Be an Overachiever: Three Steps To Start Saving For Retirement

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Be an Overachiever: Three Steps To Start Saving For Retirement

Guest Post

By Nialyn Pagliari, Esq.

Let’s think of people who save for retirement plans like high schoolers – you have the underachievers, the achievers, and the overachievers. First, the underachievers. These are the people who tried to steal your answers to the pre-calculus quiz and skipped third period English. Underachievers only consider their retirement when they hit retirement age. Even then, they don’t have any sort of plan or money saved. And… let’s face it. Living off of social security can’t be glamorous.

Next, the achievers. These are the people who paid attention in class, but may or may not have studied for the test on Monday. Achievers are likely to have created a retirement plan, and have considered, at least to some extent, how much they need to save in order to have a peaceful retirement. In fact, according to a worldwide study of retirement saving habits conducted by HSBC, achievers have approximately three times more in their retirement savings than their underachieving counterparts.

Last, we have the overachievers. These are the people who had perfect attendance and sat front and center in science class. The overachievers have not only considered their retirement, but have also sought the assistance of an investment advisor. Overachievers are the crème-de-la-crème of the retirement saving world and their savings accounts show it. Their retirement plans are a whopping 445% bigger than the underachievers. 445%, y’all. Hot doggy. That’s a lot.

But, listen up. Underachievers, achievers, and overachievers alike, it’s not too late to get started on your retirement saving path. Here are three simple steps to get you on the right foot for your retirement future.

Step One – Save, Save, Save
You may be thinking, “Nialyn… how can I save when I’m in SO much debt!?” Good point. You can’t really start the saving process until you’ve eliminated your debt and saved at least three to six months of expenses in your emergency savings fund. After that, the first step is to invest 15% of your gross income through tax-advantaged retirement saving plans such as your employer’s 401(k) and a Roth IRA. So, if a married couple that makes $56,000 per year follows this 15% savings mantra for 25 years, they’ll retire with a cool $900,000. If they follow the plan for 30 years? A spicy $1.5 million. The moral of this story is: slow and steady wins the race. Don’t try to save $50,000 of your $56,000 per year. Be realistic, have a plan, and stick to it. Slow and steady.

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Step Two – Hire an Investment Advisor That Will Focus on the Numbers
Saving is easy enough, but here’s where the train goes off the track and everything gets confusing. Once you retire, the goal is for you to be able to live off of the growth of your retirement rather than depleting your “nest egg.” What’s a nest egg, you may ask? A nest egg is a term that refers to a substantial sum of money or other asset that has been saved or invested for a specific purpose. With the help of an investment advisor, you can choose a retirement age and calculate exactly how much you need to save per month in order to live comfortably at that projected age – without touching your nest egg. The investment advisor will take into account inflation, taxes, and any fees that may apply down the road. So, ultimately, you’re never supposed to spend your nest egg, but just sit on it…until it hatches… Just kidding.

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Step Three – Realistically Consider the Future
Take a look at your monthly budget. How much will you need per month once you retire? When you look at the amount you currently have saved, are you concerned you won’t have enough to survive? No worries. It’s never too late to ramp up your saving – assuming you’re financially able to do so.
You can also consider things that you want to do when you retire. Maybe you’ve always wanted to travel the world? Sign up for celebrity hosted cooking classes? Pole danc… err… never mind. Whatever you’ve always wanted to do now is the time to do it! Your investment advisor can help you create a plan that factors in all of your retirement dreams.

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It’s also time to consider how you are going to pay for your healthcare during retirement. Creating a savngs and investment for this prupsoe and carefully considerng medical insurance, long-term care insurance, and life insurance can help you cover these costs. Research suggests that a person will spend approximately $300,000 in healthcare expenses during retirement. That’s nothing at which to sneeze. So, it’s important to be ready to dish out that large chunk of change. Additionally, being prepared to bring in an in-home nurse or to make the big departure into a nursing home is important. Therefore, having done the advance planing can save not only yours and your loved one’s pocketbook. But, may also make the difference between a heathy retirement or not.

You may not have been an overachiever in high school. Quite frankly, you may have scoffed at those who sat in the front of the classroom and raised their hands at all the softball questions. However, it’s time to channel some of the overachiever’s gusto. It’s time to take your future by the horns. While there’s no guarantee that having a retirement plan will make you a millionaire by age 65, creating a plan and talking to an investment advisor will put you many steps closer. Do yourself a favor. Be like the overachiever and contact The Investment Advisor today. Click here to sign up for a free, no obligation consultation – it’s easy, quick, and can be the difference between ramen noodles every night for dinner during retirement or lobster with creamy French butter. You decide.