How to save for retirement... and still have money
to enjoy life
Planning for retirement is easy. Saving for retirement… well, that's
another story. There are, after all, 101 reasons not to save for
retirement.
I'm too young… I don't earn enough… we need a new car… we need to pay off the
credit cards… we're saving for a down payment… we have mortgage payments… we
have to save for our kids' education.
The list goes on and on – if we let it. The fact of the matter is, if we are
going to enjoy a financially secure retirement, we need to save… and the sooner
we start, the better.
The following five-step savings programme is designed to help you save for retirement.
But equally important, it's designed to help you save with minimal financial “pain.” After
all, you still have to enjoy life.
Step 1: Budget, if you can How do you “find” money to save? One of
the best ways is to analyze where you spend and then figure out where you can
spend less. At that point, you can set up a simple budget to help you live within
your means and put money aside for retirement.
It
sounds good, in theory. But the truth is, most of us don't
have the discipline to stick to a budget. That's where steps
two through five come in.
Step 2: Pay yourself first It's human nature:
Once we get hold of money, it's pretty hard to let go of it… except,
of course, to spend it. One way to save money is to pay yourself
first. In other words, divert the money to your savings before
y ou have a chance to spend it.
Silver Thatch makes it easy. You can arrange to divert a portion of your pay
directly to Silver Thatch – in the form of
additional voluntary contributions (AVCs).You decide how much or how little to contribute. The money is deducted
from your pay before you receive it and is invested before you can spend it.
Step 3: Save regularly
Chances are you'll find it easier
to save a bit each month rather than try to scrape together a lump sum. Simply
put, you're less likely to miss $50 a month than a one-time, annual hit of $600.
Besides being less painful, there are other reasons to save regularly.
It's a good habit to get into. You'll establish a “savings pattern” that will
dramatically increase your odds for achieving your retirement goals.
It can be automatic. You can arrange for automatic deductions from your pay.
You don't have to worry about it – it just happens.
It can help you save faster. If you save $100 a month instead of $1,200 once
a year for 30 years, you'll end up with $13,000 more (assuming an average annual
return of 8%).
This is simply because your money is invested earlier and earning returns sooner.
Step 4: Don't spend your
raises
We tend not
to miss what we've never had. So, if you've got a raise coming,
divert some or all of it to savings. Once again, a good way to
do that is by having AVCs deducted directly from your pay...
before you receive it.
Step 5: Don't waste a windfall
If you get
a big bonus, receive an inheritance, or are lucky enough to win
the lottery, don't let it slip between your fingers. Think about
saving at least some of it for the future.
By following these simple steps, or at least some of them, you'll start to see
your retirement savings grow. And chances are, you won't miss the money… too
much.
One last thing. Don't forget to reward yourself for saving (a night out, a mini-vacation,
a new book...whatever it takes). A little positive reinforcement will help you
achieve your savings goal!
