The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.
I think about retirement all the time. I ask myself questions such as:
- When will I be able to retire?
- How much money will I need to have stashed away before I quit my job?
- What if I work to develop a passive income to retire instead of a big nest egg?
- What about medical insurance? Will I have to keep working just to have insurance?
With all of these questions swirling around in my mind, I tend to talk about retirement a lot. But guess what happens when I publish these articles?
Crickets.
Nobody really cares about retirement, that is, unless they are 60 years old and are finally starting to think about it. When young adults see an article with the word, “retirement” in the title, they breeze over it and think, “I’ve got so many years before retirement. I don’t need to think about that now.” That might seem logical to many, but this way of thinking is dead wrong!
Two Decisions: Your Retirement or Your Stuff
Every single financial decision you make in life impacts your retirement years. Since we will all make a finite number of dollars in our lifetime, that dress purchase, surround sound buy, and that car loan will impact whether you live well in retirement or whether you live on TV dinners in a 600 square foot condo.
If you work with somebody that has a similar job as you and therefore earns $45,000 a year (or whatever it is that you make for a salary), but they somehow live in a house that is bigger than yours, drive cars that are newer, and go on more exotic vacations than you, then they will most likely be flat broke in retirement. Do not envy them.
When we all talk about how keeping up with the Jones’s can be detrimental to one’s retirement fund, it only makes sense, but yet people are still begging the bank for money and are spending well beyond their means. Somehow people are not understanding the translation that their constant purchases are impacting their future retirement. If you purchase more stuff in your lifetime, then your retirement is going to be worse. If, however, you live on less, then your retirement years might actually be golden as they should be.
So, What is the Happy Medium?
I tend to be a saver, so I am content with saving almost every single penny I earn. But, this also means that I typically don’t have any fun. I don’t dine out, I don’t go see live concerts, and I typically don’t go on vacation. By many people’s standards, my life is boring and would be a prison sentence for them.
Others tend to be spenders. They spend money everywhere they go. They go out to lunch every day, they buy things for their friends at the mall, and they always drive the newest model luxury car. They are living high on the horse today, but their debt will soon catch up to them. Not only this, but by contributing very little into their retirement fund, they will have to dramatically change their lifestyle when they are older.
I, as a saver, will have a ton of money when I retire, but I likely won’t spend it since I am prone to never spend money on anything. The spender will get rid of all their money early in life and will need to live on breadcrumbs when they are older. Neither situation is ideal, so it is best to find a balance between the two lifestyles. We must intentionally save, but must also allow ourselves to splurge once in a while (within reason that is).
If you want to retire well, but also want to have fun today, don’t focus on buying big houses and fancy cars. Instead, put a large amount of money away into your retirement fund each year, and at the same time put some money aside for some kick-butt trips as well. You will be happy because you are experiencing life today and will have the means to do so in the future as well. Just never forget that there is a trade-off with every decision you make. It’s either your retirement or your stuff.
How about you all? How is your retirement shaping up? Do you think you’ll have enough to live well in your retirement years?
Share your experiences by commenting below!
***Photo courtesy of http://www.flickr.com/photos/120360673@N04/13856204644/in/
