So I’m standing at the bus stop the other day (I use the bus to commute to work downtown) and I start talking to a gentleman who I only know through waiting on the bus each day. We make small talk about the nice weather. And that discussion rolls into a mention of having a little bit of spring fever for both of us.
For him, retirement, in addition to the desire to be outside instead of behind a desk, was on his mind. “Just two more years”, he says. “I have just two more years until retirement!” “Really”, I say; “that’s great.” “So, what are your plans for when you retire?” “I don’t really have any.” “I guess maybe I’ll be a Wal-Mart greeter”, he chuckled.
He said, “You know, I wish I would have saved more for retirement, but when you’re a man trying to provide for a family, you just can’t save.” “Yeah, I have two little ones at home and I know how you feel.” “It sure is tough to save sometimes with new expenses popping up around every corner.”
Finally, I say, “I suppose it’s all in how you desire to live in retirement, right? It’s really about the standard of living or lifestyle we choose.” “I would imagine that’s different for everyone.” About that time, our bus arrived and off we went in our separate ways.
Some questions began to run through my mind after our conversation:
- How many people struggle to pay bills and provide and are far from saving anything each month?
- Is it really impossible to save when you’re trying to raise a family? I’m a fairly new father with an oldest child of 5. I can certainly attest to the fact it’s gotten a little more expensive each year to raise our child.
- How many people are moving into retirement without a plan and purpose?
In asking these questions, there are definitely some themes here to consider and all are choices I think are up to each person to make.
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Perhaps, it’s your choice to struggle
I can fully understand and relate to struggling to meet expenses. However, most of the time when I’ve struggled in the past, it’s been because there was a particular area of spending crowding out other budget categories. Of course, sometimes it’s not spending but a lack of income or an emergency which results in struggle. But for this article, let’s focus on monthly expenses.
Making those assumptions, not struggling, in my opinion, is a choice everyone can make. You can choose your expenses and aren’t those expenses all relative to the lifestyle you choose to live? Certainly, many expenses are economically driven. But choosing a balanced life style (not stretching too far) will allow enough room for economic impacts.
Let me explain further. Probably the three biggest expenses of a family budget are house, car and other debt. These are mostly choices with the exception of some form of debt such as medical. So, I ask, why struggle? If these expenses are weighing you down, can you not evaluate and potentially downsize them? The smaller the expenses, the more freedom there is in using the income towards your other financial objectives. It’s a matter of choice.
Perhaps, it’s your choice not to save
Throw out absolutely everything you’ve learned about budgeting and learn to pay yourself after giving. Then, build your lifestyle around what is left. This is a timeless principle that if followed will insure success with saving. But, unfortunately, the savings is built around the lifestyle.
The 401k is a great example of this principle. Most people sign up for this retirement plan which takes the money before they see it and it is invested. Personal savings should work the same way.
Practically thinking, why not have your employer automatically deposit your savings into a checking account and forget about it. If your savings is left up to you to think about each month, you will most likely find an excuse not to save.
Those investing in a 401k have lived without this additional income each month. It’s inaccessible to them. Again, it’s your choice to save. Make the choice one time to set up an automatic deposit.
Perhaps, it’s your choice to live without a plan or purpose
It’s a bit frightening for me to think of retirement years without plan or purpose. Now, the gentleman I spoke with might certainly have more than a plan that he just didn’t share. And it’s certainly okay to volunteer and help people at Wal-Mart.
But, don’t give their life long purpose enough thought. I think the retirement years are great years to carry forth your purpose further.
Without any statistics, I would imagine many who venture into this stage of life without a plan find themselves back to full-time work shortly after. Perhaps a year or so of doing nothing and emptying their checking account leaves them no choice but to earn more and find something to do with their time.
But how do you avoid this? In a recent post here at BBM, How Much to Save for Retirement, I discuss a sound approach that first starts with lifestyle, which is in-line with what I mentioned to my friend at the bus stop.
- Consider what you’ll be doing and the associated lifestyle.
- Adjust your lifestyle as much as possible today to align or to eventually transition into your lifestyle at retirement
- Build your savings goals, investment strategy based on that chosen lifestyle.
Lifestyle is all based on how you plan to live. If I were to insert a step 0, identifying your purpose, or what you’ll be doing to fulfill that purpose will depend on the lifestyle you can afford to have.
Personally, I like choices I can own, not excuses. I’m not looking to make excuses tomorrow or someday in the future. How about you? It’s called ownership. More than that, it’s called financial stewardship.
It’s your choice to manage your finances, minimize expenses, save for tomorrow and chart a course for a purpose filled future.
What do you think about taking financial ownership in these areas?