I pondered my feelings of inadequate savings while in my 20s. It's hard not to feel this way, because you have people telling you to pay off your mortgage, car loan, student loan, credit cards, etc.
But how do you save money outside of retirement? It's next to impossible for DH and I to save more than the maximum in our retirement accounts. Right now we're treading water, paying for our current bills, retirement, and just regular home ownership expenses.
We're milking our cars and praying they last another 2-3 years. We haven't got the savings in a taxable account to replace them with good newer cars. We could afford cheaper beaters (basically replacement value), but to actually buy nicer cars might be impossible without a loan.
Are we misguided? Should we stop saving for retirement and scale down to just 15%? Then save more in taxable accounts? Or should we look for ways to increase our income?
I think the problem is that in your 20s you have so many pots of money to fund and not enough income to fund them all. You can only pick and chose what is most important. And as your income grows, as ours has, you can start to have more pots.
I believe as we leave our 20s behind, we'll be in a good financial position of fully funding buying newer cars, college, and just growing a taxable account. And by maxing out our retirement options and ESPP, we have established the habit of saving and living well below our means. We are used to saving $35k/year so all extra money can be diverted to buying a large home, newer car, college, daycare.
So my advice to people in their 20s? Stop feeling overwhelemed. Start saving for retirement so you'll get into the groove of not seeing or using the money. That way as your income begins to increase, you'll be able to fund all the pots you desire while knowing you've already established a nice retirement nest egg. And stop feeling inadequate over not being able accomplish everything. Rome wasn't built in one day, and neither will your net worth be established overnight.
So I just have to keep on trudging and reconcile I can't be perfect immediately. I can just strive towards perfection and hope to get somewhere close to it.