If you’re like most people, you’re hoping to be able to carry out a comfortable retirement one day. You can hope all you want, but without proper financial planning, your retirement dreams may come up short. There are certain money management habits common to most people who are efficiently saving for retirement. Understanding these qualities of successful savers can help you start making strides toward the retirement you’ve always envisioned.
- They start saving early. It’s no secret that the longer you have to save for retirement, the better off you will be. Therefore, the most successful savers start early in life. When you start early, you have more time to capitalize on compounding interest. It can be the difference between having to save $300 a month in your 20s and $3,000 a month in your 50s to achieve the same goal.
- They save consistently. Successful savers also save on a regular basis. One of the most straightforward ways to do this is to automate your savings. If you have access to an employer-sponsored retirement savings plan, for example, then you can deduct contributions directly from your paycheck. Over time, you can gradually increase your savings rate via a feature called auto-escalation. Even if you do not have an employer-sponsored plan, you can set up automatic transfers from your bank accounts to your traditional or Roth IRA on a weekly or monthly basis—or whatever time period you choose. While automation is an excellent strategy, make sure you still take time to review your retirement plans periodically.
- They work with experts. No matter how confident you are that you can reach your retirement goals solo, it never hurts to check with a financial advisor that you trust to confirm that you are on the right track. The most successful retirement savers know this, and therefore they work with advisors to determine how much they need to set aside for their savings to last during the period of their lives when they are no longer working. If you are unsure of where to begin, then a financial advisor can help you outline a retirement plan that will address your individual needs and goals.
- They are accepting of change. The qualities of successful retirement savers also encompass the realization that you may have to amend your plan along the way. For example, if you are nearing retirement and you realize that you will likely not hit your savings goal, you may have to make sacrifices in your lifestyle to account for the shortfall. This could include working part-time for a while, downsizing your home or putting some of your travel plans on hold temporarily. Conversely, you could hit your savings goal early, which may lead you to have more leeway in deciding how you will spend your time in retirement.
Whether you are far into your retirement saving strategy or just beginning, having a grasp on the qualities of successful savers can help you stay on the best path toward your retirement goals.
For more retirement advice and insight, continue to follow Ty J. Young Inc.’s Retirement You Earned blog! To learn more about how we can help you establish a viable source of income in retirement, call our skilled financial advisors today at 877-912-1919.