There Is More to Retirement Than Saving

Couple FinanceThere Is More to Retirement Than Saving

Pop culture finance wants you to believe that all you have to do is save more and you can retire.  Most mainstream articles literally say if you save a certain percentage of your income that you will enjoy a nice retirement.  Pop culture finance is also very black and white and simply wrong.  Saving in and of itself won’t get you to retirement.

There is much more to it than that.

Successfully reaching retirement comes down to 5 different components.

(1)   You need a game plan

This is critical to your long-term success.  If I were to ask you what are you saving for, most would say retirement. Retirement is a general answer that can mean many things.  What specifically are you saving and investing for in retirement?   As an example, I want to retire at age 65 and have an income of $6,000 a month and be debt free.  Once you solidify the goal, then you are able to work backwards.  Stephen Covey had a great saying – Begin with the end in mind.  With that goal you can then determine how much you need to save and what you need to earn to reach that goal.

(2)  Commit to saving the amount necessary to reach your goals

Once you understand the amount that is needed, now you have to commit to saving that amount.

(3)  Invest

I guess that pop culture finance just assumes that you know you need to invest.  This is where you fully understand your risk level and have a solid investment game plan in place to accomplish your goals.

(4)  Manage

Now this is where Pop culture finance wants you to just forget about it.  They certainly don’t want you to manage for risk.  That might mean that you might think for yourself and make changes.  They want you to invest and forget about it.  Let the “long-term” take care of things.  That could be some of the worst advice imaginable.  It is important to have a Plan B in place because the market doesn’t always go up.  No one should take the pain of a -50% loss in a bear market.  This is where it is important to have a Plan B in place when Plan A (market goes up) is not working.

(5)  Monitor

Very few make it to this last step. Then again most people aren’t successful with their financial goals.  This might be one of the most important of the 5.  How do you know you are on track or if you need to make changes if you don’t track your progress?  This will determine if you reach your goals or not.  If you are on track, that means what you are doing is working.  If not, that is a signal to you that you need to make changes.  If you fall real far behind from where you need to be, then you might need to readjust your goals.  People stay stressed because they just assume that they are behind on their goals.  The reality is that they have no clue.  This step gives you guidance and confidence and helps assure you will reach your goals!

Now does it make sense that you just save your way to retirement?  Unfortunately, there is way more to it than that.  Fortunately, with a solid 5 step game plan, Financial Independence or retirement is just a plan away!

If you have questions or want to know more about this process of investing, email Judy Parrish at Judy@prudentmoney.com and she can get you more information.

 

  • George McCormick

    Thanks for this Bob. I have to admit I am lacking in some of these.

    • Bob Brooks

      Well George, most people are – the good news is that it is not to late to adjust!

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