He noted that this age group doesn’t have to worry about investing 10 or 12% of their salary in registered savings plans from the start of their careers instead of paying off the mortgage, as the “rule of 30” says it is just as effective Save 30% of gross wages on a combination of retirement plans, mortgage payments and special things like childcare, which is costly but short-term as a smaller percentage should be saved in the longer term.
“There are times in your life when it becomes really hard to save up for retirement,” said Vettese. “When you’re 35 with a spouse and two kids and you have a mortgage you’re paying off and you still have day care and people tell you to save 10% for retirement you’re wondering, ‘Where did this come from ?
“In the book, I proved that you don’t really have to save up for retirement every year of your career. There are some years where you can just take a break and save maybe only 5% or even zero, and other years you will make up for it when your mortgage payments are not quite as high as your pay or childcare is behind you and you have more disposable income. That’s when you increase what you save for retirement. I’ve proven that you can still save enough with it – and it’s a lot less painful. “
He wants consultants to seriously consider this idea because it will more easily get their clients to the same goal.
“I was an actuary for retirement so it’s not like I’m trying to miss out on retirement,” he said. “I know a lot of 30- to 50-year-olds who just can’t save up for retirement right now, so I’m just trying to be realistic.”