July 13, 2021
6 minutes to read
This story originally appeared on MarketBeat
GenXers, did you know the experts say you must have saved a huge six times your income for retirement at age 50? If you were born between 1965-1980 (41-56 years old), you are this age or a similar age.
In other words, if you earn $ 50,000 per year, you must have saved at least $ 300,000. If you earn $ 150,000 per year, you should save at least $ 900,000.
Yes. As much.
Even if you’ve been a long-time saver and investor, you might realize with shock that you’re just below that âmagicâ number. But here’s the deal. So many articles focus on money – do this, not that – that they forget a completely different element to get there. What about laser focus, persistence? Squeak?
Here’s how to close your deficit (even if it’s small) using your mindset and a few other techniques.
How Not Saving Enough Could Affect You
First, let’s take a dark look at what could happen if you don’t save enough for retirement (maybe not the most powerful motivator, I apologize).
- You will face the rising cost of living. Think about what taxes and insurance will cost in the future. Or a gallon of milk, for that matter.
- Medical expenses can affect you. Think about what it will cost in the future to get knee or hip replacement surgery. If the cost of a total knee replacement in the United States is between $ 45,000 and $ 70,000 today, what will they look like in 20 years? You may also have to pay more for prescription drugs and other health care costs.
- You may need to work longer. You may need to work until you are in your seventies, or at least work part-time after your desired retirement age.
- Social Security probably won’t float you! Just a reminder: if you think Social Security will help you, think again. Chances are it won’t meet all of your monthly needs. (You already knew that, but it’s worth talking about again.)
- You might end up selling something. Are you wondering what that “something” could be? Your retirement plan may be to sell your home or business even if you don’t want to.
- You may have to accept a lower quality of life. If you miss those retirement benchmarks, the saddest part of doing so means that you may have to revisit your life as you know it and end up giving up on your retirement dreams.
The idea: reinvent your state of mind
This is the secret. Seemsâ¦ not so secret, does it? However, when you start thinking about ways to save for retirement all the time, it can make a huge difference in how much you ultimately save.
When you have the drive, determination, and self-discipline to do what you have to do, you are unstoppable. Most importantly, you resist short-term temptations and desires in order to achieve long-term goals. It’s the same song: long-term satisfaction rather than instant gratification.
You know the quote from Henry Ford: âWhether you think you can or not, you are right.
You can use the power of your mind to:
- Focus on the laser: When you laser focus on something, you are mentally giving 100% of your attention to tasks. (Imagine how we could do this if we didn’t have cell phones to distract us.) Developing laser focus allows you to focus on one goal and then the next.
- Digging in the sand: It means having courage, awareness, persistence, resilience and passion for something, according to famous research by Angela Duckworth. Can you have courage when it comes to catching up on your retirement? Of course.
“If you are going through hell, keep going,” said Winston Churchill.
Let’s go over a few other tactics that involve real money, as I agree that willpower alone is not enough. You must have the capital to support it and practical advice too.
Get a concert
You will join the ranks of your young peers, the Millennials, if you have a little side. A whopping 50% of millennials have a secondary activity, compared to 39% of all consumers.
Which concert works for you? Think about what you do best: What would people pay you for just $ 10 for? (Of course, your side gig may allow you to charge them even more!)
Whatever $ 10 thing is, multiply it by 10, then again by 10. And again. And even. Ask people to help you if you need it. The point is, you can make a lot of money just by thinking about what you can do for just $ 10 (or more!) That you can give to the world.
Now are you going to use the money you earn to buy a boat? Go to Bermuda?
No! You are going to dedicate it to your retirement accounts!
Use catch-up contributions
The Internal Revenue Service sets limits on the amount you can contribute to your retirement accounts each year. You can contribute $ 19,500 to a 401 (k) or 403 (b) in 2021. People 50 or older can catch an additional $ 6,500 in 2021 to a 401 (k) or 403 (b). Those with a SIMPLE IRA plan can contribute $ 13,500 in 2020, but you can contribute an additional $ 3,000 in catch-up contributions in 2021.
Okay, this may not seem like something you are interested in at all. However, it can make sense if you enjoy your job. (I’m just throwing the idea over there.)
Maximizing your catch-up contributions and any correspondence with the employer could add a huge boost to your traditional 401 (k), 403 (b), or IRA. Plus, they could help you lower your taxable income and lower your overall tax burden.
You will also delay Social Security and might collect more money if you wait. For example, if you start collecting Social Security at 62, your benefit would be about 29.2% lower than it would be at your full retirement age of 66 and 10 months, depending on the Social Security Administration. (This calculation refers to rates for 2021.)
Downsizing and budget
Finally, take seriously all. Take a look at your incoming money. Divide it into immediate, short term, and long term expenses and allocate it to the right places. Sell ââyour house if you have to. Go budget crazy. Do whatever you need to do (within reason) to get your retirement savings because you are laser focused.
Work on your mindset – the rest will follow
Granted, this retirement / mindset info works for anyone of any age, but GenXers may be feeling a heavy burden right now as six times their annual salary may seem like huge. (At least that might sound outrageous compared to the savings Millennials require from their annual salary by 30 times and three times their annual savings by 40).
A pinch of grain can go a long way. Take an active approach and put yourself in an ideal retirement situation that meets your goals.
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