I don’t know about you, but I like looking at goals from all perspectives and going after them on multiple fronts. If you’ve set a goal to save more for retirement, you can definitely take a multi-pronged approach. You’ll maximize the chances of meeting your retirement savings goals by taking charge of your:
You’re probably used to hearing about the first two from financial guys like me. However, making sure all three work together is the key to creating a “work optional” retirement to pursue your passions and hobbies, enjoy work within an encore career and have time for the relationships and loved ones that matter most in your life. So here's how to tackle all three types of goals. (For more, see: Can I Retire Yet?)
Strategy 1: Take Charge of Your Spending
Many times when I talk about this, clients fear that I’m going to drag out the dreaded “b” word – budget. Here’s the thing: we’re all busy and unless you are in dire financial circumstances (maxed out on credit cards or unemployed for long periods of time) it is not a good use of your time to spend 10 or more hours a month tracking every dollar you spend.
However, if you’re having difficulty meeting your retirement savings goals, knowing and limiting what you’re spending in a few key areas can make a huge difference.
Strategy 2: Take Charge of Your Saving
Everyone knows they need to save something but people often wonder, “How much do I need to save for retirement?”
While everyone is different, I’ve done the math and can safely say one of the biggest drivers is how early you get started. It’s important to note that everyone’s unique circumstances are different, but figure on saving at least:
- 10% of your income if you start in your 20s
- 15% if you’re starting in your 30s
- 20-25% if you’re just getting started in your 40s
Also, if there’s a big gap between what you’re saving now and what I’m recommending above, don’t resign yourself to a lousy retirement. If this is the case, make a plan to increase your retirement savings by 1%-2% annually until you reach the targets I list above. It’s often easier to increase your savings rate whenever you get a pay raise. If you get a bump in pay of 3%, you can raise your retirement savings by 2% and still be bringing home more in your paycheck. (For more, see: A Household Spending Plan to Save for Retirement.)
Strategy 3: Take Charge of Your Career
As mentioned above, this may seem like an unconventional topic for a financial advisor. However, it’s a critical one for your long-term financial well-being.
Gone are the days that people exit high school or college, get a job with the local manufacturing company, work 30-40 years and retire with a big fat pension. In fact, not only are companies quick to pull the downsizing trigger when business conditions get dicey, they’re also looking to replace human beings with technology in all kinds of professions. Blue-collar jobs in manufacturing, transportation and fast food service are under assault. As an example, I recently read an article on the debut of Uber’s self-driving cars.
And traditional white-collar jobs are far from immune. Many companies are reducing headcounts with enterprise resource planning software that eliminates the need for human beings to re-key and transfer information from one division to another in a corporate setting. And recently, the law firm Baker & Hostetler announced it would be using its first robotic lawyer to help its human counterparts get ready for cases.
When I’m putting together retirement plans for my clients, one of the biggest risks to the plan is staying fully employed throughout your working career. As a result, I have begun offering career coaching services for my clients and also directing them to some of my favorite online resources including NextAvenue.org, Career Pivot and 40PlusCareerGuru among others.
Although far from an exhaustive list, here are my top seven ways to take charge of your career:
- Don’t wait until you’re out of work to start thinking about your next job. The best time to look for new, better long-term employment opportunities is while you’re still working.
- Fall in love with LinkedIn. Build out your network first among co-workers, then expand to social and community connections and people you meet within your line of work. Have a professional headshot taken (no selfies, please) and make sure your profile is typo-free and gives people a clear understanding of what you do and what your strengths are.
- Add value. If at least half the people you work closely with can’t complete the sentence, “Thank goodness [insert your name] is here because…” then figure out how to do things better or differently until people are routinely singing your praises. Even if you’re not sticking around in this job for long, your current co-workers can still be a great source of recommendations for your next gig.
- Take an experimental approach to your career. This is particularly important if you’re pursuing a new line of work or considering opening a business for the first time. If you’re just getting started, make a list of all the tasks you could do to explore this new career path. Pick one or two and run an experiment today by getting them done, seeing what happens and identifying the next small “experiment” to run within this new line of work.
- Be a lifelong learner. As noted earlier, the types of jobs and skill requirements within each job are continuously changing. Accept and embrace this whether you’re just looking to keep your skills sharp within your current role or pursuing a new profession.
- Find your unique ability. Your unique ability is the small set of tasks that you do exceptionally well and love to do so much that you’d be willing to do them all day long even if you weren’t being paid.
- Steer your career. Once you identify your unique ability, steer your current job toward focusing more and more of your daily efforts on these types of tasks. Once you start to do this, you’ll often be amazed at how much influence you can have over your daily efforts and the focus of your job. And if you do sense your current employer is not open to allowing you to focus on what you do best, it’s probably time to kick the job and career search up a notch to be more in alignment with the work you’re meant to do.
We’ve covered a lot of ground in terms of saving for retirement. To get started, within the next three days choose to take charge of one of these three areas (spending, saving or career). Put plans in place to control spending, boost saving or make yourself irreplaceable either at your current job or in a new profession. When you do, you’re 70-year-old future self will be applauding in the background with the knowledge that you’re doing what you need to do now to create an enjoyable and prosperous retirement. (For related reading, see 5 Strategies to Avoid Outliving Your Money.)