Here’s this month’s New Jersey personal finance question: is my pet going to delay my retirement?
Let’s face it: they’re expensive
As a New Jersey resident, I was surprised to learn that nearly half (47.4%) of households in New Jersey own a pet (Plotts, 2020). So, pet ownership has become, more or less, a pretty popular thing – and not just in the Garden State.
Here’s what the financial picture looks like for pet owners.
- The average US household spends $741 per year on their pets, but for dog owners the average is as high as $2,524 per year (MarketWatch, 2024).
- Many landlords charge an additional fee for pets which can get expensive very quickly.
- The cost of pet care while you travel is exorbitant. Having a pet stay overnight in a kennel adds up quickly, and many times they get sick from the other animals staying there.
That’s fine, you say, but all of this is just a drop in the bucket. I love my pet too much to let this deter me!
Well, maybe not…
The costs add up
The following example is a hypothetical illustration of how pet ownership could potentially affect your retirement savings:
If you buy a dog for $1,000 and spend an average of $2,000 per year on your dog for ten years, how much would you have saved if you went without a pet and invested those funds instead?
Assuming an annually compounded growth rate of 7%, your $1,000 initial investment and the subsequent $2,000 investments over ten years would have grown to a total of $29,600.05. Never underestimate the power of compounding… so yes, your pet may in fact delay your retirement!
Can I have a pet and save for retirement at the same time?
It can be done, but you’ll have to manage carefully. Take time to sketch out a budget and a long-term financial plan.
It would be useful to ask yourself these questions:
- Is a pet really affordable if you were to hit some hard times financially? What would happen if your income dropped by 20% or a relative needed some help – would a pet be a hardship?
- Are you going into credit card debt over this or is your income more than enough to cover these costs?
- What kind of condition is your pet in, and is your pet likely to generate expenses that are more than what you projected?
- Are your pet expenses preventing you from investing in assets such as real estate, education, or career development tools that might generate income down the line? If so, is the short-term fulfillment from a pet worth sacrificing the long-term potential?
Get a realistic sense of what the impact of owning a pet will be for your long term-financial plan. It may be best to go “pet-less” or to get a beta fish instead of a Golden Retriever to keep your retirement goals in focus.
Interested in a 15-minute consultation phone call to start planning for your financial future?
If so, send me a message and let’s put a time on the calendar!
-Shaun
Sources
Calculator.net. Investment Calculator. https://www.calculator.net/investment-calculator.html?
Miller, Mike. 2024, August 7th. Pet Ownership Statistics and Facts – 2024. Market Watch Guides. https://www.marketwatch.com/guides/pet-insurance/pet-ownership-statistics/
Osorio, Carolyn. (29 February, 2024). Money Digest. How Much Do Americans Spend On Their Pets? https://www.moneydigest.com/1527893/how-much-money-do-americans-spend-pets/
Plotts, Edwin. Pawlicy Advisor. Pet Ownership Statistics by State, And So Much More (Updated 2020). https://www.pawlicy.com/blog/us-pet-ownership-statistics/#