There are a few rules in life that I’ll stand by, no exceptions. When it comes to money, I always pay myself first. After 56 years of living, I’ve collected enough stuff to put on my own neighborhood rummage, and stock the whole thing, so I don’t feel any driving need to go out and spend, spend, spend! Growing up the youngest of five children in a single income family, I’ve had saving instilled in me from an early age. I can’t walk by a penny on the street. I know it’s only 1¢, but I start adding up all those pennies I might walk by in my head, how I could invest that money and start watching compounding interest take effect. When you’re saving for the retirement you want, full of adventure, travelling, and extravagant birthday gifts for the grandkids, you can’t afford to pass up a penny.
That being said, I know you can’t count on loose change to build your retirement nest egg. Most of us in today’s workforce aren’t able to rely on a pension either, and find that the responsibility for a happy and enjoyable retirement has fallen squarely on our own shoulders. And some of us, I know, didn’t come to this realization until we were well into our 40s, which isn’t the optimal time to start saving towards those golden years. I had put aside a nice chunk of change into my employer 401K and some IRA accounts, but I had a shocking discovery myself right around my 40th birthday. At my financial advisor’s urging, I put all of my information together, both how much I had saved, what I planned to save, and what I planned to spend in retirement. And this calculator nonchalantly let me know that I’d enjoy a wonderful retirement, for about 5 years. But then my money would run out. And that’s when I knew I needed to change my game plan.
As someone who grew up wearing a lot of hand me downs and eating macaroni and cheese a couple of nights a week, I had developed a pretty risk averse attitude in regards to money…which worked great for budgeting, but not so much for building a reasonable retirement fund. I was focused too much on the now, and doing great at it. The problem with that was that my “now” will be completely different in retirement. My budgeting skills won’t help me nearly as much when my income drops dramatically. With a little bit of planning and gritting of teeth, I made some changes to how I handled my money.
First, I started taking full advantage of my employer match into my 401K. I was putting aside some money, but I wasn’t putting away enough to get the full match from my employer, so I upped my contribution. And for the past 16 years, I’ve started to put any raises towards retirement, instead of into my checking account. I’ve diversified my portfolio, with some savings in bonds, some IRA certificates, and some invested in stocks. I’ve developed a great relationship with my financial advisor and educated myself on some of the patterns of the market so that I don’t have a panic attack every time there’s a dip.
It wasn’t fun finding out that I wasn’t on the track to success that I thought I was, but it does feel great to know exactly where I’m heading now. I think that’s the most important part of planning for retirement: making a plan. Autopilot isn’t going to get you there. If you haven’t started planning yet, it’s not too late. I suggest visiting Afena Federal Credit Union to get started…and don’t pass up any loose change you see on the street.