Thanksgiving has come and gone and many of us likely found ourselves partaking in the elaborate spending process of Black Friday and Cyber Monday to prepare for the holidays. Grandiose sales and deals can be enticing, but in order to plan for a life a restylement, one must understand the importance of tracking your expenses and developing a budget to adequately prepare for life after work. In part two of our series on restylement, we integrate the idea of intentional saving to understand what is financially needed in your post-working years so that you can sustain a similar, if not better quality of life.
Once you know how much you have to provide for the future, you can begin investing into your restyled life. If your needs are not in the near future, you can invest these savings more aggressively.
The landscape of retirement has changed, which is the result of two factors. First, people are not wishing to just retire; they are wanting to continue a stimulation of their mind and body. Second, the recent shift away from pensions has hindered the majority of people’s financial ability to simply select when and how they will retire.
Saving for something as abstract as retirement is challenging. The difficulty behind this process is knowing when we will need it and how much we will truly need. For most of us, this action requires a saving method that eliminates our power of control. Participating in a company-sponsored plan like a 401(k) is a successful, safe way to achieve a retirement goal. Another method is to set up automatic withdrawals from a specific account.
There are company-sponsored plans including 401(k) and 403(b) plans. There are also individual retirement accounts (IRA) and Roth IRA options, as well as individual and joint brokerage options. The best way to utilize the various account type options will depend heavily on your specific situation.
Maximizing a company-sponsored plan is the easiest option for retirement saving, as the funds are deducted before you receive your paycheck and are difficult to access until you reach the age of retirement – the definition of intentional saving. For others, the flexibility of a broader range of investment options available in non-company sponsored plans is more favorable.
Saving For Restylement
With so many people changing how they are saving for their later years, it is more important than ever to understand why and how you want to live.
One of the most common questions we are asked is: “How much do I need for retirement?” The answer to that depends on your individual situation. Think about your personal finances. How much do you spend? How much income will you have available in retirement, including Social Security, pensions, and real estate income?
Regardless of where you are in terms of approaching a time of restylement in your life, the best methods you can practice in order to prepare is to save every available dollar and invest them accordingly.
To review, in our two-part series, we have covered emergency funds, saving for major goals and top priorities, and how to properly fund for your restylement. What is left is funding a legacy – leaving money to children or funding a charitable organization.
Once you have covered funding for all your other priorities, you can then begin directing excess savings to your restylement goal and invest according to the conditions of the goal.
Preparing for your restyled life is an abstract concept. We work hard, pay our bills, buy what we need or want, and rinse and repeat this cycle on a routine basis. But if we want to live intentionally, we need to restyle our lives, and save and invest intentionally.