Does the thought of planning for retirement make you feel old? I’ve got the antidote: attend a retirement seminar.
That’s right. A retirement seminar will leave you feeling refreshingly young and smarter than your friends. You’ll be bursting with info that will make you the center of attention at the next happy hour.
At my previous job, our 401k plan provider held periodic on-site seminars to educate employees on retirement planning. Naturally, I attended one — and I was easily the youngest person in the room.
It’s no secret that saving for retirement is a problem that spans generations. Baby boomers are depending on pensions and social security, but it turns out those aren’t sufficiently funding their retirements. Millennials are saddled with student debt, and that’s to say nothing of the rapidly evolving work landscape facing us. Given these circumstances, retirement is barely an afterthought.
This article isn’t about the mechanics of planning a retirement. Instead, I want to break down some of the barriers I faced (and that I see others facing). These barriers initially prevented me from giving much thought or attention to saving for retirement.
With these barriers broken down, you will become “woke”. Once woke, you can learn the mechanics of saving in places like a retirement seminar. But fear not! The mechanics are straightforward and require minimal investment of time to get up and running.
With that, let’s get on to addressing those barriers.
Time can work for you, or against you. Your time horizon can seem so long, that you fail to prioritize saving for your future. It’s so far off, and so full of unknowns, that it slides down that list of priorities. But in reality, time is the most valuable asset you have for implementing a successful plan.
It’s ironic that it’s considered strange for a young person to attend a retirement seminar. Retirement planning advice by far benefits young people more — time is money, and young people have time on their side. So where were all the young folks at my seminar?
Probably procrastinating on it, like I was for the better part of my 20’s.
A retirement plan requires a bit of initial legwork, followed by sufficient time to execute in a (mostly) passive fashion. A successful retirement plan doesn’t involve back-loading savings to middle-age. Nor does it involve waiting until 60 to discover that big changes are needed, with minimal time remaining. And it certainly doesn’t involve prematurely tapping into your savings to cover the cost of your life while young.
Time is a critical aspect of any savings plan. If time is of the essence, shouldn’t you want to take initiative sooner than later? You’d think. At my seminar, though, there were a lot of older folks in the room giving me the side-eye. I stuck out like a sore thumb, a spritely young fellow amidst a sea of geriatrics. Or something along those lines.
So, it logically makes sense that younger people should pay attention. But I know better than to expect this — often times, even older people fail to pay attention. But that’s all the more reason to talk about this very subject.
Disregarding future self
If you are 25 or 30 and deferring saving to a vague future date, you are missing out on years of compounding and growth.
Think of your dollars as employees at your disposal. You can put them to work now, squeezing out many years of productivity. Or you can squander them for years or even decades. In this case, you will need many more dollars to match the same production output later on. The concept is about as simple as it gets.
Is it safe to assume that life is going to be cheaper in a decade? Or that gathering heaping spoonfuls of extra savings in your 40’s/50’s is going to seem enticing or realistic?
I wouldn’t take that bet, because it’s a bet against lifestyle inflation. And lifestyle inflation is a very real thing. As you earn more, you become accustomed to spending more. This will make it harder to divert any extra income to savings. Especially as you get older and are more set in your ways.
There’s also an opportunity cost in putting off saving. The growth you miss out on by not investing now, adds to the cost of whatever you are buying instead.
Want some retirement pie?
Think of the money in your retirement account as a pie. The pie is consists of two main ingredients: money contributed from your paycheck and money from investment growth.
The more you contribute earlier, the more the pie will be made up of growth. The less you contribute earlier, the more the pie will be made up of your own contributions. So the longer you wait, the higher the out-of-pocket cost of funding your retirement will be. And it may not turn out to even be enough.
Not to mention the tax implications of putting money away now. Due to tax reform, lots of people were celebrating an extra $50 in their paycheck a few months back. What about the savings you incur by sheltering more of your money from taxes to begin with? Don’t be penny wise and pound foolish, it’s not a good look.
Maybe you’ve resigned yourself to indifference: “I’ll never retire anyways.” To the rat race, and (never) beyond!
An attitude of resignation towards your future makes it impossible to give it the consideration it deserves. This is actually the ultimate form of disregarding your future self.
Twenty years from now, will you feel happy that you remained indifferent about saving for retirement? Doubtful. But in the present, it’s easy to wish away that future feeling of regret.
There’s a few cascading factors at play leading to an attitude of resignation.
Distrust of financial institutions and investing
The millennial generation has seen the dot-com and housing bubbles burst, and the ensuing fear in the financial markets. I get that it can leave a bad taste in your mouth. It can lead you to think you are better off staying out of the markets period. In addition, general disdain for the big banks can make you feel better for keeping your money out of them.
These deeply-engrained negative feelings contribute to the YOLO mentality in a big way. But really, they are just a convenient justification for making irresponsible financial decisions in the present.
A simple, sustained investment plan is a guaranteed path to wealth. This has been proven over and over. And over again. Also, good news: such an investment plan avoids lining the pockets of some coke-blowing Wall Street banker.
Distrust of world leaders
The current threat of a destabilizing trade war may compound the distrust you already have in the financial system. The many ongoing threats to global stability are easy to pay attention to. They are real, and we should all be concerned about them. I sure am! I’m not advocating ignorance.
But these concerns shouldn’t be coupled with poor financial decisions, or used as justification to bet against your own future. Wherever your money is going in lieu of savings, it’s likely leveraging you against flexibility in the future. Flexibility that saving, even for retirement, can help you get back.
Jaded sense that things are f’d up beyond repair
Distrust of the financial system and distrust of world leaders can lead to an overall feeling of hopelessness. It paints a dire picture of the future in your head. This is on top of the modern challenges younger people face in terms of employment and stability.
It creates a sinking feeling that everything is too messed up to even think about. So why bother thinking about something like retirement?
I’d ask, why not bother? If nothing else, it will give you a greater feeling of security and comfort as you face your own future. With that increased feeling of comfort, you can divert more resources to actually making a difference.
Get curious, attend a retirement seminar
If you can remove these barriers to facing the future, my final piece of advice would be to get curious. Bring an inquisitive approach to your retirement plan. Look at your 401k/403b/TSP and ask questions. If you put a sustainable plan in place and let it ride, you will be much better off for it — guaranteed. It’s as certain as death and taxes.
You go to work to get a paycheck, right? You may as well understand how the dollars you work so hard for can be used to build the future you want.
Now you’ve grasped the significance of taking action while young. So choose to become a pioneer among your peers, and go to a retirement seminar.
Observe the people there, and the questions they are asking. Ask yourself if you want to be that person, asking those questions, decades from now. Then pat yourself on the back for taking these steps now. Your future self will thank you.
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