MONEY OBEDIENCE

Retirement Calculator – “Getting through the front door”

A few weeks ago I wrote a post in which I compared my passion for running marathons with reaching financial goals. I focused on retirement planning, since this is usually the most important long-term goal that matters to most of us. Today I want to emphasize one aspect of this comparison that is crucial to the success for planning one’s retirement and running a marathon: getting started.

A runner once said that the most difficult part of every run was getting through the front door. Once you are out of the house decked out in your running gear, you will start running. Once you start running, you will set into your running routine as easily as you did the day before.

Planning for retirement is really not that different. Getting through the front door, i.e. getting started, is the most important step. And just like with running you need to prepare a little bit before you actually get started. But instead of putting on shorts, a shirt (optional for some), and sneakers, instead you need to map out a retirement plan. You have to figure out a few things that are important for making your retirement plan, like the age at which you want to retire, what kind of lifestyle you would like in retirement, and for what time period you want to plan your retirement. You may have to tweak these decisions a little bit to make the plan realistic and workable, but the bottom line is that you have to figure these things out before you actually start saving for retirement. Only when you know the answer to these questions can you know how much you have to put away each month to reach your goal. That is when you have to get out through the front door and start saving for your retirement.

Yet, many of us delay opening an IRA, participating in a 401k plan, or setting up other retirement accounts. We know that we have to save some money if we ever want to retire, we know that we have to get started at some point, we know that we are not getting any younger, and we know that retirement age is getting closer and closer every year. Still, we sometimes procrastinate. We do not save for retirement. We have a ton of excuses lined up, but the end result is the same – the retirement account remains empty.

So, what can you do to snap out of this procrastination?

(1) You can read a self-help book or another book that deals with the issue of procrastination. The recently published “Nudge” by Robert Thaler may be enough of a nudge – pun intended – to get you going on your retirement savings.

(2) You can sign up at stickk.com and make a contract with yourself that you will start saving for retirement at a particular time in the future. The way stickk.com works, if you don’t hold up your end of the deal – that is, if you don’t start saving – you have to pay money to some charity that you designate at the beginning of the deal. So, you may as well start saving for retirement once you make that deal with yourself, or you start seeing fairly quickly that you’re losing money.

(3) Stop thinking so much about it and follow the Nike slogan, “Just Do It!”

Whatever tactic you use to start saving for retirement, you will be pleasantly surprised that, first, you do have the money to add to your retirement account every month, and, second, you are likely stay on the saving track until your retirement age! When you do that, you will be able to enjoy reaping the seeds you sowed once you “got through the front door” those many years ago.

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