3 Ways to Alleviate Retirement Savings Stress and Meet Goals
Saving and investing for retirement cause stress and anxiety for many Americans. If you’re concerned you aren’t saving enough or aren’t making the best investment choices, keep reading for 3 ways to alleviate retirement savings stress and meet your goals.
#1 Put a Retirement Saving Plan in Place
If you’re currently saving for retirement and putting money in your 401(k) or Individual Retirement Account (IRA) every month, and you’re stressed about your retirement savings, you aren’t alone.
One of the best ways to alleviate retirement savings stress is to get a plan in place–even if you can’t save much for retirement right now.
With a solid plan in place, all you have to do is show up and work the plan.
Let me ask you this…
- At what age do you want to retire?
- How much money will you need in retirement not just to scrape by, but have a fulfilling retirement?
- What kind of retirement lifestyle do you want?
If you answered I don’t know to one or more of these questions, it’s time to take action and get a plan in place that will allow you to retire comfortably.
The bottom line is this: if you don’t have a clear path to where you want to be in retirement, you’re probably not going to end up there.
And more than likely, you aren’t going to have enough money to comfortably retire.
If you’re 50 and think you’re too close to retirement to get a solid plan in place or you’re 25 and think you’re too young to start thinking about saving for retirement…it doesn’t matter.
What matters is that you get a plan in place as soon as possible.
With rising healthcare costs, inflation, taxes, market uncertainty, and other unknown future variables such as social security, one thing is certain: if you don’t have a plan and take action on that plan now, you’re likely not going to have enough to retire.
Or worse, you’ll end up with so little saved that you might have to struggle to survive.
Think about this: if you had almost $250,000 average balance at retirement age and you were making $50,000 per year at your job when you retire, how long are these funds going to last you in retirement?
Will this give you the retirement you truly desire? No, it won’t. Not even close.
Here’s what you can do today to turn things around and take the pressure off:
- Sit down and create a plan for retirement. Get clear on how much you will need for the lifestyle you desire. Check out our retirement calculator to see how much you’ll need at retirement, and calculate how professional help may improve your future retirement income.
- If you created a plan years ago, but haven’t followed it, then hit the reset button and start planning.
- If you’re stuck, reach out to a third-party expert who can help guide you.
We cannot overstate how important a plan is–not only to secure your future, but also to alleviate retirement savings stress and anxiety.
And you’ll be back in control and on the way to achieving your goals.
This is your life. Your one-and-only retirement. And it’s up to you to take charge of your financial future.
#2 Become an Engaged Investor
The financial industry is systematically disconnecting average investors from their money.
Couple that with the belief that investing is hard, and it’s no wonder so many investors are disengaged with their retirement savings…and finances in general.
In our decades of helping people increase their retirement savings, we’ve seen far too many investors who…
- Don’t understand the financial jargon thrown at them.
- Don’t fully understand how to read a 401(k) or other investment’s quarterly reports.
- Trust that their employer chose a 401(k) plan administrator that offers the best investment choices.
- Think their employer is taking care of their 401(k) for them.
- Avoid seeking third-party advice because they think they don’t have enough money invested, or are too far away or too close to retirement.
To sum it up…too many Americans are disconnected investors.
Instead of seeking help when they don’t understand, they hope they’ll have enough for retirement.
If you want to alleviate retirement savings stress, do what you can to educate yourself as quickly as possible.
When you gain the necessary knowledge, you’ll go from being a disconnected investor to one who is engaged with your investments and overall health and well-being of your financial future.
If you decide to sit back and hope for more money at retirement, take heed of the story below…
The Story of the Disconnected Investor
Greg is 58, and he works for a corporation and contributes to his 401(k) and an Individual Retirement Account (IRA).
He meets with his 401(k) plan representative once a year to review the past year’s performance and discuss new strategies for the upcoming year.
Greg doesn’t really understand what the plan representative says, and he feels like he can’t control what happens to his investments anyway, so he changes nothing.
Nor does he bother to educate himself and learn what his options are.
Things are going great for Greg, and he’s confident in his retirement accounts’ performance.
Until 2008…when he loses 37% of his total retirement savings.
To make matters worse, his 401(k) plan representative advises he continue to hold his investments and hope things bounce back.
Greg decides to listen to his friends, and he puts his IRA in cash and moves his 401(k) assets into a mutual fund comprised of “safe” bonds.
The market continues to dive in early 2009, and he’s feeling pretty good about his decision. So, he decides to stop communicating with his 401(k) and IRA plan representatives, and he mentally checks out.
Sadly, Greg misses out on the opportunity to recover from his losses.
From March 9, 2009, to January 4, 2010, the Dow Jones Industrial Average climbs 10,583 points. But Greg is invested in bonds, so he only sees 2% growth.
The market continues to rebound throughout 2011 and 2012. The Dow Jones Industrial Average closes on December 30, 2012, at 12,217.56 points.
Greg is still sore about his 2008 losses. Even though his current returns from his bond investments are low, he doesn’t want to run the risk of buying into the market at all-time highs and then losing it all over again.
So, he takes no action and retires without recouping his losses and comes up short on the amount of money he needs.
Greg’s situation and decisions are painful reminders of what really happens when people are disconnected from their investments.
Missed opportunities to earn back losses…
The sense of being powerless…
The dread and fear of retiring without adequate savings…
All are preventable if you take the time now to educate yourself and really become engaged with your investments. Doing so will also help alleviate retirement savings stress and anxiety.
#3 Seek Independent Third-Party Advice
If you haven’t reached out for third-party advice on how to regularly make changes to your 401(k) or help you create a retirement plan…
You may be missing out on earning more and keeping more of your hard-earned retirement savings. In fact, doing so sooner rather than later may have a significant impact on your retirement lifestyle.
A recent Morningstar report shows that participants who received expert guidance had as much as 40% more income during retirement versus those who received no help at all.¹
How much would 40% more income impact your retirement lifestyle?
Would it make the difference between taking international vacations vs weekend road trips a few hours away?
Would it allow you to be able to spend more time with friends and family instead of having to take a part-time job to make ends meet?
Could it help you sleep better at night during retirement?
We encourage you to sit down and write out the impact an extra $20,000, $50,000, or $100,000 of retirement income would have on your life.
Writing it out is a powerful exercise that can take you from being an apathetic, passive investor to one who is engaged and excited about maximizing your retirement savings.
Discover how to secure a solid financial future and potentially keep more of your hard-earned money. Download our no-cost guide, 5 Mistakes You Want to Avoid with Your 401(k).
- David Blanchet, Morningstar Analyst 2014, “The Impact of Expert Guidance on Participant Savings and Investment Behaviors”