Why should you save for retirement while you’re still young? Retirement is far away. A short answer: Save for retirement, so you’re not working at age 81 and eating cat food. That’s not politically correct, but it’s a stark reality.
Save for Retirement to Continue Living Comfortably
To continue living comfortably after you stop working, you typically need cash in the bank, a spouse supporting you, or your children taking care of you. (Do you really want your kids paying your bills?)
Don’t expect Social Security to take care of you. My projected annual social security income is $22,000! Read that again. $22,000 per year. I’m going to live fabulously until the day I die. $22,000 ain’t gonna cut it!
I plan to have a mix of cash and investments so I can travel the world, buy the grandkids presents, and enjoy wine! I don’t want to live great in my youth then suffer when I’m old. I’d rather balance it (called lifestyle balancing) so I’m comfortable all of my life.
Picture Your Lifestyle in Retirement
Developing a picture of the lifestyle you want in retirement makes it real and gives you a more concrete goal. You don’t need to know all the details . . . just, step back and think big picture . . . . How do you want to spend your time? Volunteering? Traveling? Hanging with family? Now, stop reading, and picture your fabulous lifestyle in retirement.
Save Enough to Achieve that Lifestyle
Once you have a vision of your fabulous self in retirement, you start saving! If retirement calculators don’t make your eyes glaze over, use one—either online or through your 401K or IRA provider—to see how much you’ll have annually at retirement with your current savings percentage and investment strategy.
Use the KISS Principle for Retirement Savings
If a retirement calculator seems overwhelming, which is true for most people, then use the KISS principle (Keep it Simple, Stupid). Experts recommend you save 10 – 15% of your gross income for retirement each year. (When someone asks you how much you make, the number most people give is their gross salary.)
Next time you hear people fretting about how much to save for retirement, feel confident that you’re on the right track by saving 10 – 15% of your gross income. Your stocking away enough money to stay fly even when you’re old.
What percent of your income do you save for retirement? What other retirement questions do you have? You’re thoughts and questions—not mine—are the most important. What else do you want to know?