Rethink How You Save for Retirement With This Simple Trick

Rethink How You Save for Retirement With This Simple Trick

In our “60 Motivating Seconds With a CFP®” series, we’re bringing you simple tips designed to help you make progress on your money—in just a minute’s time.

This week, Stephany Kirkpatrick, CFP®, with LearnVest Planning Services, explains why calculating your cost of freedom can benefit your retirement savings strategy.

“Last weekend I enjoyed some much-needed girl time with my mom. Not wanting our fun to end, I asked her when she was free to grab lunch.

'I’ll check my schedule,' she told me. 'I might be whale watching, doing Pilates, or having lunch with a friend.'

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As she listed one activity after another, it dawned on me that the retirement my mom created for herself was a combo pack of all of her favorite things.

It's the ultimate freedom package.

Typically, when we talk about retirement freedom, we think about the limitless ability to spend. But I'd challenge you to instead envision freedom as the chance to savor activities you love, and enjoy the time you couldn't afford to take off while working.

This simple mind-set change is key to transforming saving for your golden years from a dreaded task to a fun one. It also lays the groundwork for this exercise: Calculate how much you'll need to fund a week of freedom in retirement—and then celebrate each time you save up enough cash to be able to afford it.

"Happiness doesn’t always correlate with spending lots of money—it's about living the life you want."

Why It Works: So often we resort to scare tactics—envisioning what we won't have—when trying to psych ourselves out to save for retirement.

But how demotivating is that?

Keeping the idea of freedom top of mind, on the other hand, will help drive you to stash away more because you'll understand what feeling you're working toward—and not what you're trying to avoid.

How to Get Started: Think about all the hours you currently spend working—and how you'd love to fill that time as a retiree.

Maybe you'd volunteer, spend time with your kids or join a sports league. Just remember: Happiness doesn't always correlate with spending lots of money—it's about living the life you want.

Next, calculate approximately how much cash you'd need to afford that lifestyle for one year, making sure to factor in expenses like food and housing, in addition to the cost of the fun activities on your list.

Since this is a hypothetical calculation, don't obsess over precise figures—but do keep in mind that, generally, your dollars will be worth less by the time you retire, thanks to inflation.

Finally, take your number and divide it by 52 to get your target savings goal for one week of blissful, retirement freedom—and make it your mission to bump up your 401(k) balance by that multiple as many times as possible!"

RELATED: Common Mistakes Financial Planners See When It Comes to Retirement

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

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