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ALMOST 30 YEARS AGO, I landed my first fulltime job. I worked at a state-run academic institution, earning $16,000 a year. The sole retirement benefit was a pension plan with a five-year vesting period. There were no investment choices to be made. There was no ability to invest additional funds, beyond what my employer contributed to the plan. It was a retirement plan requiring no participation on my part.
My second job came with the option of investing in a traditional 401(k) plan. I was confronted with having to decide how much of my salary I wanted to contribute. I also had to choose between a large number of investment options. Faced with those choices and having no knowledge of investment principles, I opted not to contribute.
When I began working for my current employer—nearly 22 years ago—I was immediately vested in their retirement program. The only choice I had to make on my first day on the job was how to invest the money that my employer would contribute to the plan. When I saw one of the fund options included the words “guaranteed return,” I checked that box.
For years, I didn’t second-guess my investment decisions. My account balances were small and so was my tolerance for risk. I was comfortable knowing my money was growing at a guaranteed, albeit rather slow, pace.
When I hit my mid-40s, things changed. Retirement no longer seemed far away. I got divorced. I realized I needed to learn how best to manage the money I had. I started listening to financial radio shows, reading books about personal finance and scouring the internet for forums with investing advice. It didn’t take long to learn there were as many opinions about the “right” and “wrong” way to manage investments as there were people offering advice.
All that sage wisdom caused me to question some of the decisions I’d made years ago. Would I have been betting off cashing out my pension when I left my first job and investing the money instead? Should I have maxed out my 401(k) at my second job rather than buying a home? Was the guaranteed return fund I had pumped money into a poor investment choice, given my age?
As I digested all the information, I slowly began making changes. I moved a portion of my money from lower-risk funds into potentially higher-returning options. I increased my savings rate dramatically. I began reading the details of all the plans I was invested in and understanding where I was positioned financially.
Perhaps the most important lesson I learned was that there are no absolutes when it comes to investing. For every person who abhors income annuities or reverse mortgages, there’s another who finds them a useful commodity. For every proponent of taking a lump sum distribution from a pension plan, there’s an advocate for receiving monthly lifetime payouts.
As with most things in life, there’s no “one size fits all” solution when it comes to finances. Rather than questioning the decisions I’ve made in the past, I’m beginning to appreciate the things I’ve done right. I started saving at a young age. I’ve maintained a lifestyle that doesn’t exceed my paycheck. I have a work ethic that’s kept me steadily employed for three decades. For me, those are the only absolutes that matter.
Kristine Hayes is a departmental manager at a small, liberal arts college. Her previous articles include Why FI, Pet Project and Educated Consumers. Kristine enjoys competitive pistol shooting and hanging out with her husband and their three dogs.
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They say wisdom comes with age. You are proof positive of this adage. Thanks for sharing your journey.