Saving for retirement can be stressful, especially if you’re feeling as if you didn’t plan the right way. According to a Schwab Retirement Plans survey,1 saving enough money for retirement was the highest inducer of stress among all ages. What does this mean, and how can you reduce the sinking feeling of stress when saving? Here are a few suggestions:
Know Your Current Situation
How can you save properly when you don’t know what you already have? Knowing where you stand in terms of saving for retirement can help develop a plan that will point you in the right direction. Lay out all your savings plans, investments, and balances and see how things look. This will help paint the picture of where you want and need to go.
Think Toward the Future
It’s easy to sit and beat yourself up about not having enough saved. Things happen, and life can often get in the way but it’s never too late to start somewhere. Now that you have a pretty fair assessment of what needs to be done, it’s time to get to it. The key is in focusing on what you can do now and to move forward. Even if your funds are tight, small contributions eventually add up.
Focus on Your Progress
Once you create a plan, channel your fears into the progress you are making. Don’t pressure yourself into thinking you have to contribute large amounts every month. Again, little steps go a very long way. Being able to say you contributed something should give you a reason to smile. You’re building discipline to contribute larger amounts in the future.
Give Yourself a Yearly Goal
One of the best ways to save like you mean it is to give yourself a yearly goal. Nothing beats being able to look back at when you started the goal, and how far you’ve come. Considering a target-date fund is also a choice that could get you closer to where you want to be when you retire.
Consider Automatic Withdrawals
You can’t spend what you don’t have. If you have direct deposit, see if you can divert those funds you want to save directly from your paycheck. Once it’s gone and in your fund, you can’t touch it. This is a good option for those who like to see their money, but know they will start touching it if they can.
Start Reducing Your Expenses
Take yourself on a trial run to see if you can start working on your retirement. By reducing your expenses now, the shock factor won’t be as prevalent as if you’re jumping in headfirst. Start paying off those debts. If you are planning to have a new car when you retire, start planning to pay for it in cash. If you have a home, add an extra payment or two if you can to pay off your home prior to retirement to put yourself in a better position. You’re working now to reduce any unnecessary retirement expenses you could have later.
Consider Taking Some Risk
If you’re in a position to take some risks with your portfolio, do it. You may find that you’ll have bigger gains than you realized, which will be beneficial in the long run. If you’re feeling that it’s risky, start with one option and see how it performs. This will help lay the foundation for future planning, and could help you get closer to your retirement savings goal.
Practicing before you retire can help alleviate the stresses that you may be feeling. Knowing that you aren’t alone, and everyone starts somewhere should help you get in the right mind frame. Use these tips and get started!
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Luis Rosa CFP® EA is the founder of Build a Better Financial Future, LLC. He has been in the financial services industry since he graduated college in 2001. Luis focuses on empowering people with planning tools and action steps to help position themselves for a better financial future.
Luis has been quoted in articles published in Yahoo! Finance, U.S. News & World Report, NBC News, Investopedia, Business Insider, The Daily News, and several other online publications. In addition to obtaining his securities registrations Series 6, 7, 63, and 66, Luis is also a CERTIFIED FINANCIAL PLANNER™ professional and is enrolled to practice before the IRS. This diverse financial knowledge allows him to best serve his clients by understanding how one financial decision affects the other, allowing him to better guide them toward achieving their goals. To meet and see how Luis may be able to help, contact Luis directly at.
Investment Advisor Representative of Retirement Wealth Advisors Inc. (RWA), 89 Ionia NW, Suite 600, Grand Rapids, MI 49503 (800) 903-2562. Investment Advisory Services are offered through RWA. Build a Better Financial Future and RWA are not affiliated.
This information is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Build a Better Financial Future, LLC and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.