When we are in our 20s, retirement seems like a destination far off into the future. Life gets busy with a career, possibly raising a family, unexpected life events, and all of the transitions that come along with it over the years. By the time we get to midlife, we may be looking at retirement savings and thinking, “Oh no! I haven’t saved enough. How can I catch up?”
The New Midlife Retirement Challenge
The traditional retirement model makes many women feel unsafe and not secure if they haven’t saved enough based on what the financial services industry says it should be, leaving them with a sense of identity loss, psychological issues around not getting a paycheck, and extra time to fill the day.
But even though, we are much more likely than men to have a savings shortfall in retirement due to breaks in a career (and let’s not forget the pay gap), that doesn’t mean we are destined to struggle financially in our later years. In this time of redefining midlife, retirement may no longer mean giving up a career entirely at age 63 or 65 and living off your savings for the following 20 or 30 years.
That’s the beauty of where you get to decide how you want that chapter to look for you, based on your terms and no one else’s. It’s redefining the value you bring to others and the meaning it has for you.
Making retirement work for you will require a new way of thinking, though. You can start by asking yourself some of the following questions, for instance, and then identify strategies you can implement now to improve your prospects or perhaps improve your financial outlook in the retirement you’re already enjoying.
- What will I pursue that is meaningful in my life?
- How can I challenge myself in mind, body, and spirit?
- How will I allocate my time?
- How will I invest in who I am?
- At what age do I want to make this transition?
- How will I find a balance between vacation and vocation?
- What is the lifestyle I’m looking for?
Evaluate Current and Future Financial Resources
Once you have a general idea of the questions above, keep in mind they will probably evolve. There is no right or wrong way to address this. It is your life, and you get to define how you want to live it! Know that your financial needs may change over time, too.
That’s why it’s essential to look at your existing financial resources first. This is your baseline as it ties in with knowing your current net worth and monthly cash flow. The balances of your present retirement and investment accounts are part of your net worth statement.
Once you have this information gathered, now it’s time to take a look to determine what you’ll need financially in annual and monthly income to support the future lifestyle you desire. Typically, it’s less than what you may be accustomed to now because many tend to downsize their living as they get older.
Simple Ways to Save More Starting Now
Suppose your current financial resources (retirement and investment accounts) will not be enough to support the future lifestyle you desire. In that case, there are simple ways you can save more starting now.
- If you are currently employed, make sure you are participating and contributing as much as possible to your employer’s retirement plan, especially if they have a matching program.
- Reassess your current investments. While there is no guarantee of growth in any investment, are your financial choices in line with your risk tolerance?
- Take a look at your current spending (monthly cash flow) to see where you can reallocate unused products, services, or subscriptions toward investment and retirement accounts.
- Where can you adjust your grocery bill not to overbuy and use just what you need for the week? This is where meal planning plays a significant role.
- Do you purchase on impulse? If so, decide to have the discipline to reign that in and divert those funds toward saving.
- Do your online shopping accounts make it too easy to purchase unnecessarily with one click? If so, and if you’re serious about saving more for retirement, consider closing those accounts.
- Avoid lifestyle inflation. If your income is increasing, do not use that as a reason to raise your standard of living. Divert those additional monies toward your retirement and investment accounts.
Many times, we think we need large amounts of money to save every month toward retirement. The beauty in compounding interest and growth is that all the little things add up to find those extra funds.
You get to decide the type of lifestyle you want in retirement and how to make sure you have the finances to support it, without having to depend on anyone else.