Greetings! I trust that this will find you well and enjoying life.
I’ve spent countless hours analyzing the habits shared by successful retirees. Five stand out and I urge anyone serious about retirement to take these measures sooner rather than later.
You Are Not the Family Bank
All parents have one basic responsibility: To equip their children to survive on their own, both emotionally and financially.
Retirees are often the wealthier members of an extended family, or they are perceived as such. But if a family member needs money, let him or her borrow it elsewhere. The wealth you’ve accumulated has to last you the rest of your life. The best way to remind your family and yourself of this simple fact is to simply say “no.”
Of course, some accidents and disabilities cannot be prevented, and there are times to rally behind family members truly unable to put a roof over their heads or food in their bellies. But for every truly unavoidable catastrophe, there are dozens more instances of parents enabling a freeloader.
You’ve worked too hard to sacrifice your financial independence. Even if you have enough to support two generations indefinitely, doing so won’t help anyone in the long run.
Manage Your Own “Pension Fund”
Independence is the real goal in retirement. That means listening to experts, but also learning to make savvy financial decisions for yourself.
Today, pensions are virtually nonexistent in the private sector. Soon they won’t exist in the public sector either. So all of your retirement, including saving, investing, debt reduction, tax planning, estate planning, is up to you.
There’s a lot to learn, but the information is there for the taking. I’ve known too many people who retired with a large chunk of change only to panic because they had no clue how to manage it. These folks were afraid, rightly so, because their lack of financial know how made them vulnerable.
Give yourself a financial education while you’re accumulating wealth so you can enjoy that wealth once you retire. Otherwise, you might leave a high-stress job for a high-stress retirement. I’ve spent countless hours analyzing the habits shared by successful retirees. Five stand out, and I urge anyone serious about retirement to take these measures sooner rather than later.
Maximize Your Tax-Preferred Retirement Savings
I repeat this statistic often because it baffles me. Only 10% of those eligible for employer sponsored 401(k) programs maximize their contributions. Be part of that 10%. There are real tax benefits to contributing to your 401(k), and it’s a mistake to turn down that free money, especially if your employer will match all or part of your contributions.
In that same vein, tapping into retirement accounts to pay off bills is almost always a mistake. Unless you absolutely need the money for basic survival, you’re much better off leaving your retirement money alone. Like many things in life, once you tap those funds, it gets easier and easier to do it again.
Debt Equals Indentured Servitude
Independence is pretty hard when you don’t have any money. And don’t fool yourself: If you have a million dollars in your brokerage account and a million dollar mortgage, you’re broke. Forget all the fancy formulas. When you stop paying people to rent their money, that’s when real wealth building can start.
Get in Sync with Your Spouse Sooner Rather Than Later
During your working years, you trade time and expertise for money. For most folks, the goal is to save enough so that they don’t have to work full time to survive. Then, during retirement you trade money for time to pursue other interests. Sad to say, many people struggle to pinpoint what those interests are once they get there. One spouse might want to travel while the other is a homebody, etc.
Retirement is no fun if only one spouse is living their dream. Happier couples talk and plan how they want to spend their time long before retirement day.
I urge you to pass your own “secrets to success” on to your family’s next generation; they will thank you for it…eventually.
If you have questions about any of the above or feel that we can help in any way don’t hesitate to contact us.
Jeff Christian CFP, CRPC
Excellence is doing ordinary things extraordinarily well.
John W. Gardner