The Missing Key to Retirement Security
We’ve all heard the stories about the lottery winners who win millions of dollars and are flat-broke a few years later. Or what about professional athletes or actors, who make even more during their working years, and then end up with nothing once they stop working?
As financial planners, we see the same thing with many retirees, who may have made a tidy sum in the millions over their working lifetimes, but soon run out of money in retirement.
Why does this happen?
One word: Resourcefulness (or rather, a lack thereof).
Some people are blessed through various sources, while others are truly skilled at making money. But where so many of us fall short is that we are terrible managers of the money we have.
Or as this article says, “We get distracted by the assets, and virtually ignore the financial dependency created by our habits.”
The average retiree probably makes several million dollars during his or her working lifetime. It may not be as much as Derek Jeter, but it should still be enough for a comfortable retirement.
Regardless of how much money you make, earn, or otherwise get hold of, the truth is that “resources don’t matter if you aren’t resourceful.”
Let’s face it: we can all figure out a way to spend everything that we make!
The trick is learning to properly manage what we make, so that we will have plenty to live on when we’re no longer working full-time. This means not only saving within the right vehicles, but also learning how to live resourcefully while we are still working (and thereafter).
Here are just a few tips to a financially secure retirement:
1. Eliminate debt.
The more debt you can get rid of before retirement, the less money you will need during your retirement years. Plus, just think of how much more satisfying your retirement will be without all those bills, and all that debt hanging over your head!
2. Beware of Parkinson’s Law!
This is the unfortunate human tendency to allow ourselves to push the limits. Whether it is time, money, or other resources, we inevitably have the tendency to spend everything we have right up to the maximum. In other words, the time it takes to accomplish something is usually determined by the deadline you were given! Or in financial terms, expenses rise to meet income. Parkinson’s Law can absolutely KILL your retirement plan if you’re not careful, and if you don’t have a structured plan in place to make sure you are saving regularly, consistently, and on an increasing basis with your income.
3. Become income-independent.
If you want to be independent of an income in retirement, you need to learn to become more independent of your working income. Huh? What this means is, you need to learn to save a higher and higher percentage of your income while working. By doing this, you will automatically become living on a lower and lower percentage of your income.
What does this mean in the long run? It means you will have MORE saved for retirement, and you will need LESS by the time you retire, as you will have learned to become income-independent.
If you can master these three areas, you will have trained yourself to beat Parkinson’s Law, and you will have learned the art of financial resourcefulness. Then, and only then, can you ensure that you will have the retirement you have dreamed of.
Need help putting a plan in place to do this? Want to know the best and safest places to save money for retirement? We’re here to help! Just give us a call at 614-536-0088 to schedule a FREE financial review with one of our qualified retirement planning advisors.