I Didn’t Start Investing Until My 40s, but These Moves Helped Me Retire Early

grandma, mom and baby on a hayrideIn the LearnVest Personal Stories series, everyday people share the details of their money lives, discussing the individual choices they’ve made and how it’s impacted their financial journey.

Today, one woman, who hadn’t put a penny toward retirement until her late 40s, talks about how she reset her money mindset to play catch up—and how some diligent saving and investing actually let her retire ahead of schedule.

By most people’s standards, I came late to the retirement game.

The light bulb didn’t go off that I needed to start investing for my life after work until I was 48 years old. It was 2001, and I was a single mother of a teenage daughter, Hope*, living in expensive Southern California on a schoolteacher’s salary.

I was dating a fellow educator, Don*, and while on a hike one day, the conversation turned to money. He was going on and on about his personal stock holdings, his pension, how he was maxing out his 403(b) and how he owned an investment property in addition to his primary home. Then he turned to me and asked, “What are you doing about your retirement?” My answer: “Nothing.”

My immediate reaction was, “What’s wrong with me?” I always considered myself to be a smart person, a feminist even, but a man was reminding me that I needed to think about my financial future. On top of that, I was a journalist in a past life, and knew how to dig for information. Yet I had never bothered to educate myself about my finances.

How the Past Nearly Bankrupted My Future

A lot of that had to do with the fact that I was a single mom just trying to make ends meet, so I was pretty much living paycheck to paycheck. Investing for the future wasn’t part of my reality. I had also been in some tumultuous relationships that had a severe impact on my life, both personally and financially.

Prior to moving to California, I had been a journalist on the East Coast and was financially comfortable. I owned my own home, and even held some stock options through my employer. I had been in an 11-year relationship with Hope’s father that ended badly when she was a toddler, and although we never married and he never supported us financially, he sued me for custody. I became embroiled in a bitter lawsuit and sold my house, cashed in my stock, and basically went broke trying to keep custody of my daughter.

  • M

    Teachers in California don’t get social security.

    • Sara

      But she would be eligible for SS from her earlier employment.

      • debbie lariscy

        But its tricky, cause if she had a teachers job that did NOT pay into SS, gave her a pension, the WEP/GOP law comes into effect and she loses over HALF the SS she would have gotten. Its so unfair. The law needs to be repealed and affects mostly government employees who get pensions, like some teachers, firefighters, police, etc. The law is in committee in Congress, but we need people to ACT and get it moved to a vote. It has some bi-partisan support. Look into it if you think this law affects you.

        • CW

          Disagree. The only reason why she’s able to retire at age 60 while start saving at 48 is due to a generous publicly funded teacher’s pension. Typical 30-year term CA teachers retire with COLA’d pensions valued at $1 million+ which is why that $40k income salary she started out with appears so deceptive.

          WEP is designed to offset the fact that SS is tilted in favor of lower income people with a larger proportion funded by middle and upper middle class. If no WEP, then due to her low contribution to SSI during the 35 lookback period- she would appear to be a lower income person – which she really wasn’t. SS is already underfunded. Only true low-income people should benefit from the disproportionate SS distribution.

          If you really think this is unfair, I would vote for teacher pensions to be eliminated. Teachers should be paid 1.5x their current wages and compelled to contribute to social security. We could then fire bad performing teachers and reward good ones and the state would get much needed relief from our pension obligations. Of course, there’s no way this teacher would have been able to retire early with such a late start even at 1.5x her salary- but it would address your concerns wrt WEP.

  • Gars

    Can’t retire where you worked. Still working in “retirement.”

    Money really began to increase when it was all in one place.

    I’d suggest it was the 30% rise in the stock market that boosted your net worth. If you live 30 years, your $200,000 will give you somewhere around $6,700 PRETAX.

    I’d suggest this person is not retired. She is burned out and has moved on to a less stressful type of work in a less expensive area.

    Just sayin’

    • flours

      I agree…while changing careers to something less stressful is also a goal of mine, I wouldn’t consider myself retired at that point.

  • A

    Great Story!

  • papillon

    How did she open three separate 403(b)s? I thought they were similar to 401(k) and you can only have one through your employer.

  • San

    As a 48-year-old who hasn’t saved as much as I should have, your story is inspiring. It’s great to read about someone who started taking baby steps, which all of us can do. Thank you very much for sharing!

  • Ephem

    Give me a break! She has a pension. She barely mentions that. The $200,000 she saved is just pin money that she won’t have to touch until after she turns 70. Please tell us a REAL story about somebody who started late and funded their retirement with their savings and Social Security, not somebody for whom their 403B is their hobby money. Geesh!

    • mysticaltyger

      Ok, here’s the bottom line. If you want to retire 10 years from the time you start saving (with no help from a pension), as this woman did, you have to save about 65% of your after tax income.

      • vickchang5307

        Rule #1: Pay yourself FIRST.

        Rule #2: Don’t let greedy salesmen/brokers/agents take any of your money in fees, commissions, loads, etc. Do the paperwork yourself with a discount broker – Fidelity, Vanguard, TD Ameritrade, etc., then invest in no-load mutual funds with no front loads, no back loads, and certainly NO 12b1 FEES whatsoever. It will make a difference of hundreds of thousands of dollars by the time you retire!

        Rule #3: Don’t waste money on stupid stuff you don’t need. Don’t get $100/month smart phone. I pay $20/month with tMobile. Don’t get $100/month auto insurance. I pay $24/month with Insurance-Panda. Don’t spend $50/month on your gym. I spend $15/month at Planet Fitness. All these expenses add up and end up cutting into your savings.

        Rule #4 Save at least 10% of your gross income. Join your 401k at work, set up IRAs on your own.

        Rule #5: Again – Pay attention to your savings. As they grow you will feel empowered

  • sandar

    So all that college paid off for Hope? Is she enjoying a great career as well as doing the family thing?

  • Lewallen

    I call BS on this story. So many details that don’t make any sense. How’d you jump to dumping $1000 a month on a teacher’s salary? That’s a little more than half your monthly take home. You miraculously paid off everything in such a short amount of time while investing in all of those accounts? Did someone let you stay with them rent-free? Something doesn’t smell right here.

    • FrugalToo

      I guess you didn’t read where she got a promotion and raise over the years plus eventually moved to a retirement community that was $500 less per month then moved to TX which is much cheaper than CA.

      “To open a Roth IRA
      with one of the major providers, I needed to start with $1,000, which I didn’t have. So I opened an IRA with my credit union instead, squirreling away $100 a month. Then, I signed up for my school’s 403(b) plan, investing just $50 a month.
      It wasn’t much, but it was all I could afford at the time. My 403(b) contributions were automatically deducted from my paycheck, so I never missed
      the money.

      Long story short, it was hard to know exactly how much my investments had grown because the accounts were so scattered. I just tried to focus on upping my contributions as my salary increased. By 2004, I was putting away $1,000 a
      month, and by 2007 I had reached $1,300.

      During this time, I was also paying for Hope’s out-of-state tuition, so I had dueling money priorities. My goal was not to leave her burdened with too much debt. Getting promoted and moving into the administrative side helped; by the time she graduated, my salary had reached the mid-$70,000s.

      I also took advantage of times when I found myself with fewer bills. When I moved
      to a retirement community I saved $500 a month on rent; that “found money” helped a lot with her tuition. And after I paid off my car, I started putting that money toward retirement. We did have to take out some federally subsidized
      loans, but ultimately, Hope only graduated with $15,000 in debt, which really isn’t that bad.

      The real growth began when my money was finally in one place. I was invested
      primarily in balanced index funds that were managed based on a 2015 target date
      (I knew I didn’t want to touch that money until further into my retirement). In
      2011 and 2012, I saw more than 10% growth in my portfolio. And in 2013, it grew
      more than 13%. That’s pretty damn good.

      Initially, it didn’t seem possible to retire that early. But I was burnt out from being an
      educator, and I wanted to move to Central Texas to be closer to Hope. I crunched the numbers and figured out that I could live off my pension in Texas (but not in pricey California), and supplement my income with some freelance
      writing and consulting for my old school district.

      • dontgivetothechurch

        Still doesn’t add up. At the end she was getting into the mid-70′s, but the majority of that time she was not. She lived in California, where it’s expensive, and yet $1000 a month and then $1300 a month. That is not going to add up to $200,000 total unless you did put that away from the start, and unless you were extremely lucky (not possible to have no losses these last 5-8 years) your stocks all fell during the down years. I don’t believe this story either.

        You would have had to be putting closer to 1000 a month from the start AND making close to 10% EVERY Year to make 200,000.

  • http://nononsenselandlord.com/ No Nonsense Landlord

    You need to super charge your retirement plan. Invest in real estate.


  • wellian

    Thanks for this story. I also didn’t start saving until my 40′s. I always read that you must start young to save enough to retire (or at least achieve FI), so it is inspiring to see it can be done even as a late starter – I’m willing to be as frugal as it takes.

  • hannachan196

    The folks who did nothing to prepare for retirement, the ones who always had an excuse or some “reason” for not saving. Their plan is to sit with a social worker to see what “benefits” they qualify for.

    My advice? Start saving now. Shop for cheaper health insurance (I use Freelancers), compare auto insurance (I found $25/month at 4AutoInsuranceQuote), cut your cable/cellphone/internet to nothing (tMobile is the cheapest), and look for cheaper gym costs (I like $10/month Planet Fitness). Doing this, you can save an extra $200 per month to your retirement fund. Every little bit helps.

    Don’t be a leech. Don’t ask for subsidized housing (including heat, utilities, taxes), free food, Medicaid, “Extra Help” paying for their meds, SSI for extra cash, free cell phones, etc.

    Of course those benefits are going to be paid for by the very people who did plan and save for retirement. Ain’t that fair? The liberals and progressives think it is.

    • debbie lariscy

      I’m progressive and I refute you blanket claim that we think like that. Not everyone, and I do like your post. QUESTION: what kind of coverage/policy can u get for that amount? I would be afraid to go bare bones and have a law suit or claim. Thanks.

    • Hyptiotes

      Your savings plan apparently includes comment spam and acting as a shill for an insurance company too cheap to advertise through legitimate channels. Nice.

  • Christa Sharp

    To the bottom poster–how do you expect minimum wage workers to save even near enough? The people complaining about entitlements seem to be out of touch with the seriously scary reality of the working poor.