When to Start Planning for Retirement
The last year has been a real eye-opener so far. The COVID-19 Pandemic isn’t the only crazy thing we have heard about this year. Preconceptions of the norm have been shattered and continue to be put under pressure.
The Pentagon now says there are actually UFOs out there, or as they call it UAP or Unidentified Aerial Phenomena. They recently released footage of pyramid-shaped objects that no one can explain.
As if that weren’t crazy enough, there is also a study which has found that saving for retirement isn’t necessarily important before you hit your late 30s or even your early 40s, if you’re college-educated. Some finacial pundits even suggest that starting to save as early as your 20s might not be the right thing to do either, as you are cutting out disposable income needed to get ahead when you are young. As you get older your wages increase and your ability to save does as well.
The point here is that when you’re younger, retirement doesn’t necessarily need to be your priority, as you still have time on your side. As you enter your “second phase” if you will, once you hit your 40s, then the picture begins to take on a different feel.
As you grow older, healthcare costs can rise exponentially when you are in retirement. But again, focusing on health when you’re younger may help in that regard. According to experts, spending money on preventative health care like fitness, eating well, and looking after yourself when you are younger is just as important as saving for an unforeseen potential hospital stay down the road.
Your body is more susceptible to illness and injury and healthcare costs do go up, to be sure. And of course, other expenses may go down a bit, depending on your lifestyle. A 2017 Consumer Expenditure survey shows that the median spending for households aged 55 to 64 was $64,000 per year. If you compare that to those 75 and older, we see that they spend less every year.
If you consider the fact that your spending decreases, it could be an opportunity to save more in your golden years. That isn’t always made a part of the equation when experts are calculating how much you need when you retire.
"Die with Zero" author Bill Perkins found that many folks don’t spend what they have saved for retirement by the time they pass on. The old adage “you can’t take it with you” applies. Those retirees who had half a million dollars or more saved found that after 20 years (or by the time they died) they had only spent a portion of that money.
If you have goals to leave some money for your loved ones, then of course that is a different story altogether. But if you’re just saving for yourself, then according to the above information, a lot of people are overshooting the mark. But the question worth asking yourself is this: is that such a bad thing?
Author Grant Cardone says in his book “The 10X rule” that you should set targets for yourself that are 10 times greater than what you believe you can achieve, and you should take actions that are 10 times greater than what you believe are necessary to achieve your goals. Simply stated, if you shoot for the stars, you’re almost certain to at least make it to the moon.
Living in the now is great for the younger generation, but as we grow into your more mature years and take on more responsibility, it would be remiss to ignore retirement and not plan diligently for the future.
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