Have you ever seen people who are living their retirement dreams and think to yourself, “How the heck did they get there?”
There’s joy in their voice as they talk about their plans to travel the world or a special cause they care about and how they help; and it’s contagious!
So, how did they really do it? First of all, you need to understand, that they’re probably not financial wizards. It’s simply because they’re retirement-savvy. It’s not like they have some secret formula for retiring well. They weren’t watching the stock market every minute of every day, or even have complex financial portfolios either.
Are you ready for the big hack they’ve been using?! It will blow your mind!
Get this: They put money in their retirement account every single month, year after year. Jeez! They kept their spending in check and simply made saving a priority. And they probably used the help of an investment expert or pro during that journey of theirs.
That’s pretty much it! It’s not complicated at all, and ANYONE can do it!
But we need to take a deeper look into what this looks like in everyday life. That’s why we’re going to check out some things people do (and you can too) to be successful in retirement.
1- They understand their income is their biggest wealth-building tool
Smart investors take advantage of their most effective and reliable way to build wealth; their income. It doesn’t matter how large or small their household income is. They will give every dollar (or Riyal) a purpose or job to do.
Another really important thing they do is completely stay away from debt because they know living debt-free gives them the freedom to do more with their money – like plan for the future.
There was a study done, called the The National Study of Millionaires. This research was done in the US only, but I do imagine that this rings true for most millionaires around the world. The study shows that nearly three-quarters of millionaires have never carried a credit card balance in their life – and this makes sense, right? Think about it; how can you save for retirement if you’re constantly giving your hard-earned money to the bank?
2- They make a monthly budget – and stick to it
People who are retirement-savvy know exactly how much they spend on groceries, eating out, and spending on clothes, and so forth. And if they run out of latte money before payday, they simply drive past the coffee shop to avoid breaking their budget. This goes for anything, even if it’s a couple of bucks (or Riyals) we’re talking about here.
And why do they do this? Because every Riyal adds up, and they know that small, everyday choices like that make the biggest difference in the long run.
3- They invest 15% of their income in retirement
After they pay off their debt (except the mortgage), and save three to six months of expenses, smart investors save 15% of their household income in retirement. Interestingly enough, almost half of millionaires say they invest 16% or more of their income each month toward retirement!
Studies have shown that people who follow the steps I mentioned above and invest 15% of their income in retirement accounts actually reach the million-dollar mark on average in less than 20 years! That’s amazing!
By investing that amount, they’re able to make real progress toward a solid retirement while still working toward other important financial goals – like saving for their kid’s college and paying off their mortgage early. Now THAT sounds like a solid plan for your money!
4- They have a long-term vision for investing
Something all retirement-savvy people know is that investing is a marathon, not a sprint. You won’t find the jumping from one investment to another because of stock market ups and downs. This is because they have a long-term vision when it comes to investing.
They know that mutual funds with a solid history of growth are a great investment choice to stick with for the long run.
5- They live below their means
Another thing you won’t find retirement-savvy people doing is spending more than they make. Nope! It’ll never happen! According to that same study of millionaires, 94% of millionaires live on less than they make or are living within their means.
They purchase modest houses and pay cash for vehicles and vacations. This is how they’re able to put some money away for retirement. They also don’t need the latest and greatest gadgets, because they don’t care about keeping up with an image that they can’t sustain.
Do you want to hear something else that’s interesting? That same study found that 93% of millionaires use coupons as well! Most people I meet would be embarrassed to pull out a coupon and pay for something in the supermarket. Even if it means more money in their pockets. And that’s why they remain just above being broke because they worry about what others will say about that. People that they’ll never see again make them give up on their future dreams because they don’t want to look like they’re being cheap. When in reality they’re investing in their future.
People who are savvy like this know how to score a deal when they see one, are content with what they have & stay focused on their financial goals. All this together helps keep their priorities in check every month.
6- They keep their hands off of their retirement plans and accounts
This is a huge one, folks! Borrowing from your retirement account might seem like a great way to pay for an unexpected expense now. But successful long-term investors know that you will lose long-term compound growth on the money you’re putting into that account. We could be talking about thousands and thousands of dollars in the long run.
The bottom line? Don’t do it! It just isn’t worth it.
And if you’re in the States and you’re thinking of borrowing from your 401(k) loan, this will come with high risks like taxes and penalties if you can’t repay the debt.
That’s why people who have retirement on their minds will make sure they have a solid emergency fund ready to take care of unexpected expenses that get thrown their way by life. By doing that, they can leave their retirement savings alone.
Remember, your investment needs time to grow, and withdrawing from it too early will not do you any favors.
7- They stay away from get-rich-quick investments
Another thing people who are focused on their retirement plans do is waste NO TIME chasing get-rich-quick investments.
They know better than to run after and fall for investment trends with a lot of hype and no proven results to show for it; much like cryptocurrency (at least for now).
Retirement-savvy people don’t take big, unnecessary risks with their money. They don’t put all of their money in one basket like in one stock, and they definitely aren’t emptying their bank accounts to “invest” Dodgecoin, just because Elon Musk has invested in it (and no one knows exactly how much he really has invested in it).
Instead, they stick with investments and strategies that have helped millions of people around the world build wealth the right way – and you should too.
8- They have a plan that they update as they need to
Another thing people who are good at investing do is know exactly where their money is going and how much it’s growing. They keep track of their investments by having annual check-ins with an investment professional.
They also check in with this professional whenever there’s a big life change that happens – like a new job, or a new baby, or moving the family to a new location – so they can look over the impact those changes could have on their savings plan.
Just remember, I said check-in. Not checking every hour by the hour! Don’t do that! You’ll end up going crazy and be tempted to make more rash and reckless decisions with your investments. Just be proactive, and be patient!
9- If they’re married, they work together with their spouse
Let’s get one thing straight. Couples who are on the same page when it comes to money are usually more likely to win with investments. They work as a team and win as a team. Also, a lot of couples aren’t only focused on getting ahead themselves – but they’re also motivated by their shared desire to be generous with their money as well.
And if you’re single, or newly single – no sweat! And more importantly, you’re not off the hook! Go find an accountability partner – a close friend or trusted family member perhaps – who will encourage you and keep you focused on reaching your financial goals. Take my advice and don’t do this on your own. You need someone there that can support you and cheer you on!
10- They meet regularly with an investment professional
People who are smart with their investments are fully aware that a skilled professional is worth their weight in gold, as they say. In fact, according to The National Study of Millionaires, more than half of millionaires said they worked with a financial advisor or investment professional to make their dreams of a million net worth a reality.
This is because having someone in your corner to help you choose the right mutual funds makes a huge difference. Trust me, saving for your retirement is just too important to do on your own, folks.
