Everyone has a different lifestyle and different needs, so it’s obvious that no one method will work for everyone when it comes to planning for retirement. Today, we’re going to discuss why it’s important. This is pretty simple for me: I want to tuck money aside for the long term so that eventually I will […]
Everyone has a different lifestyle and different needs, so it’s obvious that no one method will work for everyone when it comes to planning for retirement.
This is pretty simple for me: I want to tuck money aside for the long term so that eventually I will not have to work. I will have the financial security of knowing I don’t have to work, but I could if I wanted to. The freedom to travel, see family and friends, and see the world is my goal and this money helps me to achieve that.
If you currently maybe don’t have an income since you’re stepping away to focus on something more important, make sure that not contributing to your retirement is a short-term thing. When you reach that moment later down the line, you’ll want to have that money saved up to keep life simple and enjoyable.
When it comes to what you want, ask yourself: how do I picture retirement? What do I want to be doing and how much is that going to cost?
Every time you contribute money to your retirement, think back to this and remind yourself how amazing it will feel to have this money available to you later for those goals and the lifestyle that’s important to you.
When I polled my audience, most people said they weren’t contributing to their retirement because their bills were too high. Most likely, this isn’t going to change unless you get extremely proactive about reducing your expenses and making it a priority to save.
Another common question is in what order of priority is saving? If you currently struggle to meet your needs, setting aside 10% in your savings may not be plausible because you need that money to pay your bills.
When we review the statistics of retirement savings, we can see that the average person ages 56-61 has $163,000 saved up for retirement. The median number is about $17,000, meaning that 50% of people have more than that and 50% of people have less. This is the age where most people are ready to retire!
Looking at these numbers, we can see that if we don’t take action on this it will not naturally happen. But don’t worry, I’m here to give you a basic plan of action to follow.
Make sure you have a small emergency fund saved. This can be anywhere from $500-$1k, depending on you and/or your family’s needs. Not sure what to include?
Think: you need a new tire or a plane ticket for a family emergency out of state.
Tackle any high-interest loans or credit cards. When you get these debts paid off, you get to keep that money each month! If you have to cut expenses elsewhere for a while to get these knocked out, that’s totally fine! After you pay it off, you can save what you would normally be paying!
Find out if your employer offers a match in your 401k contributions. Most will offer to match your contribution up to a certain percentage, so you could be leaving money on the table! Make sure to take advantage of any match they offer and contribute at least some into your 401k.
No credit card debt? Are you in a position where bills are too high to be able to save? Focus on decreasing your expenses. Refocus on your why and get motivated to reduce those bills and find money to set aside for retirement. This could mean cutting down on eating out or maybe ditching a streaming service for a while. DOn’t be afraid to go bare minimum when finding ways to save.
One important thing to remember when starting your journey to financial freedom is that no one path will work for everyone! Readjust and find what fits your journey.