I work with clients on how to tame financial anxiety. I teach them the practical skills needed to manage their cash flow as well as help them explore their emotions around money. This work propels them into a balanced lifestyle- where they spend within their means and feel good about it.
Fearing the future
But what of the future? Nothing brings up fear and anxiety about the future like retirement planning does. In the middle of the night we awaken worried about our future- what will we do? How will we take care of ourselves? Will there be enough? Some become haunted by images of bag ladies destined to walk the streets with their shopping bags. We awaken and think, “I have to get a handle on retirement”. But then the cold sweat recedes into the background and forms a kind of free floating anxiety. And no action is taken.
We all want to retire and live comfortably. One of the reasons we take no action is that we simply don’t know what to do. And not knowing what to do keeps us locked in inaction. Articles on retirement planning can be complicated, and we are often stopped by the numbers. We immediately become suspicious that we don’t have enough money to save for the future, so why bother looking under the bed at the monster? Better to not think about it.
Why scaring people doesn’t work
Some financial writers try to scare you into action, by painting dire numbers and depressing, “if you don’t do something right now” scenarios. The obvious problem is that fear and anxiety are well known to keep people from doing anything. It literally freezes them.
And of course there are all those articles on how we should have started saving when we were 25 because of the power of compound interest… but these articles serve to shut us down if we are 43 and haven’t done a lot. We feel defeated before we even start. We feel hopeless, like we’ve lost too much time and we can never catchup. And I’m sorry, but retirement funding was NOT on my mind at 25 as I debated marriage, grad school loans, babies and a used car that didn’t have a lot of use left in it….
It’s not too late to catch up
So let me be clear- it is NOT TRUE that it’s too late to catch up and be on track for retirement. Many of us who started late, for a wide variety of reasons, simply need to open up to the creative possibilities that lay before us. Maybe we were wiped out in a divorce at 40 (I was). Or we’ve simply been deeply distracted by raising kids and managing our careers and dealing with a variety of curve balls that life likes to throw.
On the positive side, we are older and wiser now. With our life experience we can think more rationally about lifestyle and not get as caught up in how society tells us we should live or spend.
Some positives of being our age
Another positive is that many of us make a lot more money now than when we were 25. This is great news! So while our expenses have obviously increased from 25 as well, we are working with more money and can direct some of this to retirement, once we get clear.
Experience has also likely taught us that automatic monthly deductions can be our friend (like that 401k pull), and that inevitably we will be able to live on what is “left over” after the contributions are taken from our account or paycheck. In fact, it’s highly likely that you’ve adjusted many times in your life to varying sizes of income. This is the power of life experience.
One Possible Action
So now is a great time to sit down and wrap your arms around retirement planning. Taking a couple of actions will make a big difference.
One action may be significantly increasing your 401k or IRA contribution. Make it monthly, not annually. That is MUCH more livable and doable.
One thing I tell my coaching clients is to not fight basic financial psychology. It is very hard for most people to find large chunks of money once a year. It’s almost always better to invest automatically once a month with a paycheck deduction or a deduction from your checking account. If you learn to live on what is left after a monthly contribution, you will be a MUCH happier person, one who doesn’t think about this all the time. (And you’ll actually make more money in your investments- you will take advantage of what is called “dollar cost averaging” with monthly investing, not risk bad market timing by investing only once a year.)
The truth is that monthly investing brings sanity and happiness. AND it also means you really will think about money LESS often. Bonus- you can avoid the stressed out mad scramble to fund your IRA in one fell swoop just because your accountant tells you what it would save you in taxes.
Releasing energy
Increasing your investing, or starting to invest, IS doable and we do have enough time when we enter into the conversation and put a couple of things in place.
The glorious upshot is that if we can come to the place of feeling like we will be okay because we know we are “on track” and will have enough money to live on someday, this releases enormous energy. We don’t fear the future or dwell on it. It frees us up to enjoy our lives that much more in the present.
In a future post, I will share five basic steps to planning your retirement. (With a couple of simple calculators thrown in. Oh fun!) Then we’ll get you to an investment planner and off you’ll go.
Last, if you are curious about the difference between a money coach and a financial planner, please read this post.
