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The Most Important Tip for Retirement Saving


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.

most important tip for retirement saving

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?

How to start contributing to a Roth IRA

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, the job became too stressful and Joe retired from his engineering career to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle.

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.

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{ 10 comments… add one }
  • Sharon September 13, 2014, 11:02 am

    I would add to start looking at where you retire. Some places in US may take twice as much money to retire that in other places. Variables to look at are price of living/housing, proximity to things you like to do/people you love, income tax and infrastructure. For instance, my husband and I sat down and listed what’s the top things we are looking for in a town (other than a specific state/town). We listed – needs to be close to higher ed for good culture/environment, close to places to visit for lakes/rivers, close to great bicycling options, close to airport, moderate weather, great downtown to live in, no income tax, etc. Once we had those down, we looked at cost of living in the places we narrowed down. This way if you live in a high cost of living area, you may be able to sell your home and add some of the extra funds to your retirement.

  • Lila September 13, 2014, 7:28 am

    I listen a lot to Dave Ramsey’s radio show and there are some amazing families out there who live on average incomes 30,000-50,000 who manage to pay off debt, and have a huge amount of savings.

    I also read this story about a family of four who lives comfortably on $14,000/year… it amazes me at what some people are a capable of.


  • Ernie Zelinski September 12, 2014, 5:09 pm

    I didn’t start saving for retirement until I was over 40 years old. Now that I am 65, I believe that I will be okay, in fact, better off than over 95 percent of retirees over 65.

    Having said that, Robert Benchley put it much more eloquently than I ever could:

    “The thing to do is to make so much money that you don’t have to work after the age of twenty-seven. In case this is impractical, stop working at the earliest moment, even if it is a quarter past eleven in the morning of the day when you find you have enough money.”

  • Special Agent Dividend September 12, 2014, 3:37 pm

    Very good post. I have to admit, I’m one of those that until recently took for granted my nice income. I really didn’t start actively looking to invest until I hit 30. I only wanted to make more money to spend more money. Luckily, it finally hit me that I needed to start thinking about the future and I started my journey.

  • Melanie @ Dear Debt September 12, 2014, 1:04 pm

    Those pictures are creepy! Haha, but you look great Joe. I am committing to $100/mo to retirement even though I’m still in so much debt. I realize I’m not getting any younger and I want to feel more financially balanced.

  • Tawcan September 12, 2014, 11:19 am

    I’m glad that I started saving early. Not necessarily for retirement but just saving in general. Kinda wish I spent more time early on to understand about the different investment methods better though.

  • Tom September 12, 2014, 9:28 am

    I thought you were an engineer. What gives with the 110% stuff?

    • retirebyforty September 12, 2014, 10:26 am

      Sure, you can give 110%. Let’s say you make $100k this year. Let’s say you work hard and hustle and next year you make $110k. Wouldn’t that be 110%? It’s all about the baseline.

  • Jon September 12, 2014, 7:22 am

    Ha! I love that we have to realize we are going to get old. It’s sad that we don’t think about it, but we will. Like you, I was lucky in that I did save for retirement right out of college and kept up the savings since. I wish there was an easier way to help people understand the importance of just putting something away for retirement when they are young. But one’s mindset is a tough thing to overcome.

    • retirebyforty September 12, 2014, 10:25 am

      That’s why we need our parents to push us in the right direction when we’re young. I’ll try my best to convince the kid to start saving early.

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