5 things I learned about retirement finances in 20 minutes—2
So, what’s in the news about retirement finances? I’m developing the habit of every now and again checking out what’s happening in that area. I Googled ‘retirement finances news’ to see the latest findings and share some of what I’ve found.
Here are 5 things I learned online that could be helpful as you look at your finances for retirement.
1. What you choose NOT to buy helps your finances
Nicole Dieker argues that long-term wealth ‘comes from what we’re able to earn and what we choose not to buy’.
‘If you see someone driving a $200,000 car,’ she says, ‘the only data point you have about their wealth is that they have $200,000 less than they did before they bought the car’. Unless they’re leasing the car, of course, and that gives you no indication of their wealth.
Long-term wealth brings financial stability, but it comes from ‘what we’re able to earn and what we choose not to buy’.
Having chosen not to buy means you can put your savings into compounding financial accounts—each with a financial goal (which can include retirement). When they start compounding, don’t interrupt them unless they reach their goal or you’re in a true financial emergency.
It starts with deciding what you aren’t going to buy.
2. Use a financial planner if you have no interest in finances
If you’re heading for retirement and the finances and investment side of planning for it doesn’t interest you, use a professional to help.
Not everyone has this interest and often this is simply a matter of personality says Clint Proctor. If that’s you, ‘hiring a financial planner may be one of the most worthy investments that you make in your financial future’.
3. Automate your savings
‘To be successful in saving for retirement, you’ll need to be consistent,’ says Katie Brockman. By this, she means setting aside a percentage of your salary each payday. The percentage approach also means that if there’s a pay rise, your savings also go up.
She recommends that retirement be seen simply as another bill that has to be paid. That could make it easier to save consistently.
By automating your savings, two things happen, says Brockman: ‘You’ll be forcing yourself to save every month—whether you want to or not’ and you ‘simplify saving to stay on track to reach your financial goals’.
4. Women more than men will outlive their savings when they retire
There are four reasons for this says Mallika Mitra:
- There’s often a salary gap between men and women in their working years
- Women tend to live longer than men (by 6 to 8 years)
- Women spend more time away from work caring for children
- This ‘motherhood penalty’ means they can fall behind in rank and opportunities for promotion at work.
Mitra’s advice to women is to find a financial planner who can help them plan their retirement finances.
5. Know your spending plan
‘How do you decide between spending, saving and investing’? asks Jim Fernandez. ‘Having a clear understanding of your spending plan is an essential starting point to get you on the right track towards achieving your goals’.
He sees developing a spending plan helping you avoid ‘unnecessary expenses that could otherwise interfere with your bigger financial goals’. He quotes Benjamin Franklin: ‘Beware of little expenses. A small leak will sink a great ship’.
These varied messages about finances and retirement—with their lessons and warnings; tips and thoughts; hints and suggestions—can be summed up with:
Consider not buying as a saving
If you have no interest in finances, use a professional
Automating your saving forces you to save
Women are more likely to not have enough saved for retirement
Have a spending plan—and stick to it.