Last time, we had fun being indignant about people who make six-figure income and are going broke. I’m pretty sure the majority of people making that level of income are smart enough to live within their means. There are just a few rare cases that are spending way too much and can’t save for the rainy days. I’m not sympathetic at all because middle class households with more limited resources have a much more difficult challenge with their retirement saving. So I thought it’d be good to share the most important tip for retirement saving with you today.
Commit to Saving
There are many ways help you save, but the most important thing is to commit to retirement saving. When we’re young, we don’t ever think about getting old and that’s a huge hurdle. When I was in my 20s, I never gave retirement a thought. Life is too busy and it’s hard to think about the far off future. Luckily, my dad convinced me to contribute to my 401(k) and saving became automatic after a few years.
I began to think more seriously about retirement in my 30s because I started to dislike my engineering career. Once I committed to getting out of that career, we really ramped up our saving and side hustles. Proper motivation is the key to everything and you need to find your motivation for retirement saving. Once you have that, then you’ll be able to give 110%.
So how do you find the proper motivation? First, you need to realize that you’ll be old someday. You need to accept that jobs and careers are impermanent. You can’t work forever and you’ll have to live off your savings eventually. Well, I guess you could live on social security benefit, but it won’t be pleasant. The average monthly social security benefit is only about $1,300. That’s below the federal poverty line.
Here is a tool from Merril Edge to help you visualize getting old – Face Retirement.
Yes, it’s not pretty even at 40. It’s midnight and I’m all worn out from trying to keep up with a rambunctious 3 year old boy. Actually, the 67 year old doesn’t look too bad. They must have modified the algorithm. The last time I looked at this, there were many more wrinkles. (See the old pictures in Face Retirement Head On.) Anyway, once the concept of old age becomes a reality, then it will be much easier to save for retirement.
I’m going to wrap this up early today. The new preschool schedule threw me off and I’ll have to figure out a new writing schedule.
Here are some additional tips to help you save for retirement. Have a great weekend!
8 Tips to Help You Live Within Your Means – The first step to financial independence is living within your means.
How to Start Making Passive Income – Passive income is the key to early retirement. See how you can start making passive income.
8 Essential Things To Do To Retire Early – Early retirement isn’t just a dream.
3 Easy Steps to Retire By 40 – Easy steps?
Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.
Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.