Five Financial Habits for a Comfortable Retirement
Feeling Secure in Retirement Requires Deliberate Planning and Strong Financial Habits| By: Randall E. White, CFP®, RICP®, CRPC®, CMFC®
It’s not an overstatement to say that all retirees want to enjoy a comfortable and financially secure retirement. In order to save enough money to be able to make this a reality, most people begin saving at a young age and do so consistently throughout their working lives. However, practicing consistent healthy money habits is a challenge for many people.
If you’ve struggled with saving for retirement and fear you might be behind, there are things you can do to get yourself back on track. It will require you to get proactive and intentional with your savings and your financial habits moving forward. Though it may seem daunting, it’s not impossible. These five financial habits can help you catch up to your retirement savings goals and get you on the right track for a comfortable and financially secure retirement.
1. Automate Your Finances Where You Can
In this day and age, where things seem to happen at lightning speed, time and discipline can be sorely lacking. That’s why automated finances can be so beneficial when it comes to saving. Setting up a weekly or monthly automatic withdrawal that goes straight into your savings or investment accounts takes the burden off of you to remember to put money away. It also decreases your chance of spending the money before you’re able to save it. And remember, because of compound interest, the earlier you set up an automatic withdrawal into your savings, the more you’ll benefit from interest compounding on itself in those accounts.
Ultimately, one of the biggest roadblocks people face when it comes to finances is taking action. Most of us know what we’re supposed to be doing, but we struggle in the follow-through. Taking advantage of helpful tools such as automating or financial apps that can help you chart how much money is coming in and where it’s going can help you hold yourself accountable on your journey towards retirement savings.
2. Earn More than You Spend
As with anything, the more educated you are on wealth management, the more empowered you’ll feel to make the choices that are right for your unique situation. With finances, the best way to save money is to earn more of it than your spending - and the best way to ensure that you’re doing this is to create a budget and stick to it. Too many people live paycheck-to-paycheck or depend heavily on credit cards because they haven’t taken the time to create a budget that adequately accounts for their current lifestyle. However, budgeting is one of the easiest financial habits you can practice if you’re looking to gain control of your finances.
Take some time to sit down and look at your finances. Take some time to sit down and determine where and how you’re spending your money – and where you might be able to cut back on some of that spending. Then, calculate a reasonable spending and savings goal based on your income that will help bring you closer to achieving your financial goals.
3. Create an Emergency Fund
One of the biggest threats to your financial stability is encountering an emergency that you weren’t financially prepared for. Maybe your pet gets sick and needs surgery or you find yourself in a car accident and your vehicle is totaled. Whatever the case may be, the less prepared you are to handle the financial burden of the unexpected, the more severe the consequences will be to your wallet. A crucial part of any financial plan should be creating an emergency nest egg that you can lean on in times of need.
Most experts recommend that your emergency fund has anywhere from four to six months of monthly expenditures, at a minimum. That way, if there’s an emergency and you’re unable to work or you’re unable to cover the cost with your checking account, you won’t have to dip into your savings and put your retirement or long-term saving goals at risk.
4. Invest, Invest, Invest
Another financial habit you should practice is investing because it helps ease the burden of saving all the money you’ll need for retirement. Having a portfolio with the appropriate amount of risk can do wonders for helping you meet your retirement goals. Each person has their own unique financial situation and financial goals, so a balanced portfolio will look different for everyone depending on age, income, and other variables. As stated earlier, financial education and stability go hand in hand. So be sure to educate yourself on your personal portfolio and the current state of the market, and don’t be afraid to bring any questions to those that you trust whenever you’re unsure of something.
Additionally, don’t forget to take advantage of other investment accounts, such as a 401(k) or an IRA account. Retirement savings accounts such as these often come with tax benefits that can significantly help you catch-up to your savings goals. Even accounts such as an HSA can offer benefits that will help you in the long-term.
Investing can be confusing – even scary – so the best way to ensure that your portfolio is working for you is to sit down with a financial advisor who can help you make the right choices for your situation.
5. Maximize Your Government Benefits
Don’t overlook the governmental benefits that may help you solidify your retirement savings, such as programs like Social Security, Medicare, and other financial or long-term care resources. Being intentional about how you plan for these benefits allows for you to maximize the help that you get. For instance, manipulating your Social Security benefits strategy and timing your retirement age can help you increase your benefit amount significantly.
Ultimately, making the most of these benefits requires that you do your due diligence in researching how they work and creating a smart strategy to achieve your goals.
After spending so much of your life working, you deserve the retirement of your dreams. However, that’s not going to happen unless you plan adequately for it and take the necessary steps. Saving for retirement can be overwhelming for even the most frugal savers, but it can seem downright impossible for those who struggle to manage their finances. Incorporating small, manageable financial habits like these can help you save for retirement without feeling overburdened by the seemingly monumental task at hand.
Here at TriCapital, we pride ourselves on empowering our clients to take control of their finances so that they can achieve the financial goals they’ve always dreamed of. If you would like assistance with your retirement plan or would like advice on your investment strategy, please schedule a complimentary discovery call with us today!
Securities offered through Triad Advisors, LLC, member FINRA/SPIC. Advisory services offered through TriCapital Wealth Management, Inc. TriCapital Wealth Management, Inc. is not affiliated with Triad Advisors, LLC.