Investing Challenge: How Do Real People Overcome Challenges to Save for Retirement? One of the reasons we launched the Investing Challenge back in January was to help lighten the mood surrounding the topic of retirement investing. We've heard a lot about how far behind Americans are in saving for retirement, but we don't often hear many solutions that the average family can actually afford.
That's how we landed on the $300-a-month figure. It's a challenging number since few of us can find an extra $300 a month without some effort and sacrifice. But it is doable, and it's enough to make a real difference to your nest egg by retirement. |
1. Deal With Realities and Control Your Emotions We know a lot of folks are still debating whether or not they can take on the challenge—or if they'll ever be able to squeeze anything out of their budgets for retirement savings. We get it. One of the main reasons people hesitate to save for retirement is that they're focused on meeting day-to-day obligations.
Christina F. is a mom of five kids in Alexandria, VA. Two of her children have special needs, so she knows what it's like to be wary of "spending" money on retirement savings. "It's been hard to save for retirement because I always feel like I need to have more money in the bank since we don't know what's coming around the corner with the kids," she said.
"But I know that if we don't save now, we won't be able to take care of ourselves in the future, let alone them, if they need it," Christina continued. So she and her husband have made retirement savings their priority. They're debt-free, have their emergency fund, and watch expenses like a hawk. They've also come to the tough, but correct, decision to save for their retirement instead of building up a college fund for their children.
"We feel that the best gift we can give our children is a strong work ethic, good money sense and not having to care for us when we get old," she said.
2. Refine Your Budget and Work Toward Your Goal Over Time Making up your mind to put retirement savings at the top of your to-do list is just the first step. Now you actually have to find the money. Dave, along with many retirement experts, recommends you invest 15% of your income just for retirement. That can sound like a huge chunk of cash, especially if your budget is so tight it squeaks.
When Katie R. quit work to stay home with her kids, her family in Mason City, IL, had to learn to live on just one income. After such a drastic cut, they finally had to face the fact that they could not afford to put away 15% of her husband's income for retirement. But they didn't stop investing just because they couldn't reach the 15% goal.
"We were just doing as much as we could," Katie explained. "However, each month we were able to tweak the budget a little more—stuff like changing his W-4 and our cell phone package. We can now afford the 15% for retirement, contribute to the college funds, and increase our 'fun' money!"
Budget cutting isn't the only way to reach that 15% goal.
Judy Z. from Spring Branch, TX, started her retirement savings plan nearly 20 years ago by contributing just 3% of her salary. Then, each year she received a bonus, she diverted most of it to her 401(k), and each year she received a raise, she put a third of that into her 401(k) as well.
"It did not take long to max out my 401(k)," Judy said. "At age 51, my husband and I have two kids in college with their costs completely funded. We are at the point of severe wealth building, and our giving has increased significantly!
"It is a great feeling to know that I could retire at age 60 if I choose," she told us.
3. Let Go of Past Regrets But not everyone gets a strong early start like Judy. When Rick P. from Cookeville, TN, attended a Financial Peace University (FPU) class in his area, it opened his eyes to how far behind he was in saving for retirement. "At first I felt discouraged because of my age and the fact that this was a late start," he said.
This is where a lot of people get stuck. They see retirement saving as a mountain that's too large to climb at this point in their lives. They give up before they even begin.
If you're overwhelmed by the prospect of building a nest egg at the eleventh hour, go back to the first step and separate your realities from your emotions. One of the best ways to do that is to get all the facts—where do you really stand now and where could you be if you started saving with gazelle intensity?
That's how Rick got his retirement savings back on track. He took what he learned in FPU and then met with of one of Dave's investing Endorsed Local Providers (ELPs). Now Rick is 59 and is looking forward to the future. "We are now totally debt-free! Our Roth IRAs are fully funded, and our 401(k)s are on track! Yes, there is a light at the end of the tunnel, and it is a sunrise on a great retirement ahead!"
Take the First Step If you're not as confident as Rick that your retirement savings is on track, you can start to change that right away. Take part in our Investing Challenge and start investing $300 a month for retirement starting this month. And put that hard-earned money where it will do the most good: in good growth stock mutual funds. Work with an experienced investing advisor you trust to help you open your retirement accounts and choose the best funds for long-term growth.
If you need an advisor you can work with to help build your nest egg, we can put you in touch with one Dave recommends in your area today!
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