We’re not going to tell you.
You already know.
You know you should have insurance. You know you should save for retirement. You know you should limit credit cards. Here at Your Managers, we believe that customers don’t need to know their problems but instead need real workable solutions.
Saving for retirement is one these areas, and one many have heard about since they were fresh out of high school. “If only you started saving $xxxx then, what would life look like today?!”
Don’t feel bad, life does not work like this. While some are perfect savers, the vast majority of people face different life situations that force them to budget differently. So with a few years of work left, it’s perfectly normal to feel like you need to kick it up a notch and get a better understanding of your personal finances.
To help, we have put together a list of four things you can do to boost your retirement savings in your final working years.
1. Stop Being an Ostrich with Your Head in the Sand
It can feel a little ugly the first time you go through all your expenses: “Maybe we didn’t need to eat out three times a week”. But that’s ok! Just like ripping off a band-aid, doing a full audit of your finances is critical in getting to grips with them. You’re going to see some things you don’t like, but through that you will finally have an understanding of ways you can actually generate more income without giving up all the things you love!
Without an audit, we can be guilty of making assumptions. “If I stop buying coffee every day, I’ll have $xxxx more a month!
That may be true, but is it really realistic to give up 100% of your coffees? By doing an audit, you’ll find realistic expenses that you can reduce, and set realistic budgets. Instead of focusing on not drinking your coffees, you instead can set a $10.00/week budget for them.
2. Road Map Your Future
Things will change when you retire. Time goes up, income goes down, and CPP/EI contributions end.
What are you going to do?
This is a loaded question, but knowing the answer can help you plan ahead, and in turn know how much you need for retirement. Are you golfing every day, or planning to spend your time in the garden? Big worldwide trips, or small ones to visit grandchildren?
It’s important to note that your first few years of retirement will probably be your most active but that doesn’t mean that expenses will go down as you age. There is always the possibility of needing a little help here and there, and those expenses are just as important to plan. Understanding what you’ll need then will help you understand what you need to save now.
3. Automate Savings
What does pay yourself first mean?
No matter how painful, you gotta pay your bills right? Well, apply those same principles to your savings. Take a fixed percentage and bill yourself that amount each month. As long as you do it first, that money will gone and you’ll be forced to make adjustments to your current expenses.
This method can be used at any age, but nearing retirement you should think of increasing the amount you put away. Just remember that in a few years you will have the ultimate freedom and time to take on anything, so it’s ok to take it a little slow right now.
4. The Fire Drill
How often do those two words sneak into your brain? What ifs are strongly tied to memories and thoughts of younger years. What if I saved more? What if I took that job? What if I married that girl? What if we had moved sooner?
In retirement, the what-ifs associated with your finances tend to pack a stronger punch as they are not as easy to fix as they once were. Without a full-time job, you may feel at a loss for ways to pick up the slack, so proper planning is important.
An easy way to tackle this is to sit down and write out what your life would look like if you retired today. How long would the money last? What kind of things could you afford to do? What if you or your spouse was to get sick? Could you afford to support your adult children?
This exercise will not only help find things you’re missing but will also identify the things that matter most to you! Both will give you the motivation to put more money away for when the day finally comes.
Make It Happen.
Small tweaks over the course of 30 years can make an enormous impact on your retirement, but you have to make them happen! Hope is not a strategy, and the help of a Net Worth Manager to coach you can be invaluable. If you have any questions, or want to discuss how to start building your own plan, send us an email today.