Welcome to today's episode, how to prepare for retirement through savings. even if you feel you're behind or struggling to save. So if you're somebody that is fretful, wondering if you're going to make it, this episode is for you. If you are somebody who is struggling to create a savings habit or build that savings muscle, I hope you'll join my 90 day summer savings challenge.
We begin June 3rd where we are going to dive into saving strategies, not just cost cutting, but we're going to focus on creating a habit that is sustainable and you can find momentum with. The link is down in the show notes, more details, more information, so I hope you will join me. Back to the topic of saving for retirement and having enough.
68 percent of Americans worry they may not have enough money for retirement. If this is you, you're not alone. I was, had a conversation on a free call with, we're going to call her Susan. That was her whole reason for making the call. She was frantic. She was telling me all of the things she was doing and just felt like it was not going to be enough.
After listening to her and really exploring what she was doing and, exploring the numbers that she had, I said, okay, let me just share with you a little piece of advice. And this is what I'm sharing with listeners today. Money on average doubles in seven years. Now that can fluctuate a little bit, but this is average.
So the money that you have, this is the direction I gave her. The money you have, she had two sets of seven years, will double once and then that total will double again. And she says, okay. And then I said, and that is if you quit contributing to it today, she was so relieved, such so much was lifted off of her.
The frantic was gone. She became more, calm with all of the decisions and all of the things she wanted to do. So I want you to take that exercise. I want you to think about how many, you know, seven years do you have? If you only have like four, think about, you know, 0. 5. What does that look like? You know, it's not going to double.
It's going to half double if that's a thing, but really start exploring that. But we're going to talk about more and how to create that level of enough. Working with financial advisors and chatting with them. The advice they give is, well, you need 70 to 80 percent of your gross income to be, to retire.
That's great. That's really good. If you're in your 20s and 30s, I think that's great guidelines for them. But for those of us who are closer to retirement, I want to share a few more ideas and talk through them with you as we discuss that 70 to 80 percent just a little bit more. So I have five areas we're going to discuss.
Five essential, areas of focus. Some are bigger than others. So to start. Think about planning within your means. You've heard live within your means, budget within your means, spend within your means, but I want you to think about planning within your means. But before we dive down that, I really want you to think about retirement.
I want you to plan for a dream lifestyle. This is the opposite of planning within your means. However, I think it is crucial to create a desire for something that you really want to happen. A lot of people just think, I have to retire by the time I'm 65, or I'm done working so I want to retire now. And they give no thought to what they are going to do.
What is life going to look like in this new phase? What are you going to be doing? Who's going to be there with you? Are you traveling? Are you not traveling? Are you golfing? Are you not golfing? Two of those things I said are definitely a box that people will put you in, but I want you to explore what you want.
Have a conversation with your spouse or partner if you have one. If not, just, you know, really create this vision of what it is you want. With that comes desire and motivation naturally. It just naturally happens. If you're like, I want to retire at 65, there is no desire or motivation in that. None. Because what does that mean to you?
So explore that. Think about that. And then if you're like me, as soon as I like, okay, this is what I'm going to do. And this is what I want it to look like. And then there's the inner voice that says, there's no way that's going to work. And then me, I'm like, just watch me. Right, right, that right there is motivation.
That is what I want you to find. That is what I want you to create. So before you plan within your means, I want you to go explore what the dream lifestyle of retirement looks like and feels like for you. Because if you don't, there is no motivation. Once you've done that, then I want you to come back to planning within your means, coming into reality.
So I made the mention of, you know, 70 to 80 percent to live on. That is great for those in their 20s and 30s because they are not even close to retirement. Their gap is huge. Now your gap is smaller just because you already know what's going to be there when you get there. You know what your health is presenting.
You might know family has moved on. You know, there's all sorts of things that kind of feed into that. So. Getting back to reality, I want you to look at how much you have saved to date, assuming as save three to 4% withdrawal rate. So if you have saved a million dollars, this would be 30,000 to $40,000 a year.
Now you're thinking, well, that's not enough. I can't do it. The second step to this I want you to know how much you're living on. What does it take to fuel what you are actually already doing? What is that amount? What does that look like? Because honestly, that is your number that you need right now.
Any extras would be beyond that, which heads you to your dream lifestyle. But really, get clear, so if you are not budgeting, then this is where you need to start. Budgeting is such a power tool in creating opportunities, different avenues, helping you see what reality is, and being able to get to that dream lifestyle that you've created.
So, plan within your means, look at what somebody is telling you as is a true withdrawal amount. Go to social security, see what that potentially would look like in x number of years of you retiring. You don't have to wait. You don't have to do that the day you retire. You don't have to wait for that to happen.
You can prolong that to get more, but definitely going there will educate you some more and give you direction there as well. So again, we just talked about plan within your means, but I really want you to dream. And then hopefully that gap will present itself at that point. And you know what you're working towards.
So these next areas will help you fill that gap. The first thing if you are working for an employer And do they have an employer match? That is your first step is to make sure you're meeting that. If they will match you up to 6%, 6 percent of your income needs to be going into your retirement. That right there will set the stage of being able to close that gap very, very quickly.
It's, it's heavenly to have somebody, you know, helping you build up your 401. I didn't have it for 17 years and then I had it my last 15 years. And granted, you know, the longer it's been in there, the more it compounds, but I tell you what, the contribution amount I was able to put in with their match was huge.
So be, be, be sure that you are doing that. If you are not working for an employer, don't worry, we have some more information for you. All right, this next area, it's kind of vague initially. Save, save, save. So find as many areas as possible to save. Now you're thinking, okay, what does this really mean? And instantly you're probably thinking, okay, I have to cut that some things out.
I want to jump into that thought and I want you to stop thinking of it as all or nothing. This is something I'm covering in the challenge. But really think about pausing, reducing and replacing. We'll explore this more heavily in the challenge, how that works, what that looks like, but instead of thinking about cutting expenses or cutting things out to have the savings, I want you to think about pausing, reducing, and replacing.
Sometimes there's some swaps that we can make and still get the same thing. Just exploring those, being able to save, and as I cover the rest of them, these add up all together. Right? It's not about one effort. It's about several efforts going together. Some other areas to look for are savings with your auto and home insurance.
Are you getting the best deal out there? Have you checked around with different insurance companies? Have you thought about increasing your deductible as long as you have that in savings? That will save you on your premium. Really exploring with your agent, see if they can help you you know, find some savings within that.
Paying medical bills. That is another huge one. Hospitals, at least around where I am, are very, very good at double billing. So don't just pay medical bills. Make sure they've gone through your insurance. Make sure they reflect accurately what you received in care. And make sure when you pay it, you keep it.
And then if another one comes through, that you make sure you're not double paying. Already an expense that right there saves you instead of just paying out being prudent on what you're paying and then the little bit that you are able to save. I know we're talking about retirement, but keeping a certain amount of liquid, liquid savings, and we discussed this a few episodes back, keep that in a high yield savings, which is going to produce some extra income, which again allows you to free up some funds to throw into retirement.
That's how that works. If you are somebody who is got some health challenges. You're paying for medical bills often. Make sure you're taking advantage of tax deferred accounts. That right there is going to save you some money. We talked about this last episode with Rizk Hasari on a health savings account.
Go listen to that if you need more help on how to create one if you don't already have one with your employer. All right, moving on to the next area. Use some planning tools. Get some support within this area of trying to create a plan, right? And some of us are numbers people and some of us are not. So tools here are going to be You know, be a variety.
Some may work for you, some may not. But I highly suggest, number one, to have a budget. Your budget is one of your planning tools. How you do it, there's many different ways. If you have struggled with budgeting before with the traditional creating it every single month, I would love for you to jump on a free call with me.
Because yes, that is flawed. That is why you're frustrated. And I want to open it up to an easier way, more manageable way to budget and start being able to use it as a tool. If you are into calculators and spreadsheets, maybe you can work around with those. Vertex. com is a great place to go and view and see what's going on.
If you type in retirement planning tools into Google, there's a whole list you can go through and see, you know, what they're suggesting, what's available, what makes sense to you. Because it's all about if you can make sense of it, not if somebody else says it will work for you. I know on my journey I used Personal Capital, and it was earlier on in my journey, but they have a, an option in there to look at what your retirement funds are costing you as far as commissions with your company.
And so that was a great tool for me to make adjustment and save on the fees actually coming out of my retirement. So go play around, go explore, go see what you can find. You don't have to do them all today, all at the same time. Just pick one and start going. So that kind of leads into the next one.
Educate yourself for your situation. Now, I've already kind of alluded to this earlier on in the episode. Don't let anyone place you in a box. Just because you're retiring, it does not have to look like somebody else's. Does not mean you have to go to the golf course every day. It does not mean that you have to travel every year or every month or, you know, at all.
You get to put yourself in your own box. Again, that dreaming, that will help, that will support you. But if you allow somebody or yourself even to place you in a box, this limits your creativity and your curiosity. Being curious helps you explore, helps you get educated, for your situation. I had an individual ask me the other day how they can move their retirement from 62 to 60.
What was the advice I gave? Get into your numbers, know what it is costing you, and then see if you have enough saved. Remember again, that rule, 70 to 80 percent of your gross income to live off is great for those who are so far away. But once you're to this point, you're, you know, five years away, you can view what your gap is.
You can get clear on what that is. Just really hone in on the basics. And as you retire, expenses do change. They fluctuate down. They fluctuate up. But But really, I've seen less going out of my household money than when I was working. But, I also want to add to the rule that you need 70 or 80 percent of your gross income.
I was living on 57 percent before I retired. Now coming into it, I'm at 60%. So I'm just saying that it is doable. Don't let some of these boxes, these standards, you know, like I said, they're great advice if you're so far away, but as you're getting there, you know what your health looks like, you know, if you still have parents or kids to care for, you know what your debt is left remaining.
So once you figure out your gap, start taking the actions to close that. It's so much easier to have a target than to just be striving for a number because somebody said so.
So I wanted to share this from a West Moss. I don't know where he is, but he was a certified financial planner. His strategy is to plan to have 240, 000 saved for every 1000 of disposable income in retirement. So calculating that. How much would you need to have saved? Again, it's only a guideline.
Again, it's only direction. It's giving you some thoughts. It's giving you some ideas. It's helping you get closer to what your real number is. And I know as you get here, you're like, okay, but I just don't know what is, you know, inflation going to do to me? What is, you know, the market going to do? How does all of this pan out for me to be retired?
So. Having fears fear of the unknown is very common. So I want to cover three common fears to kind of help you think through it, start preparing your mind to be in a better position. So yes, inflation is a thing. Yes, inflation is something we need to remember as we're heading into retirement, but it should not be a fear.
Inflation is best offset, and this goes for anybody, with liquid savings. With your emergency funds that you are continually adding to and growing, it is with that that you can make a shift to when bills go up. Because utilities can go up, you know, during very high inflation. We've just experienced that.
And myself, I was able to offset with savings. So if you are not saving, not creating that buffer within what you're living on, then you have no way to take a right or a left or plan differently. So be sure that But as you're thinking about inflation, and it will go up and it will continue to go up, that creating that, that liquid savings, that buffer that you can access right now is very important to help offset that.
All right the volatile market. Yeah, the market is every day it's up or it's down. We hear it constantly. That is the way the market is. But in the long term, it is a more even. You know, on a graph, it's more even if you look at it a year by year or five years or 10 years, it's a much more leveled out line on a graph.
So just remember that looking at it day to day, yes, it does have an impact, but you are not using all of that money today. You have a long term still, even, you know, retiring at 65. Hopefully you're going to live till 80 or 85. Right. Maybe you're somebody that doesn't want to live that long. That's fine.
But just thinking about that, you still have 10, 15, 20 years. So that's long term. Let the market take care of you. If you look at history, there's still an average rate of return and you have to stay for the long term. Alright, so the final fear I want to talk about is unrealistic expectations.
So this is where our mind gets the back, the best of us, right? We're like, I can't retire because I spend too much or I can't retire because, you know, I don't have enough money. Honestly, it comes back to clarity. What is very clear to you in your money situation? Do you know how much it takes for you to live basic living expenses?
That right there is step one. Again, this is a budget, right? Knowing how much is going to bills, how much is going to your regular, spending that supports you with groceries, fuel, all of those things. And then you have the leftover, which is your savings. And that you'll continue that as you go into retirement with living on that month to month.
Make sure that you get clear and make sure you can tie that up. I've had individuals come and work with me, they're like, I don't make enough money, I think I'm going to have to go get another job, I don't know what I'm going to do. And once we put the numbers on a sheet, and getting away from that idea that it's not enough, they look and it's completely different.
So if you remember Susan, in the very beginning of this episode, and how frantic she was, But once I provided clarity to her, she then had that calm, she could continue moving forward, still doing all of the things that she was doing. Alright, so I know we've covered a lot. And if you're still thinking, I just don't know if I can do it. I invite you to join me on a free call. Just like Susan. And let's figure it out. Let's find some clarity within some of those beliefs and determine the next steps you need to do to begin closing your retirement gap.
That's all I have for today, but before I close, please hit subscribe and leave a review so that others can join us on this retirement journey together. Let's find success and be able to enjoy the next phase of life.
