Okay, let’s be honest, the vast majority of Americans haven’t or aren’t saving nearly enough for retirement. On the other hand, there are people out there (and hopefully you’re one of them) that are stashing away as much money for retirement as possible, and diligently working to make sure that, when their “golden years” arrive, they’ll be ready to handle anything that comes they’ll way.
With that in mind, below are a few reminders that will help you avoid some common missteps that diligent savers like yourself sometimes make. Enjoy.
The first is simply that you can actually save too much. Yes, having plenty of money saved for retirement is a good idea because who knows what’s going to happen. When you don’t have a steady paycheck coming in, small emergencies can become bigger in an instant. On the other hand, using some of that money that you earned over the years to create meaningful relationships, go out and have fun, travel, donate to charities and otherwise make life worth living is still a good idea. Sure, some expenses aren’t worth the money, and you certainly don’t need every little convenience, but if you already have enough money saved up, using some of the money to enhance your life, or the lives of those around you, is a great idea.
Next we’ll talk about your portfolio, and the fact that if you “tweak” it too much, you may end up losing money rather than making it. The fact is, if you choose the assets in your portfolio correctly and then let time and compound interest do their thing, by the time you get to retirement this simple strategy will, in most cases, work out just fine. The beauty of having a portfolio that’s properly diversified is that, in almost all cases, it will grow and earn you money over the long run no matter what you do. So why mess with it, stress yourself out and take the risk that you make the wrong decisions.
Speaking of tweaking your portfolio, endlessly checking the markets to see what’s going on, and listening to all the “noise” being made by pundits, so-called experts and talking heads will drive you just as crazy. The fact is, the stock market is like an emotional roller coaster and can mess with your emotions, causing you to make rash decisions and hurting your chances of becoming financially independent. To avoid this, make your investment plan and then stick to it rather than letting all that noise get in your head.
Lastly, do your best to stay motivated to keep working. This is a bit difficult because you want to keep earning as long as possible but also start enjoying your life and avoid burnout. Of course the timing of your retirement is totally up to you but it’s a decision that will, for all intents and purposes, affect you for the rest of your life. If you’re happy at work and still able to go in every day with a smile on your face, you might not want to change that situation just yet. On the other hand, if you’ve become fed up with the rat race and have plenty of money and assets set aside to support yourself and your family, the world is your oyster, so go enjoy it.
The best part of becoming financially independent is that you can put time and life ahead of money and working. Once you’ve done that, the key to enjoying that life is to make sure that you control your money, rather than the other way around.