, so rising costs gobbled up the spending power of my raise. I barely got by and didn���t save anything. I was a lousy cook and ate a lot of fast food, devoting my off hours to pizza, beer and music with friends. I gave absolutely zero thought to my financial future.
Faraway lands. I took an exam to qualify for a federal job but didn���t score high enough to advance above others who had received preference, generally those with military service. I thought about joining the military, but first I contacted the Peace Corps again. They found my missing paperwork and invited me to join. I bid the balky computer farewell and boarded a plane to a country I���d never heard of before.
The Sultanate of Oman is a Kansas-sized, comma-shaped desert kingdom to the southeast of Saudi Arabia, beginning at a naval chokepoint, the Strait of Hormuz, and stretching from there around the Arabian Sea to Yemen. I would earn little money over the next three years, but this was my dream come true. I was seeing the wider world.
I���ve often been asked what it was like living in a country in the early stages of modernization. I was based in a small town far from the capital city of Muscat. My home was a cement-block house, essentially the same size and construction as a typical one-car garage. It had electric lighting and a ceiling fan in the main room. Electricity was purchased monthly from the neighborhood grocery store, the cost dependent on the number of installed lightbulbs. The grocer owned a portable generator that ran a few hours daily to keep meat and soda cool in the store, his expenses defrayed by sharing the output with those who lived nearby.
There was no such thing as trash day. People burned garbage to reduce its volume. We had no heat or air-conditioning in a climate where temperatures ranged from the low 50s in winter to above 115 degrees in summer. It was simply impossible to replicate my comfortable American life with its nearly infinite choices of food, entertainment, friends and jobs. I lived on a monthly $300 allowance, which covered rent, utilities and food.
I met almost everyone in the village during those two years teaching school, before spending a third year in the south of the country as a traveling health worker. Despite hardships, people seemed no less happy than everyone back home. Each family had hopes and ambitions similar to mine. They worried about their teenagers, exhorted their little ones to do well in school, and took care of one another when sick. They traveled to visit friends and family, and came back with pictures and stories to share as they whiled away their evenings with social calls.
There were personal tragedies and petty rivalries and party nights and holiday traditions. It was the same as my world back home, except each household had to manage all their essential human activities and expectations with very little money.
Repeatedly over the following decades, whenever I faced a major setback or my life situation became precarious, I would recall my years in Oman and other places I���d visited. I���d remind myself that almost everything that creates happiness, that makes life worth living, is possible at all price points. I���d stop obsessing over whatever I wanted, what I thought essential for my happiness or success, and look for an alternative that would fit my current station.
I���d also remember that others had much less, and see if there was something I could do to improve their lot for a while, by word or deed. Over my life, this has saved me a mountain of grief and a pile of money.
Starting to save. I didn���t yet have the vocabulary for what I was doing, but over that first decade after high school I was building human capital. It increases an individual���s opportunities, including his or her earnings potential. These early investments in myself���and my dreams���have carried me through life.
Not long after I returned from Oman in 1982, and after another two years of graduate school, I took a second computer-related job, this time as a programmer. I was nearly 30 years old and had accumulated no savings. As part of its culture, the company where I worked taught employees how to plan for the future. I finally got serious about saving for retirement and began contributing to a 401(k). My annual salary rose from $19,000 to $35,000. I earned a few thousand more from freelance projects, a practice encouraged by my employer, who thought everyone ought to have a side gig.
I made plenty of financial mistakes. For instance, I was more focused on saving for retirement than preparing for unexpected expenses. As a result, when my father got a terminal cancer diagnosis and asked me to come see him, I didn���t have the cash or credit to buy a plane ticket. My boss suggested I loan myself money from my 401(k). I borrowed enough for two trips and signed an agreement to pay myself back with 7% interest. An adequate emergency fund would have been better.
Here���s another mistake I made: I worked at government agencies for 12 years, three years in the Peace Corps, two years at city hall, and seven with our local electric company. Technology workers earned tens of thousands more in the private sector, so most didn���t stay long in government. Yet I remained.
Why? One advantage of the public sector was having a defined benefit pension plan. Plan rules permitted me to buy three years of service credits for my time in the Peace Corps. I delayed purchasing them until long after the end of my public service career, which cost me a small fortune.
My cost for the pension credits followed a formula based partly on salary and partly on imputed returns. Though I���d received little income as a Peace Corps volunteer, buying three years of pension credits cost me $58,000. This was many multiples of what it would have cost when I first started my city job. My income had risen from $30,000 to $90,000 over those nine years of employment, and 20 years had passed since I started at the city. Still, the credits I purchased contributed substantially to my small, inflation-linked government pension.
Each year, I���d estimate how much I could expect from my pension and I���d review my Social Security statement. I���d consider whether that would meet my retirement needs. I remember at one time thinking that $15,000 a year would be plenty, and that my pension would almost equal that. But I also assumed I might be overlooking potential retirement expenses, so I carried on working and saving.
My parents had died at age 57 and 62, so I never counted on getting to retirement. If I didn���t make it to old age, I didn���t want to regret the way I spent my life. I regularly reviewed how well my current work suited my life and whether the job made good use of my abilities. If it seemed a bad fit, I���d look for a promotion or seek a new job that could be more satisfying. I had continued to add to my technical and managerial skills, and so kept my talents in demand.
At age 40, I thought I���d retire at 55, leaving plenty of time to spend with my husband before one or the other of us died. As has happened before, my plan went one way, my life the other. Over the decades, I had married twice. One marriage ended when my husband left. The second ended when my husband died following a brief, unexpected illness.
I have raised five children across two separate generations. I still have one in high school. Through it all, I paid my bills when due, and made cuts elsewhere to balance my budget. Childcare and college bills have cost me as much over the years as houses and cars. Only rarely, and for as short a time as possible, did I stop saving for retirement. When things turned around, I started saving again���and doubled down if I could.
Back to academia. In the late 1990s, I saw large numbers of in-house information technology staff and managers replaced by contractors and temporary workers from abroad with H-1B visas. As a manager, I didn���t want to have to replace good workers or get caught in the turnover, so I looked for an exit strategy of my own.
I called a family meeting to discuss how everyone felt about me leaving my government job to try another career. If my family said no, I would have stayed in my job forever, perhaps. But I had completed most of a doctoral program on the excellent advice of a mentor, and so had just a few credits and a dissertation remaining. My family was enthusiastic in their support that I finish my degree and pivot to academic life.
I graduated debt-free, thanks to education subsidies from my employer, along with some savings and money made from part-time college teaching. I took a fulltime academic position and ultimately earned tenure. I also served as an associate dean for three years. I politely declined invitations to apply for dean or senior university leadership positions.
In my last years at the university, my annual income topped $100,000, not by much and not for long, but a marker of prosperity for sure. I maxed out my 401(k) contributions, including catchup contributions allowed after age 50. I also saved the maximum in a nondeductible��IRA and even added a little money to my regular taxable accounts.
I wasn���t saving all this money in case I lived to 95. Rather, I was saving in case my spouse lived to 95, and to make sure the youngsters in our house wouldn���t be left in financial difficulty if something unfortunate happened to me. I like the good things in life as much as anyone, but I also have frugal habits from long practice.
Much that brings me joy is really cheap. For instance, listening to my teens laugh as they talk about their lives. Walking the family dog. Chatting with neighbors. Watching people picnic in the park. Can I admit it? I���ve joined city council meetings on Zoom, just for fun and out of curiosity about what���s important in our city.
My retirement. It���s been three exceptionally difficult years since my husband died. I had a freak accident. Early retirement. Then, weeks after clearing out my campus office, the pandemic shut schools for over a year and hijacked my twins��� college preparations. But we carried on. Now, they���re finishing their freshman years.
I have concerns about spending my old age alone. I had planned to enjoy this time with my husband of 30 years. I feel bad that, of all my friends, I���m the first to lose my life partner. I don���t want to be a burden on my kids. They���re starting their journeys now, not so different from the adventure I began so many years ago, and I don���t want to stand in their way.
My retirement is not filled with carefree activities, new friends and travel���yet. That���s why, looking back, I value more than ever the choices I made when spending time and money. It���s how I ended up with a large family and lots of friends, and it���s allowed most of my fanciful dreams to come to fruition. To understand what I mean, consider three memorable trips.
My dad died in 1988, months after my first marriage failed. I was in low spirits, adjusting to a single salary while most of my expenses were unchanged. Coming back from my dad���s funeral, my brother suggested that we sign up for a mountain climbing trip in South America. Not that we knew much about mountain climbing or had ever been to South America. He said it would cheer me up, and that the months I spent developing the required physical conditioning would keep me busy. I agreed, imagining I might meet a nice guy on the trip.
I cut out all other discretionary spending for the entire year to pay for that trip. In December, I flew to Ecuador. We spent Christmas Eve at a climbers��� hut so full that I had to sleep outside under the stars. Before dawn, we started our hike to the summit of Tungurahua, an active volcano. The precise peak we summited no longer exists, wiped out by a later eruption. A few days after that summit, I climbed to the top of Cotopaxi, the world���s highest active volcano.
Remember Y2K, when the world���s computers were supposed to crash? At the beginning of 1999, I requested vacation leave for the end of the year. It was easy to get in January. By December, my bosses were sweating and asking me to cancel. But I had prepaid for a cruise and I knew my computer systems were in order. My husband and I celebrated New Year���s Eve dancing our way into the new millennium on a promenade deck in Panama, while my colleagues spent a boring night at the office.
One of my twins qualified for the U.S. team for the World Baton Twirling Federation���s 2019 International Cup. Six months after my husband died, the two of us flew to Limoges, France, for her competition. It was a quick trip, because I had to arrange alternate activities for her brother and sister back home, and I didn���t want to strain the kindness of friends and family any more than necessary.
At the end of the meet, we had one glorious, rainy day of sightseeing in Paris before our return flight. My daughter was bone-tired and I was getting about with a cane after my accident. Still, there are so many memories from that trip, such as cutting short our visit to the terrace atop the Arc de Triomphe as a hair-raising electric storm approached.
Some adventures are no longer possible. At this point in our lives, neither my brother nor I would feel safe hiking in crampons above 15,000 feet. I don���t have my husband to cruise with anymore. My teens will soon spend their holidays with other young adults on their own adventures, without me in tow.
Today, I���m a single parent with three young adults still to care for. We���re getting by financially on Social Security and a pension, supplemented with withdrawals from savings. I���ve lived in the same house for nearly 30 years. I paid off the mortgage long ago, and owe no one money.
Looking at my peripatetic path through life, with some good luck and some bad, I���m doing far better than I might have expected in terms of my net worth and annual income. That���s because I started saving and investing while relatively young, choosing to spend less than I could have, even in years when I had more money than usual.
My life is full of purpose, and I���m grateful to have the financial wherewithal to meet its challenges. I���ve learned to tolerate myself, and channel my quirks and preferences in ways that improve my financial standing. Right now, I���m simplifying my accounts, and spending more on myself and on causes I���ve contributed to for decades. As my children mature, I share with them bits and pieces of my financial picture, so���in due course���they won���t have unpleasant surprises.
I don���t have unreasonable expectations of continued good health or good fortune. Instead, I���m a realist, grateful for any week that shows nothing worse than gradual decay and delighted with any week where things seem slightly better than expected. I���m insured for the worst. And I never forget that, despite my age and stage in life, I still have three teenagers to launch. The adventure continues.
Catherine Horiuchi is retired from��the University of San Francisco's School of Management, where she was an associate professor teaching graduate courses in public policy, public finance and government technology. Check out Catherine's earlier articles.
It was a shocking introduction to a world where people might have much more, for no clear reason. My access to capital amounted to 52 nickels a year, or $2.60. Added to that was $1 reliably tucked in my Christmas stocking, as well as a little something from grandparents. Once my allowance rose to a dime, my total annual haul climbed to $10.
In my early teens, my parents divorced. Mom moved to the city where her sister lived, rented a duplex and got her first job. She���d gone to college, even graduate school, but had been a stay-at-home parent for 20 years. She had limited employment options. She wasn���t young and pretty, knew almost nobody in town, had two kids to watch over and no work history. Few jobs met our family���s constraints.
She ended up working the swing shift as a nurse���s aide in a rest home. That way, she could see us off to school each morning and be there when we returned each afternoon. Then she���d leave for work. As I saw how she���and we���struggled financially, I became determined to fend for myself and avoid low-paying jobs.By then, Mom gave me $3 a week in allowance, so my income was about $150 a year, mostly spent on records and books. I sewed my own clothes, aside from T-shirts and jeans, while also raiding and deconstructing my mom���s vintage outfits for new looks. I had a passbook savings account with pretty much nothing in it.
A young couple moved in next door and we became friends. One was a graduate student who���d served as a Peace Corps volunteer somewhere in Africa. My eyes were opened to a much wider world, and I wanted to see it. The journey that followed might seem meandering. Still, I ended up in surprisingly good financial shape, in large part because my needs and wants have almost always been modest. This is an underappreciated source of financial freedom���one available to almost everyone.
College on the cheap. When I graduated high school in the early 1970s, many kids I knew received fancy presents like cars and trips to Europe. I was envious but I had a plan: Go to college and see the world. My graduation presents���a dictionary and the complete works of Shakespeare���have served me well. I still have both books.
I turned down admission to a prestigious out-of-state school because its financial aid package wouldn���t cover my expenses. Instead, I enrolled at the local university, where I had a scholarship. I moved in with three friends who���d gone straight into the workforce. In that bygone era, I lived on $100 a month, which came from my dad plus whatever I could earn from college work-study jobs.
My share of the monthly rent for that two-bedroom apartment was $28.50, plus a quarter of the utilities. We each put $5 a week into a food kitty for suppers together. We also had dinner out once a week. I walked the two miles to campus or rode the bus.
If I didn���t have enough money to buy a textbook, I���d read it on reserve at the university library. I lived just five miles from home, so I could visit often for a home-cooked meal, to do laundry and for help typing term papers. I graduated from college completely debt-free, but with little savings, possibly $100 in my bank account.
My career plan? Become a high school Latin teacher. Once I got into a classroom, however, I felt uninspired. I needed a new idea. My roommates helped me get my first fulltime position, an office job. That lasted maybe a year before I returned to college for a master���s degree, something my bosses encouraged.
I didn���t pick a major in a particularly rational way. Instead, I asked myself, of all the professors I���d met in my undergraduate classes, who seemed to be having the most fun? I settled on a master���s degree in linguistics. My plan from there was to get a job where I could travel and see the world.
I got by on scholarship money, a teaching assistant's stipend and a $1,000 student loan. It would take me six years to pay off that debt, the first of several small debts that left a lifelong distaste for borrowing. People I respect have argued that using debt can be valuable, and I���ve seen them do so successfully. But it���s not for me.
Sensitive computers. Before graduating, I applied to serve in the Peace Corps, but my paperwork got snagged. I thought about going on immediately for a doctoral degree and maybe becoming a college professor. Instead, in 1978, I moved to the city where my brother lived.
I needed work, so I looked for something with lots of openings, where they might hire just about anybody. I hoped to land a job whose skills would be useful for my future. I didn���t want to get stuck like my mom in a dead-end, minimum-wage job. I���d learned that men earned more than women, and read about why that happened. I couldn���t battle those causes head-on, so I focused on applying to male-dominated positions where few women workers had been hired and salaries were more equal.
I took a position as a computer operator, tending an oversensitive machine. It was an early networked time-sharing system that supported remote corporate clients who could access their data 24 hours a day. I worked a crazy schedule, nights and weekends, as well as days. There were just four or five computer operators providing customers with 24/7 coverage.
At night, I���d work alone. I���d back up data and reboot the computer with a length of paper tape after every electrical disturbance, such as a lightning strike near our building. During slower hours, I���d read computer manuals and write code for data reports. This work paid the princely sum of $700 a month.
After a while, I got a raise to $850. That meant I���d crossed over to earning $10,000 a year, a symbolic milestone that changed almost nothing. Those were years of high inflation, so rising costs gobbled up the spending power of my raise. I barely got by and didn���t save anything. I was a lousy cook and ate a lot of fast food, devoting my off hours to pizza, beer and music with friends. I gave absolutely zero thought to my financial future.
Faraway lands. I took an exam to qualify for a federal job but didn���t score high enough to advance above others who had received preference, generally those with military service. I thought about joining the military, but first I contacted the Peace Corps again. They found my missing paperwork and invited me to join. I bid the balky computer farewell and boarded a plane to a country I���d never heard of before.
The Sultanate of Oman is a Kansas-sized, comma-shaped desert kingdom to the southeast of Saudi Arabia, beginning at a naval chokepoint, the Strait of Hormuz, and stretching from there around the Arabian Sea to Yemen. I would earn little money over the next three years, but this was my dream come true. I was seeing the wider world.
I���ve often been asked what it was like living in a country in the early stages of modernization. I was based in a small town far from the capital city of Muscat. My home was a cement-block house, essentially the same size and construction as a typical one-car garage. It had electric lighting and a ceiling fan in the main room. Electricity was purchased monthly from the neighborhood grocery store, the cost dependent on the number of installed lightbulbs. The grocer owned a portable generator that ran a few hours daily to keep meat and soda cool in the store, his expenses defrayed by sharing the output with those who lived nearby.
There was no such thing as trash day. People burned garbage to reduce its volume. We had no heat or air-conditioning in a climate where temperatures ranged from the low 50s in winter to above 115 degrees in summer. It was simply impossible to replicate my comfortable American life with its nearly infinite choices of food, entertainment, friends and jobs. I lived on a monthly $300 allowance, which covered rent, utilities and food.
I met almost everyone in the village during those two years teaching school, before spending a third year in the south of the country as a traveling health worker. Despite hardships, people seemed no less happy than everyone back home. Each family had hopes and ambitions similar to mine. They worried about their teenagers, exhorted their little ones to do well in school, and took care of one another when sick. They traveled to visit friends and family, and came back with pictures and stories to share as they whiled away their evenings with social calls.
There were personal tragedies and petty rivalries and party nights and holiday traditions. It was the same as my world back home, except each household had to manage all their essential human activities and expectations with very little money.
Repeatedly over the following decades, whenever I faced a major setback or my life situation became precarious, I would recall my years in Oman and other places I���d visited. I���d remind myself that almost everything that creates happiness, that makes life worth living, is possible at all price points. I���d stop obsessing over whatever I wanted, what I thought essential for my happiness or success, and look for an alternative that would fit my current station.
I���d also remember that others had much less, and see if there was something I could do to improve their lot for a while, by word or deed. Over my life, this has saved me a mountain of grief and a pile of money.
Starting to save. I didn���t yet have the vocabulary for what I was doing, but over that first decade after high school I was building human capital. It increases an individual���s opportunities, including his or her earnings potential. These early investments in myself���and my dreams���have carried me through life.
Not long after I returned from Oman in 1982, and after another two years of graduate school, I took a second computer-related job, this time as a programmer. I was nearly 30 years old and had accumulated no savings. As part of its culture, the company where I worked taught employees how to plan for the future. I finally got serious about saving for retirement and began contributing to a 401(k). My annual salary rose from $19,000 to $35,000. I earned a few thousand more from freelance projects, a practice encouraged by my employer, who thought everyone ought to have a side gig.
I made plenty of financial mistakes. For instance, I was more focused on saving for retirement than preparing for unexpected expenses. As a result, when my father got a terminal cancer diagnosis and asked me to come see him, I didn���t have the cash or credit to buy a plane ticket. My boss suggested I loan myself money from my 401(k). I borrowed enough for two trips and signed an agreement to pay myself back with 7% interest. An adequate emergency fund would have been better.
Here���s another mistake I made: I worked at government agencies for 12 years, three years in the Peace Corps, two years at city hall, and seven with our local electric company. Technology workers earned tens of thousands more in the private sector, so most didn���t stay long in government. Yet I remained.
Why? One advantage of the public sector was having a defined benefit pension plan. Plan rules permitted me to buy three years of service credits for my time in the Peace Corps. I delayed purchasing them until long after the end of my public service career, which cost me a small fortune.
My cost for the pension credits followed a formula based partly on salary and partly on imputed returns. Though I���d received little income as a Peace Corps volunteer, buying three years of pension credits cost me $58,000. This was many multiples of what it would have cost when I first started my city job. My income had risen from $30,000 to $90,000 over those nine years of employment, and 20 years had passed since I started at the city. Still, the credits I purchased contributed substantially to my small, inflation-linked government pension.
Each year, I���d estimate how much I could expect from my pension and I���d review my Social Security statement. I���d consider whether that would meet my retirement needs. I remember at one time thinking that $15,000 a year would be plenty, and that my pension would almost equal that. But I also assumed I might be overlooking potential retirement expenses, so I carried on working and saving.
My parents had died at age 57 and 62, so I never counted on getting to retirement. If I didn���t make it to old age, I didn���t want to regret the way I spent my life. I regularly reviewed how well my current work suited my life and whether the job made good use of my abilities. If it seemed a bad fit, I���d look for a promotion or seek a new job that could be more satisfying. I had continued to add to my technical and managerial skills, and so kept my talents in demand.
At age 40, I thought I���d retire at 55, leaving plenty of time to spend with my husband before one or the other of us died. As has happened before, my plan went one way, my life the other. Over the decades, I had married twice. One marriage ended when my husband left. The second ended when my husband died following a brief, unexpected illness.
I have raised five children across two separate generations. I still have one in high school. Through it all, I paid my bills when due, and made cuts elsewhere to balance my budget. Childcare and college bills have cost me as much over the years as houses and cars. Only rarely, and for as short a time as possible, did I stop saving for retirement. When things turned around, I started saving again���and doubled down if I could.
Back to academia. In the late 1990s, I saw large numbers of in-house information technology staff and managers replaced by contractors and temporary workers from abroad with H-1B visas. As a manager, I didn���t want to have to replace good workers or get caught in the turnover, so I looked for an exit strategy of my own.
I called a family meeting to discuss how everyone felt about me leaving my government job to try another career. If my family said no, I would have stayed in my job forever, perhaps. But I had completed most of a doctoral program on the excellent advice of a mentor, and so had just a few credits and a dissertation remaining. My family was enthusiastic in their support that I finish my degree and pivot to academic life.
I graduated debt-free, thanks to education subsidies from my employer, along with some savings and money made from part-time college teaching. I took a fulltime academic position and ultimately earned tenure. I also served as an associate dean for three years. I politely declined invitations to apply for dean or senior university leadership positions.
In my last years at the university, my annual income topped $100,000, not by much and not for long, but a marker of prosperity for sure. I maxed out my 401(k) contributions, including catchup contributions allowed after age 50. I also saved the maximum in a nondeductible��IRA and even added a little money to my regular taxable accounts.
I wasn���t saving all this money in case I lived to 95. Rather, I was saving in case my spouse lived to 95, and to make sure the youngsters in our house wouldn���t be left in financial difficulty if something unfortunate happened to me. I like the good things in life as much as anyone, but I also have frugal habits from long practice.
Much that brings me joy is really cheap. For instance, listening to my teens laugh as they talk about their lives. Walking the family dog. Chatting with neighbors. Watching people picnic in the park. Can I admit it? I���ve joined city council meetings on Zoom, just for fun and out of curiosity about what���s important in our city.
My retirement. It���s been three exceptionally difficult years since my husband died. I had a freak accident. Early retirement. Then, weeks after clearing out my campus office, the pandemic shut schools for over a year and hijacked my twins��� college preparations. But we carried on. Now, they���re finishing their freshman years.
I have concerns about spending my old age alone. I had planned to enjoy this time with my husband of 30 years. I feel bad that, of all my friends, I���m the first to lose my life partner. I don���t want to be a burden on my kids. They���re starting their journeys now, not so different from the adventure I began so many years ago, and I don���t want to stand in their way.
My retirement is not filled with carefree activities, new friends and travel���yet. That���s why, looking back, I value more than ever the choices I made when spending time and money. It���s how I ended up with a large family and lots of friends, and it���s allowed most of my fanciful dreams to come to fruition. To understand what I mean, consider three memorable trips.
My dad died in 1988, months after my first marriage failed. I was in low spirits, adjusting to a single salary while most of my expenses were unchanged. Coming back from my dad���s funeral, my brother suggested that we sign up for a mountain climbing trip in South America. Not that we knew much about mountain climbing or had ever been to South America. He said it would cheer me up, and that the months I spent developing the required physical conditioning would keep me busy. I agreed, imagining I might meet a nice guy on the trip.
I cut out all other discretionary spending for the entire year to pay for that trip. In December, I flew to Ecuador. We spent Christmas Eve at a climbers��� hut so full that I had to sleep outside under the stars. Before dawn, we started our hike to the summit of Tungurahua, an active volcano. The precise peak we summited no longer exists, wiped out by a later eruption. A few days after that summit, I climbed to the top of Cotopaxi, the world���s highest active volcano.
Remember Y2K, when the world���s computers were supposed to crash? At the beginning of 1999, I requested vacation leave for the end of the year. It was easy to get in January. By December, my bosses were sweating and asking me to cancel. But I had prepaid for a cruise and I knew my computer systems were in order. My husband and I celebrated New Year���s Eve dancing our way into the new millennium on a promenade deck in Panama, while my colleagues spent a boring night at the office.
One of my twins qualified for the U.S. team for the World Baton Twirling Federation���s 2019 International Cup. Six months after my husband died, the two of us flew to Limoges, France, for her competition. It was a quick trip, because I had to arrange alternate activities for her brother and sister back home, and I didn���t want to strain the kindness of friends and family any more than necessary.
At the end of the meet, we had one glorious, rainy day of sightseeing in Paris before our return flight. My daughter was bone-tired and I was getting about with a cane after my accident. Still, there are so many memories from that trip, such as cutting short our visit to the terrace atop the Arc de Triomphe as a hair-raising electric storm approached.
Some adventures are no longer possible. At this point in our lives, neither my brother nor I would feel safe hiking in crampons above 15,000 feet. I don���t have my husband to cruise with anymore. My teens will soon spend their holidays with other young adults on their own adventures, without me in tow.
Today, I���m a single parent with three young adults still to care for. We���re getting by financially on Social Security and a pension, supplemented with withdrawals from savings. I���ve lived in the same house for nearly 30 years. I paid off the mortgage long ago, and owe no one money.
Looking at my peripatetic path through life, with some good luck and some bad, I���m doing far better than I might have expected in terms of my net worth and annual income. That���s because I started saving and investing while relatively young, choosing to spend less than I could have, even in years when I had more money than usual.
My life is full of purpose, and I���m grateful to have the financial wherewithal to meet its challenges. I���ve learned to tolerate myself, and channel my quirks and preferences in ways that improve my financial standing. Right now, I���m simplifying my accounts, and spending more on myself and on causes I���ve contributed to for decades. As my children mature, I share with them bits and pieces of my financial picture, so���in due course���they won���t have unpleasant surprises.
I don���t have unreasonable expectations of continued good health or good fortune. Instead, I���m a realist, grateful for any week that shows nothing worse than gradual decay and delighted with any week where things seem slightly better than expected. I���m insured for the worst. And I never forget that, despite my age and stage in life, I still have three teenagers to launch. The adventure continues.
Catherine Horiuchi is retired from��the University of San Francisco's School of Management, where she was an associate professor teaching graduate courses in public policy, public finance and government technology. Check out Catherine's earlier articles.The post Investing in Myself appeared first on HumbleDollar.
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