As we all must know by now, time flies. When did you start working at your current job? Wow! It’s already been that many years?! The more years we have to our name, the shorter one year feels. And the more years we have, the closer we come to the next chapter of our lives. For about 26% of the U.S. population, that next chapter is retirement.
Retirement. Let’s sit with that word for a minute. When you read the word “retirement,” what did you initially feel? Excitement, relief, confidence, accomplishment? I would certainly hope so! But if we’re being realistic, maybe that word makes you feel a little anxious and lowers a dark cloud of uncertainty over your head. If so, you’re not alone. Nearly 64% of today’s Americans who are quickly approaching this next step of their lives do not actually have a plan. Planning your retirement is a daunting task – there’s no doubt about that.
So let’s have an open conversation – right here, right now – to acknowledge the top 4 things that could be holding you back from entering the next step of your life on the right foot.
Cost of living and day-to-day expenses.
“How can I possibly save or invest money if every day is a different bill – mortgage, car, those student loans that never go away, tuition for my kids or grandkids, healthcare, credit cards, bla bla bla!”
We all know how this feels. It’s not a cheap time to be alive! Luckily, saving money doesn’t have to cost all that much of your monthly budget! Speaking of that budget, when was the last time you took a look at where you’re spending money and were honest with yourself about what you probably didn’t need to buy? If you put in the effort to pay close attention to where your money is going it’ll be much easier to save.
Here’s a tip: when you feel like buying something that isn’t a necessity, write it down on a list. Keep that list for 30 days and if, by the end of those 30 days you still want to buy it, go ahead! If you buy it, you’ll rest assured that it was money well spent and if you decide not to, you’ll have saved a little extra. A little extra money here and there really does add up. Imagine you’re able to save an extra $25 each month. It may not seem like enough to be worth it, but what if you add that to your employer retirement plan where your employer matches your contributions? Suddenly you have double what you had before! Saving money is a slow process that can begin to feel hopeless but it’s absolutely necessary to trust in that process and stay motivated to save. You’ll be glad you did.
You don’t know where to start.
So you’ve accepted the two facts that you need a retirement plan and that you’ve been putting it off. You know it’s important but that doesn’t mean you automatically know how to do it. Listen closely because I’m about to solve this problem so you can be on your way to planning the retirement you’ve always dreamed of. The first step in planning your retirement is figuring out how much money you need. Start with expenses – when you’re retired what expenses will you have? Consider both your fixed expenses (things like your mortgage and car payments) and your variable expenses (things like groceries, medical bills, gifts, entertainment). Once you can see right in front of you how much money you’ll need to spend, then you can determine how much money you’ll need to have. This is the easy part. And if you’re anything like me, making an organized, categorized list will be a little fun too! Now you’ve written out your expenses and feel good about what monthly income you’ve decided you’ll need. Next on the list – figuring out where that money will come from.
You think your personal savings, pension, and social security will be enough.
A whopping 62% of working households have personal savings of less than one year’s worth of income. So…which personal savings were you referring to? Social Security is still around, but it’s changing. And that 401k or 403b is a good chunk of money too but the question is, will all of this last as long as you need it to? Let’s do the math here. Say you calculate your monthly income need to be $2000 per month for you and your spouse. That’s $24,000 per year. Say you live for 20 years after you retire – that’s $480,000 not including extra expenses for potential emergencies or serious health problems! Reality check – personal savings, pensions, and social security may not be enough. Times are changing and so is retirement. Luckily for you, there are other income options out there, but capitalizing on those requires your action now.
The ambiguity of whether or not you’ll have enough money when you’re 90 years old doesn’t actually scare you.
Look, I know we’re all tough guys here and we’re not scared of anything, but if this thought doesn’t scare you maybe it’s time to do some reprioritizing! Simply put, you need a retirement income strategy to last as long as you do. Often times, this strategy comes in the form of an investment plan that may not be something you can set up on your own; you may need to seek help from a retirement planning professional. Some projects can certainly be great DIY (do-it-yourself) projects; retirement planning is not one of them. Everyone wants a comfortable and happy retirement and there are people dedicated to helping you achieve just that. Don’t be afraid to ask for help! If you’re worried now, know that you’ll be fine as long as you take it upon yourself to take action in creating the retirement you want.
So, what do you say? Will you wait until tomorrow to start thinking seriously about your future, or is today the day? (HINT: today is the day!)
Visit www.mountainpeakfinancial.com to get started.
 According to the Pew Research Center, 26% of the U.S. population is baby boomers – the generation that is currently aging towards the retirement age of 65.
 Employee Benefit Research Institute’s annual Retirement Confidence Survey reports that 64% of workers feel that they are behind on planning and saving for their retirement.
 The Continuing Retirement Savings Crisis research report published by the National Institute on Retirement Security reports that 62% of working households ages 55-65 have saved less than one times their annual income towards retirement.