Retirement is a goal for many, but a surprising number of people have been putting savings on the back burner. Roughly 28% of American workers said they had saved less than $1,000 for retirement, according to a recent Employee Benefit Research Institute Retirement Confidence Survey.
It’s easy to believe that you’ll save for retirement when you make more money, when you’re finished paying for your kids’ tuition, or when you have more money in your emergency savings fund. However, the stark reality is that retirement goals often continue to get shoved to the side until one day you wake up and realize you’re much older and much closer to retirement than you thought.
If you haven’t been able to get motivated about putting money away for retirement, we have something that may help. Here are seven quotes that will push you to start padding your nest egg.
1. You’re on your own
“How you invest during retirement is as critical as how you invest in preparing for retirement. Things are never as simple and automatic as they once may have been — you worked hard, saved, and then sat back and collected your benefits. You can’t rely on someone else coming up with the cash you’ll need once you stop working.”
Daniel R. Solin, The Smartest Retirement Book You’ll Ever Read
2. Crackers and ketchup, anyone?
“Before you recoil in horror at the idea of keeping track of every dollar that passes through your hands, remember that creating, maintaining, and periodically tweaking your budget is a vital aspect of preparing for retirement. You may be able to get away with ignoring your money choices while you are working full time and bringing home a good salary, but maintaining that same level of money ignorance as you prepare for retirement is a good way to ensure your plans and finances go off the rails. Knowing how you spend your money will allow you to make the decisions that make the difference between an enjoyable and well-funded retirement and learning to enjoy meals of crackers with ketchup.”
3. Cash flow is king
“I have found that retirement is all about cash flow, not net worth, especially after the real estate crash. I have met people who have a net worth of $2 million, which looks great on paper, but when it comes to retirement income, they are just barely squeaking by on their Social Security and a small pension. It’s great that you are worth $2 million, but ultimately, it’s your cash flow that will determine your quality of life in retirement, not your net worth.”
4. Retirement planning requires a plan
“The goal of retirement planning is to create a plan. It feels silly to come out and say that, but from what I’ve seen, most investors never actually take the step of creating a concrete plan. Instead, they read a few articles about various retirement planning topics and they leave it at that. (And many investors don’t even do that much.) The more specifically you’ve planned how you’ll manage your portfolio — and your finances in general — the less likely it is that you’ll have to go back to work or dramatically reduce your spending later on in retirement.”
5. You’ll get old
“Growing old is not an option. We don’t have a choice. But we do have choices that will greatly affect our quality of life for the rest of our life.”
6. Start early and reap the rewards
“Letting your money work for you is a key component of saving for retirement. Compound interest, dollar cost averaging, tax-deferred savings, and diversification help lower your risk and boost your return on investment over time. Compound interest is the interest on your principal plus interest on the interest you earned previously. For example, a single investment of $10,000 at 5% compounded annually earns $10,789 in interest over 15 years for a net amount of $20,789. Straight interest would accrue at the rate of $500 per year, $7,500 in total interest, for a net amount of $17,500. When interest is reinvested and compounds at 5%, it adds another $3,298 to the value. That is the magic of compound interest.”
Taylor Larimore et al, The Bogleheads’ Guide to Retirement Planning
7. Stop putting yourself last
“Why would you wake up in the morning, leave your family, not do what you want with your day, go to work all day long for 8, 9, 10 hours a day, commute back home, get up and do it all over again? Why would you do this 5 days a week, 4 weeks out of the month, 12 months out of the year? Why would you do all that to earn money and not pay yourself first? Most people pay everyone else before themselves: the government, their creditors, and their bill collectors. Everybody else gets paid first and then if anything’s left over, then they pay themselves. That system stinks and is designed for you to fail financially. If that’s the system you’re using right now, and you don’t have money, that’s why. The odds are set up against you. It’s too tough for you to get rich if you’re paying everybody else first. You need to change this. You need to completely redirect your income so the first person who gets paid is you.”