Retirement Saving-
So Important and So Hard
The longest, toughest conversations I have are with sub 40 year olds about the importance of saving for retirement.
It’s something so far removed from their brains because its likely 20 years, 30 years away…
However, when I work with clients in their 60’s/70’s they mostly say, “I wish I saved more money for my retirement.”
If only they would talk to each other!
To ease the conversation, I no longer use the word “retirement”, I have replaced it with “Financial Independence.”
The reality is that Independence from the daily grind is what these “kids” seek. They fail to realize that this dream can only be accomplished if they have money in the bank
I know it’s hard to save hard earned dollars when there are so many monetary distractions like Starbucks, Netflix, and a Saturday night social gathering which calls for sipping the hottest craft beer. Everyone wants your money!
Is this you? Well, it’s never too late to get on track!
You probably don’t want to hear another person preach…so instead I have put together:
3 Advantages of saving for retirement now, which will lessen the amount of money you need to save later!
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Money management skills
By saving for retirement you have to take responsibility of your finances today.
Think about the last impulse purchase you made.
Do you think you got the best price?
What about the item you delayed buying for weeks, months or even years.
You probably researched and investigated all the options and sought out the best deal possible.
Understand the difference?
Immediate financial decisions we make, typically cost us more money.
Now, I understand that it’s not easy to balance future monetary needs with present expenses. But if you can manage your money properly, you should not over spend or over save!
That means you will most likely have to save for a short-term goal (like buying a new car) and a long-term goal (retirement aka: financial freedom) AT THE SAME TIME. You should not wait until 1 goal is accomplished before starting another. You have to hit them all NOW.
This can only be accomplished if you have a good handle of what’s coming in (income) and what’s going out (expenses)
Track your cash flow for 30-60 days. Every penny.
SEE where the money is going and make changes to find extra cash to save for all your goals!
Think short term AND long term.
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Time on your side
Today is the earliest you can start saving for your FINANCIAL INDEPENDENCE if you haven’t yet. It does not matter what you have or have not done so far. No reason to waste your time thinking about the past.
The good news is, by starting today, you are giving yourself the most amount of time for your money to grow.
Tomorrow is one day less, the day after is 2 days less..etc.
Start today and make time your best friend.
Why is time so important?
Time allows your investments to compound. The more time equals the more compounding. Compounding is the process of your money making money…Here is an example:
Let’s say that at age 25, you start putting $300 each month into your employer’s retirement savings plan, and your account earns an average of 8% annually.
If you continued this practice for the next 40 years, you would have contributed $144,000 to your account, accumulating just over $1 million by the time you reached age 65.
But if you waited 10 years until age 35 to start making contributions to your plan, you would have accumulated only $440,000 by age 65.
LESS TIME, LESS COMPOUNDING. $440,000 is waaaay less than $1,000,000
The more money your money can make, the less YOU have to save.
Note: This hypothetical example of mathematical compounding is used for illustrative purposes only and does not represent any specific investment. Taxes and investment fees are not considered. Rates of return will vary over time, especially for long-term investments. Investments offering the potential for higher rates of return also involve a higher degree of risk. Actual results will vary.
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Maximize Company Plans
If time/compounding is your best friend.
Then workplace retirement benefits could become your girlfriend/boyfriend.
What’s one financial thing you could fall in love with….?
FREE MONEY.
The earlier you start taking advantage of your employer retirement plan the more FREE MONEY you can potentially acquire. The more free money you acquire. The LESS money you have to SAVE!
Free money could come in the form of a matching contribution or profit sharing. Research your plan and find the free money.
Wrap Up
It’s easy to say retirement is far away so I don’t need to worry about it. However, your older self would kick your butt so hard for thinking that.
If you follow my three easy steps, you will ultimately reduce the money you have to save out of your own pocket and you will achieve success and financial freedom for the future. Hop to it!
As always, you can consult with me to discuss your retirement savings strategy
Look for future posts on the best ways to maximize your wealth in retirement and check out my recent post on simple debt payoff strategies.
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Thanks for stopping by and I hope you achieve financial success!
