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Creating Space Series: Retirement

Retire, or Work Until the End of Time

Everyone’s goal, should be, and generally is to eventually retire.  We’ve never met anyone who enthusiastically stated “I want to work until the day I die!”  We’ve met some people who have accepted that as their only option, but even they want to retire.  The problem, when it comes to retirement, is that many people don’t have a plan.  Everyone’s plan will be different, and the only way to get on the proper path is to speak with someone qualified, or to come up with the plan yourself.

Planning Retirement

There are a lot of great resources out there, such as estimators that can ball park the cost of the retirement you want to enjoy.  Take these FREE tools and use them!  A recurring theme that you may have noticed throughout this Creating Space series is that planning is key.  Without planning, you’re living life by the seat of your pants, and that is how most of the United States is flying!  No one seems to have plans!

Walk through the mall, and you’ll see a bunch of people who just can’t wait to spend what is left of their paycheck.  The current savings rate in the United States is 4%!  4%! That means 4 pennies, 4 measly pennies, an amount that few people would even bother to pick up off the ground, is what we save from each dollar!

Can You Live On 4% of Your Income

And that is including the people who are doing better.  What this means is if you are contributing 6% to your 401K right now, then there is someone out there contributing 2%.  How could anyone retire on 2% of their income?  The only way is if you made a drastic life change, and we mean eating cans of tuna drastic.

A millionaire couldn’t live on 2% of their income because they probably couldn’t change their lifestyle enough to do it.  If they can only save 2% then that, presumably, means that they are consuming the other 98%.  To put this in perspective, this is exactly like eating $20.00 meals during your entire working life, then being forced to eat a 40 cent meal for the rest of your retirement.  Could you eat lobster and steak your whole life, then switch to peanut butter and jelly?

Live Like No One Else

In reality, you should be eating the peanut butter and jelly now, let the money you would have been spending on lobster sit in your dividend paying stocks then during retirement not only would you be eating lobster and steak for dinner, but you’d be doing it at the finest restaurants with the best bottles of wine!

But of course, people don’t do that.  People must have their iPhones, and Flat Panel TVs today!  Have the luxury today, and lose all of that potential interest you would have earned!  That’s a plan for disaster!  Make the sacrifices now, so you won’t have to make the sacrifices later!  You must plan for retirement now, so you won’t have to work later.  Anything that you do now will either be to the favor of, or detriment to, your future self.  On Friday we will continue our discussion of Creating Space by discussing financial stress in relationships.

Self-Reflection Questions:

  1. Do you have an idea of how much your retirement will cost each year?
  2. Have you accounted for future price increases?
  3. Do you have any other plans beyond a 401(k)?
  4. Are you depending on social security in any way?
  5. Do you believe social security will actually be there?
  6. Have you forecasted what your monthly income will most likely be with your current retirement investments?
  7. Have you spoken with, or will you speak with a financial advisor to help you plan?
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