I’ve known for a while now that I’m behind on retirement contributions, but I finally really admitted it to myself in cold, hard numbers. Or I tried to, at least. It’s pretty hard to find a “number” that you’re supposed to have by a certain age so that you can tell if you’re on track for retirement or not. But, I think it’s safe to say that I’m behind. Waaay behind. I’m 40, and I don’t even have $40,000 set aside yet for retirement.

I did start contributing young (at age 19 or 20) but I followed up that good move with a laundry list of dumb things. I withdrew money from a 401k and spent it. I didn’t insist that my then-husband contribute to retirement also, so when we divorced the small amount that I hadn’t already done dumb things with was cut in half. I didn’t contribute at all for years after that. Instead, I spent down my regular savings while I was unemployed. Meanwhile, my little bit of retirement money was invested in kind of a bad fund that I kept dumping money into when I did resume contributions. And we all know what the market has been like lately.

One good move minus several stupid moves plus down markets equals not much money set aside for retirement.

So what am I doing to improve the situation?

I decided that I wasn’t going to let panic or avoidance get in the way. All the retirement rules of thumb that I found online suggested that I needed a whole heck of a lot of money to retire. Seeing all those zeros was scary, but then I got a grip.

Everyone’s situation is individual. Estimators can only give you estimates. (Dinkytown has a nice retirement calculator if you’re looking for one.) Sure, I do want a retirement where we can travel the world on a whim and be philanthropists. And I want us to retire early. So that’s what I’m really aiming for. But first we have to take care of necessities, so…

I set a minimum target number for myself: I want to have $300,000 set aside for retirement as soon as possible. I got that number by figuring up my minimum annual expenses and then dividing the total by 4%, which would be my conservative estimated annual return. Since I could live on $12,000 per year (or less) if I had to, $12,000 x .04 gives me $300,000. This would mean that I could spend $12,000 per year without touching the principal balance of $300,000. Unfortunately, this scenario still pretty much leaves me counting on the government for health insurance (or on Social Security to pay for health insurance.) Since I don’t trust the government or the prospect of Social Security, that’s bad, but I have to start somewhere. So $300,000 it is as an initial goal.

Reducing expenses and expenditures. I’ve been working on reducing my fixed expenses as much as possible and just spending less in general. Throw a paid-for home into the mix, and my required annual expenses will drop even further. I figure the fewer expenses I have, the less money I’ll require. Health insurance and other medical-related expenses are the biggest potential wrench that I can see.

Increasing income and becoming informed. I’ve been working on increasing my income while decreasing my spending. If I make more money but spend even less, I’ll have more to contribute to retirement and the house payoff. My husband has been doing the same. I’ve also been learning about investing so that I can hopefully avoid making the kinds of (uninformed) mistakes that I made in the past.

Increasing contributions. Finally, I’ve increased my retirement contributions dramatically. They are now at 30% of gross, but need to be even higher. I’ll continue to increase that percentage gradually, a few percent at a time until I’ve reached the maximum allowed at this time for my situation. ($15,500 in a 401k + $5,000 in an IRA.) I’ll also need to save outside of traditional retirement vehicles for retirement.

Of course my husband looked at his retirement situation as well, and what’s needed. He is in better shape than me as far as that goes, but he’s also a little older than me so he has been increasing his contributions as well. Together I think we can get it done.

The most important part of this experience was actually LOOKING at the situation and making changes NOW without panicking. (Now is always the best time to make a change.) It’s too easy to avoid thinking about things otherwise. And too dangerous, since the distant future will be here before we know it.