As a financial advisor, a frequent concern I hear from clients is about being able to attain the life they have dreamed of when they hit retirement.
Countless articles about saving strategies and investment choices seek to teach people how to have the discipline and patience retirement saving requires.
While I agree saving is very important, these articles often miss one vital point: life should be enjoyed. All of life. Not just retirement. So, let’s talk about how to get the most from your years while also providing yourself with an adequate retirement.
I try to stress the importance of goal setting because it allows us to set a road map for reaching a successful retirement. This roadmap will have countless variables but should always employ one very important tool: a good, old-fashioned budget. Budgeting is the foundation that we build our retirement upon.
You may have seen different budget styles and perhaps you even have implemented one. I favor the 50/30/20 method. This budgeting technique allows us to consistently and confidently build a retirement nest egg but also leaves room for fun along the journey.
The 50/30/20 budget breaks your income into three simple sections. The main chunk, 50%, is intended to cover your needs. Think housing, utilities, and groceries, which make up the majority of your monthly expenses.
The smallest section, 20%, is the savings portion and also covers debt repayment. This might include student loans. The Certified Financial Planning Board recommends saving 20% of your monthly income. You can set aside enough money to build a robust, stable retirement but also enjoy yourself.
The remaining 30% covers your wants. It allows for a responsible amount of freedom. Just be sure to have the discipline to stick to your budget and not let that 30% creep to 40% or more.
Likely, your budget will ebb and flow over the years, which is why I advocate for working with an advisor to build a road map. Just like a family vacation, there might be detours and stops along the way, but you eventually get there. The same is true for retirement savings. It’s important to enjoy the journey not just the destination.
To get started on a roadmap to your retirement goals, reach out any of our advisors to guide you on your journey.
By Max W. Feller
Financial Advisor
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