One of my areas of expertise is making mistakes. I have literally made a mistake in almost every aspect of life. Be it family, career, faith, financial, business, friends, you name it, I've made an error with it. However, what's important is that I haven't let those mistakes define me or hold me back, and neither should you, especially when it comes to retirement planning.
Retirement mistakes come in all different shapes and sizes with some of the most popular being:
- Not saving enough
- Not saving at all
- Taking a loan against a 401(k) or 403(b)
- Withdrawing and spending a former employer's retirement plan instead of rolling it over
- Bad investment choices
- Being out of the market when you should have been in and vice versa
One of the main reasons so many people can feel trapped by their past mistakes is the media, and that includes me. On a regular basis, investors are reminded of the blunders they have made, or may still be making, through emails, newsletters, magazines, radio shows and television. That's why I want to emphasize here that you shouldn’t let those stories, statistics, or figures define you and your retirement plans.
In my Naked Retirement workshop, I ask members of the audience to reveal to the group, both their age and how much they have saved for retirement. You should see their faces. They not only panic at the idea of disclosing their age but nearly flat-line at the notion of sharing the dollar amount they have saved for retirement. Of course, no one ever has to divulge these numbers, but I use this method to establish an important point. Their age and savings amounts don't define who they are or what they stand; it's their everyday actions and behaviors that do. And you always have the ability to change those aspects of your life.
Whatever your retirement mistakes have been, you're not alone, and you can turn things around. Here’s how:
I never ask people to forgive themselves; I tell them that they need to do it. Stop feeling bad, guilty or ashamed of the past. Forgiveness starts by accepting the fact that no one can change what's already happened. Simply go forward as disciples of good financial behavior.
Saving Is A State Of Mind
Stop worrying if you aren't matching funds at work, or can't even save 1% of your pay. The important thing is to start saving … even if it's only a penny or nickel at home to start. Turn savings into a habit and be proactive by starting your day by asking yourself, "What can I do better or different that will result in savings?" You may not uncover a gold mine each and every day, but you will begin to condition your mind to think differently.
Be Patient And Expect Setbacks
Channeling any new mindset and approach takes time. Farmers can't just throw a few seeds onto the ground and expect a crop overnight. It takes time and work. And you have to expect setbacks. Things won't always go as planned. Something may come up that drains savings… but that's what that money is for. Don't fall into the "oh, poor me" attitude that makes you think you can never build up a savings account. Instead, expect the unexpected, and celebrate that you have the funds cover it when it does happen.
Set Achievable Goals
In order to avoid falling into a routine of mistakes, start small. Save $1 a week or month if that's all you can do. Whatever you do, make your first savings goal achievable. Too often, people set goals and, when they don’t reach them, they try to make up for it by setting an even higher goal. When they fail again, the snowball keeps rolling as they push the goal up and up, which of course makes it more and more difficult to achieve. Like a dieter who wants to lose five pounds, if they miss that goal in the expected time frame, they decide to drop 10 pounds. After missing again, the next goal is 15 pounds. Soon, they realize that higher goal is unrealistic and self-destruct. So, keep your savings goals reasonable right from the start. Start small and after achieving your initial goal, raise the bar.
Start Learning About Investing:
Plan for the day when you do have savings to invest by getting educated now. Not only will it help motivate you to save more, it will also empower you once you have the money. That can also go along way in protecting oneself from investment fraud or bad advice. Check the library, community college or adult education center for free investment workshops and classes. Social media is also a great place to find help. There are countless experts on debt, savings, and investing accessible on Twitter, LinkedIn and Facebook.
Focus On You
One of the things few people reveal about retirement is that family, friends, health, and, spirituality are the truly important things and don't require a ton of savings. In fact, the things clients most enjoy about retirement have very little to do with money. In many cases, that's partially because they've tamed their spending and paid off debt… and you can too.
While I don’t want to understate the importance of saving early and saving often, too many people are stuck within the confines of their retirement mistakes. Don't let what you have done, or haven't done paralyze you from importance of going forward. After all, it was the tortoise that won the race not the hare.