Today I’m going to talk to you about being broke. More importantly, NOT being broke.
After 27 years of working with seniors, I’ve been in homes where it’s just… it’s sad. I’m talking about mainly the Baby Boomer population. These are folks were taught to throw their money into the future and their 401Ks, or in their qualified plans, or in their IRAs. They were taught that when they got to retirement, they’d have all this money to do anything they want.
They can travel, they can pursue hobbies, they can go visit the grandkids. Well, that’s not reality. What I’ve found in my experience is that 9 out of the 10 homes that I was in, especially early in my career, many of these seniors were unable to even pay their bills. And it’s not because they plan to fail. They just failed to have a plan.
The Importance of a Plan
What is important is that you put some type of plan together so that when you get to those retirement years, you can do what you want to do and those years really can be golden.
I had a client come into the office one day and she was dressed very nice. She was getting ready to leave her job, so I sat down with their, told her I was going to ask her a few questions before I could help her. I like to find out where you’re at and what it is that you want, in order to help you find YOUR ideal retirement.
I started asking her questions and she was a little reluctant in answering the questions that I was asking her. Once I dug a little deeper, I found out the reason she was so reluctant is because she’s broke. She was over $15,000 in debt on her credit cards. She wanted to retire because the stress at work was causing health issues, but she had never put a plan together to be able to retire and live the same lifestyle at retirement that she was living during her working years.
Start Planning Early
When you get to that point in your life where you want to retire and you want to enjoy life and have some fun and not have to punch a time clock, you’d better make sure that you have created some type of a plan earlier in your life that will work for you in your later years.
The best time to start putting a plan together is when you’re young. I know that when you’re right out of college, you’ve got college debt, you’re starting a family, you want to buy a car, you want to do all this, but it’s tough to do. You’re only making maybe minimum wage or you’re not making that big money yet.
Start Saving Early
It’s important to start saving at a young age and get the power of compound interest working for you while you’re young. Even if you can only put away $20, $30, or even $50 a week. You want to be the kind of person that saves first and THEN spends money instead of the kind of person that spends money and if there’s anything left over, then you save it. Trust me when I say that normally doesn’t work very well. It hasn’t worked for the Boomers and it doesn’t work for you.
Plan Your Retirement
What you do with your money today while you’re making good money is directly proportionate to the kind of lifestyle that you’re going to have in retirement. You want to discipline yourself and sacrifice a little today to start saving some money, especially at a young age. Otherwise you’re going to regret it when you get to your golden years because you won’t have much time to make up all that compounding that you could have done during your early years when you were working, when you had a good income.
If I had to give you a generic recipe for setting up a savings plan for providing money for yourself in the future so that you can have the same lifestyle when you retire that you do now, I would advise the following: 20% of your income, your annual adjusted gross income, needs to go into some type of a compounding vehicle so that you will have money in the future. If you have no debt whatsoever other than your mortgage, that leaves 80% of your money to live out your lifestyle so that the journey along the way is a pleasant one.
Time Goes By Quickly
The amount of time people spend on their retirement is often just a small slice of the pie. Usually what happens is that people get closer to retirement age and they start thinking about what that means and wondering if they have enough money to retire comfortably. Sometimes this leads to panic and they feel compelled to do things that they wouldn’t normally do and that usually involves taking on a lot more risk.
The reason that my clients come to me is because we can fix these issues depending on where you’re at, what you have done, and what you have not done. It’s never too late to sit down and put together a plan for what it is that you really want when it comes time for retirement. It can be done.
In some cases it’s harder than others, but just remember, how you discipline yourself now is going to be directly proportional to how much money you’ll have when it comes to retirement. If you continue doing the same thing over and over, doing what you’re doing financially, you probably are in a position where that’s not going to work for you down the road. We can examine those issues and have a conversation and fix those issues so that they will work for you upon retirement.
If you want to create a strong, healthy retirement during your lifetime, then I’d love to have a conversation with you. Just give me a call or shoot me an email.