Have you ever started something so late that you wonder if it’s worth doing at all? The bargaining that happens within your mind of “is it still worth it?” or “I’ll never get it done, so why should I start it now?” and the ever famous “I won’t start this, I’ll just weave it into the next thing and start that!”. Self-bargaining is a powerful emotional tool and can get the best of anyone. I’ve done it (I’m famous for the third one), you’ve done it and we will both do it again. I feel within our own minds live the emotional turmoil we all suffer when we get a late start: the shame of having to start over or never having started at all.
Let’s pivot this into personal finance, shall we?
A very common situation that illustrates the above is when it comes to saving for retirement. We all know we should do it. We all know that starting young, giving us a solid 30-40 years, is the best way to do it. It’s also the easiest way, needing to only invest a small amount of money over a long period of time giving us the best potential outcomes, yet many people just don’t do it. Many people feel it’s not a priority “today” so we can delay and start tomorrow. Or the day after that. Or next month, next year, when I’m married, when I get the better job, after my divorce is final, when the kids are grown or basically “when I have my life together”. And then one day, you look in the rear-view mirror and see that none of those things happened (or maybe all of them happened) and in front of you is your 50th birthday and the pressure starts to mount. Thoughts such as iIs it still worth saving for retirement since I’m getting such a late start?” or “I’ll never be able to save enough, so why should I start now?” and the ever famous “I won’t save for retirement, so I’ll just weave those dollars into the next thing and start that!”. Which is what, exactly? What comes after retirement?
And this is where I come in.
I listen to the play-by-play of a life that didn’t go according to plan. Of the late start of retirement savings due to reckless spending in their youth. About the 401(k) that was cashed out in their late 40’s to pay off high credit card debt or in their 50’s to literally pay the bills after a devastating divorce or death of a spouse. I’ve met the people who lost their pensions due to poor company management, lost their savings due to poor investment management and lost their faith in the entire process. They have completely given up, surrendering to the fact that they will literally work for the rest of their lives. And this is where I hit pause and say it’s never too late to start.
Is the goal of a large retirement nest egg to fund a 30-year traditional retirement still achievable? Probably not. But retirement doesn’t have to look like it did for your parents. Or your grandparents. Or your neighbor. Or your boss. That’s the beautiful thing about personal finance, it’s very personal and adapts to you. Maybe in order to start, you need to change direction and pivot towards something that is obtainable. A retirement that can bring you personal satisfaction and do away with the shame of not starting. Yes, you can start. You can start today. Okay, let’s start tomorrow and we will take it slow. You can’t save for an entire traditional retirement in 5-10 years (if you are envisioning a lottery ticket or trip to Vegas as that silver bullet, I see you) but what you can do is adjust the definition of retirement and align your expectations to the lifestyle you’ll live in your retirement along with the required income needed for that life.
Instead of focusing on what you didn’t do, let’s talk about what you can do when it comes to a late start retirement plan:
Paying off your house, or downsizing to a less expensive home that you can pay off, means you won’t have a mortgage payment in retirement. Thus reducing the need for income. Thus reducing the need for a big pile of money.
Buying all the “big ticket items” for the house or taking the “big trips” before you retire reduces the probability of needing that cash flow in retirement. See above reference for big pile of money. Pre-pay for as much as you can while you are working and have the cashflow.
Transition your career to something you can work at part time into your 70’s and not hate your life. This will provide an income to subsidize your younger “active” retirement years while. After age 65, Medicare becomes your new best friend so the need for insurance benefits is diminished. Find employment that makes you happy, not just brings in a paycheck.
Consider community living with other people to reduce the monthly living expenses. No, this doesn’t have to be the dreaded moving in with the kids….but finding a roommate for both cost sharing and companionship. Why is this option only for the young people just starting out? I’ve already asked my best friend to live with me when we are old(er) as a way to thrive both financially and emotionally.
These are a few ways I’ve seen late-state retirement planning work in my career. Eventually, I pivot my recommendations from “save more” to “pay off more” as a way to help all families retire with dignity. Key word being dignity. It may be too late to build the big pile of money, but it’s never too late to live with dignity.
So, what do we do when it’s too late to start? Change directions. Chart a new course. The goal can be the same, it will just have to be altered to adapt to your current state of readiness. We don’t have to boil the ocean, how about just a very large lake? It will still be hard work, but you can do it: one gallon of water at a time.
Kimberly Enders CFP® CWS® CERTIFIED FINANCIAL PLANNER™
Enders Wealth Management
37800 Van Dyke Ave, Suite 125
Sterling Heights MI 48312
www.enderswm.com
#kimenderscfp
Securities and advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC, a broker-dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity. All investing involves risk, involving the possible loss of principal. There is no assurance that any investment strategy will be successful.
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
The views depicted in this material are for informational purposes only and are not necessarily those of Cetera Advisor Networks LLC. They should not be considered specific advice or recommendations for any individual.