Although the basic idea of setting aside funds for retirement has remained constant over the years, the tools and overall picture are beginning to change. In the past, people were able to depend on pensions and Social Security benefits to carry them through retirement, but now it is equally vital to have a positive attitude towards budgeting and making money while saving. This means that those who are saving for retirement now are presented with issues that weren’t taken into account in the past.
A Saving Mindset is the True First Step to Retirement Planning
Recently, many companies in the United States no longer offer traditional pension plans and are instead providing 401(k)s or Roth IRAs to their employees. Unfortunately, while these investment accounts provide exposure to potentially growing assets, they are also subject to volatility, which means you could face some risk while you save. However, this doesn’t mean that the retirement of your dreams is out of reach.
It is well known that the sooner you start saving, the more likely your funds will last you. However, the truth of the matter is that a person’s income, expenditure, and capability to save can differ drastically over the course of their life. Taking into account all the different types of jobs, modifications to lifestyle, and economic upheavals that you have experienced, the standard concept of accumulating wealth and income for retirement may not be as easy as it seems. Some might find it difficult or believe it to be out of reach to save enough money to cover their costs for their whole retirement. However, by putting in time, effort, and a portion of your working income to this objective, you can actually achieve the retirement you look forward to. During this “accumulation” period, it’s important to grow your nest egg with the goal of financial independence as your north star. Having the right state of mind toward retirement could be the difference between being nervous and putting off retirement planning to a later date versus starting now and taking pleasure in all that the retirement lifestyle can offer.
Understand the Transition Period from Saving to Spending
Moving from putting away money to spending it requires a new set of priorities and strategies to adhere to. You spend a great deal of your life saving, but the transition to spending what you’ve saved is a new game to understand.
Initially, it may be difficult to start using the money you earned for your retirement. You might have built a habit of saving money, so spending it can feel frivolous. But it is important to recall that the whole point of saving is to eventually spend it wisely for retirement.
Undoubtedly, when people receive a pay raise, a promotion, or experience a major change like retirement, they are tempted to savor some of life’s luxuries. But keep in mind that constantly altering your lifestyle can ensure that your accumulated earnings will dwindle fast. So, checking in with and adjusting your retirement plan is necessary to instill a solid plan and maintain a healthy income. While your mind no longer needs to be set in saving gear, your financial well-being should remain at the top of your priority list.
Ultimately, retirement planning exists so that we can spend more of our time in retirement doing the things that are important to us. If you want to start mapping out your retirement plan, reach out to us for a complimentary review of your finances!