Saving For Retirement Without Losing Hope
Retirement is always a scorching hot topic. Money issues are emotional to begin with, but it’s easy to feel hopeless considering the rising costs of education, housing, childcare, and healthcare. Add to that the unrealistic advice we receive (occasionally in the form of shame masquerading as help), and it’s little wonder we’re not making much progress.
This tweet basically broke the internet, and rightfully so. Many people struggle to save $1,000 – let alone a retirement nest egg that experts keep telling us should be more than a million dollars.
I get the sentiment behind this advice, and it can be a good benchmark, but it’s hard not to be frustrated knowing that you’re forever falling behind. It seems like we’re constantly being told that we’re not saving enough and will likely end up living in a box eating cat food, or that young people are retiring in their 30s. The middle ground of ‘it will be tough but eventually most of us will probably be okay by the time we get to traditional retirement age’ is a less sexy headline, but I wish we saw more of those stories.
It also seems like we’re simultaneously being blamed for the stuff we buy..
.. and for the industries we’re destroying by not buying stuff.
I’m kind of over it, to be honest, and I imagine you probably are too. There has to be a middle ground somewhere out there among the click-bait titles. We may have started out in a tougher economic position than other generations, but we can still spend money on things we value and save for our future.
Let’s talk about how we’ll probably struggle, but a comfortable retirement is still attainable with some luck and perseverance.
Here are some quick ways to save without a lot of planning or giving up every small joy in your life.
Throw Away Perfection
Most importantly, completely discard the idea of perfection in building your retirement. If you wait until you have the perfect budget, the perfect asset allocation, the perfect target balance, you’ll never start. Every day you waste procrastinating or choosing a strategy is a day that your money could be growing.
Take Advantage Of Workplace Benefits
If your employer offers retirement matching, sign yourself up! If the match is 50%, that means for every $50 you invest you’re actually investing $75. Depending on your salary and match, you could be leaving hundreds or thousands of dollars on the table every year. Retirement matches are like a raise for your future self. Unless you have incredibly high interest payday loans or are struggling to get current on your bills, getting that match should be a top priority.
If you can’t do the full match at work, or the recommended monthly contribution based on your calculations, that’s okay! Start with 1% of your income, or $10/month, or whatever is comfortable for you right now.
Pay your future self first, and make the transaction as seamless as possible. We all know what happens when we plan to save money that’s left over at the end of the month. If it’s taken out of your account as soon as you get paid, you won’t even miss it. Treat it like any other non-negotiable bill.
Increase Contributions When You Can
Have a look at your monthly expenses. Is there anything you could cut back on, even a little? You don’t have to eliminate anything altogether, just try to spend a bit less and invest that money instead. Got a raise? Choose a portion to send to investments – 50%, 10%, 25%, whatever works for you. Bonus or tax return? Extra income from a second job? Same thing. Choose a portion of it for future you, and spend the rest on things you need or want now.
Use Technology To Ease Into Investing
I personally find the investment options at banks intimidating. I know a lot of their fees are obscenely high, I know they’re trained to sell, and I know I’m easily overwhelmed by options. That’s why I decided to go with an app instead – I currently use Wealthsimple but there are a few others out there. I opened an account entirely online, deposited $500, used their asset allocation quiz to choose the investments, and now I just check in on it every once in a while. It’s helping me get used to the ups and downs of the market, so that I’ll be a more confident investor when I finish paying off my student loans and can start contributing beyond my workplace account.
Always remember that starting slow is still starting, and that you don’t have to be a perfect investor right out of the gate to prepare for your future. We constantly hear about the end goal, the final balance, the consequences if we don’t get there. Let’s focus more on gaining momentum, and some of the worry will take care of itself.