In the last several years, I have taken a much harder look at financial planning, retirement preparation and overall how to make money work for my life in the long run. I realized that even with basic efforts I was doing there had to be more available. Like most of us, we receive an annual social security statement in the mail. Each year, I take note of the projections but do not think much else about it. I heard a commentator say, a person can retire with 30 solid years of contributing to a retirement plan. I knew my social security projections would not be enough. I then looked at my employer-sponsored retirement account. I was shocked to see that my retirement account projections may not even provide me as much as my social security benefit. I am not a person that neglected retirement, I simply did not think about it and felt more comfortable with my head in the sand. The translation, I did not keep up with my contribution levels and should have been more involved in what investments I was holding.
The whole topic was overwhelming. I know I am not alone. Study after study shows Americans are not adequately preparing for retirement and we find ourselves overwhelmed by the topic. I consider myself an average hard working person that spends my time raising kids and taking care of the house. When an average person tries to open the door to financial planning we are bombarded with high-pressure sales, conflicting information, one salesperson telling us the only way is XYZ and anyone who tells you otherwise is trying to steal your money. We want to slam that door shut and deadbolt it.
Then there is the stock market. In high school, one class was offered regarding finances. The teacher told us we have $10,000 fake dollars. He dropped a stack of newspapers and told us to invest in the stock market and see if we could make any money over the next month. It was not like today; we could not Google search our way out of this assignment. So I opened the stock market pages and found the one company I knew at the time “Ford.” I completed my assignment by writing, one stock price twice a week for four weeks. This class did not prepare us to manage finances, pay bills, learn about how to use credit, invest in our future wisely or anything about how the stock market works.
After watching some family and friends struggle in retirement and later in life, I had to actively decide I did not want that to be my life. I do not want to be a financial burden to my children or grandchildren. I want to be able to have a high quality of life. I am rapidly approaching 40 years of age which means even though I already have a solid foundation toward retirement, it is not enough; I need to make it a priority for the next 30 years.
I had to make some changes to the way I view retirement and financial planning:
- I focus on providing a good life for my kids. My financial future will directly impact their quality of life in the future. I have to prepare now to protect them later.
- I have a good quality of life today; I want the same or better quality of life when working is not taking 40 or more hours of my life each week.
- With technology advancements, our generation has the potential to live very long lives and maintain active lifestyles. I need to prepare to fund a long retirement.
- One key element to retirement and financial planning is compound interest. Money today will grow significantly over 30 years time. I need to use that to my advantage.