Secure Your Future Series: Why You Should Plan for Retirement

Retirement… something that we don’t think about when we are safely tucked away living with our parents when we are young (or even in our 20’s or 30’s when we are out enjoying life). Everyone is different but I would hazard a guess that even by mid-30’s the majority of people haven’t started to mull the idea over. 

Why save for retirement

It is always good to have a plan when it comes to your nest egg. We also know the phrase, “Don’t put all your eggs in one basket.” Speaking about our retirement, it would perhaps be unwise to rely solely on what we put in for Social Security. Generally speaking, anything can happen between now and retirement. Therefore it would be a kind of security blanket to diversify your portfolio beyond Social Security. Honestly, I can’t begin to pretend I know the intricacies of social security benefits. However, The Motley Fool gives a great breakdown and explanation of Social Security. 

The information provided on this site is based on my own personal experience and is not to be construed as professional advice. I am not a financial advisor or planner, nor am I a CPA. The contents of this site and the resources provided are for informational and entertainment purposes only and do not constitute financial, accounting, or legal advice. The author is not liable for any losses or damages related to actions or failure to act related to the content on this website.

Diversify

It is in our best interest to not rely on one source for your retirement because of the investments rarely move in a steadily upward direction. A great example of this is why mutual funds have gained popularity.

For those that don’t know much about mutual funds, it is a fund that multiple people place their money in with a manager assigned to invest in a portfolio of stocks rather than putting all your eggs in one or two stocks. Some stocks in the fund may not be doing as well or taking off as well while others in the fund may be doing really well. This generally will balance out into increased dividends into your retirement account.

Another example is having both long-term and short-term rental properties. When the economy is really good, short-term rentals do really well and while the economy is bad, long-term rentals do really well. Having multiple avenues of money flow is advised to minimize risk as well as get the best interest rate, or return on investment (ROI).

Pensions and employers’ contribution to retirement savings can be rare these days so you need to be proactive in saving for the future when you can’t rely on these forms of retirement plans. No one wants to work forever or work themselves to death. I believe we all want that freedom to wake up in the morning and decide what you want to do with your day instead of someone deciding for you.

Saving for retirement and starting now means you have the time to plan and pick investments that have medium to high ROI. Then you can sit back and let your money work for you being as hands-on or hands-off as you would like, giving you some peace of mind about the future which can be in short supply at times.

Why you should have your own personal reasons to save

Putting money aside for retirement is investing in your future and sometimes it’s hard to wait to see the fruits of your labors. There will always be plenty of reasons to use the money now and justify it by saying, “I’ve got time, I will start next month.” 

Or “I will put it aside next time.” Then before you know it a year goes by and the flow to that retirement fund has stopped.

Taking the time in the beginning and asking yourself, “why do I want to save for retirement?” “How much do I need to save to retire when I want?” “What do I want to do when I get there?”

Write down your goals as well as the answers to these questions (or even a photo of your dream/goal) and keep them in a place where you can see them regularly and refer to when you feel your resolve waver just a bit. My favorite habit is the desire to go out to eat. Really, who wants to cook when life seems to be chaos with 3 children under the age of 5? 😉

Having personal reasons to invest in your retirement instead of just the generic, “Oh, I should save just because that is what I was told I should be doing…” can solidify your efforts towards your savings goal. This can help to keep the momentum going.

Reasons for Saving

• Desire to travel 
• Visit adult children and grandchildren
• Wish to retire earlier than 65-70 years old
• Have free time to work on projects or learn new skills: flower arranging, woodworking, jewelry making, sewing, gardening, etc.

These are just a few examples, so what do YOU want to do?

When should you start?

There is a saying that says “the best time to start was yesterday, the second-best time to start is today.” Thankfully there isn’t a set of rules determining your start time. The earlier you start the better, but don’t let it be a source of anxiety. You may not be in the position to save for retirement yet and that is ok. You may have debts that need to be under control first. That’s okay too. In the next section, we will look into ways to “trick” yourself into setting more money aside for savings. And later in the series, we can discuss the importance of researching and planning even tho you may not be saving or investing yet.

Just take a deep breath, the goal of this series is to give you the tools, steps, and resources you need to make a plan and take your first steps towards saving for retirement. Don’t worry, you have the time. Saving for retirement is a long term process and you can adjust when needed as life changes.

Next post: How to Save Money

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References & Resources-

General:

Matthew Frankel, C. (2018, August 21). Here’s How Much Social Security Benefits Are by Age and Income Level. Retrieved July 14, 2020, from https://www.fool.com/retirement/2018/08/21/heres-how-much-social-security-benefits-are-by-age.aspx

U. (2014). Social Security Quick Calculator. Retrieved July 14, 2020, from https://www.ssa.gov/OACT/quickcalc/

User, C. (2019). Save for Retirement. Retrieved July 14, 2020, from https://americasaves.org/for-savers/set-a-goal-what-to-save-for/save-for-retirement

Retirement goals: Why bother saving? (n.d.). Retrieved July 14, 2020, from https://www.voya.com/articles/retirement-goals-why-bother-saving

Schnaubelt, C. (2018, November 01). 3 Reasons To Start Saving For Retirement Now. Retrieved July 14, 2020, from https://www.forbes.com/sites/catherineschnaubelt/2018/11/01/3-reasons-to-start-saving-for-retirement-now/

Appleby, D. (2020, June 01). Top 4 Reasons to Save for Retirement Now. Retrieved July 14, 2020, from https://www.investopedia.com/articles/retirement/07/noexcuses.asp

Hogan, C. (2020, January 21). How to Save for Retirement. Retrieved July 14, 2020, from https://www.daveramsey.com/blog/how-to-save-for-retirement

How much do you (really) need to save for retirement? (n.d.). Retrieved July 14, 2020, from https://www.merrilledge.com/article/how-much-do-you-really-need-to-save-for-retirement

Pinkasovitch, A. (2020, June 24). 5 Key Retirement-Planning Steps Everyone Should Take. Retrieved July 14, 2020, from https://www.investopedia.com/articles/retirement/11/5-steps-to-retirement-plan.asp

Epstein, L. (2020, June 02). Saving for Retirement When You’re Self-Employed. Retrieved July 14, 2020, from https://www.investopedia.com/articles/personal-finance/091114/build-your-own-retirement-plan.asp

Anania, K. (2020, February 27). Tax-Free Savings Accounts and Other Places to Save Tax-Free. Retrieved July 14, 2020, from https://www.investopedia.com/articles/personal-finance/090814/taxfree-savings-accounts-and-instruments.asp