When we need to make our money go further, we might feel that we need to earn more. And when we are scrambling together or finances for retirement we may feel that we’ve got to spend a good few years really putting money into their pension pot. But it’s not just about the physical act of getting money. It’s also the mindset that we exude. So what does it take to switch our mindset into action?
Look at Your Retirement Wants and Your Retirement Needs
There is a significant difference between the two. You may feel that your retirement years will be the best opportunity to live a life of luxury and comfort. But if you have already been scouring the ads with luxury homes for sale, but you feel they are out of your budget, now might be the time to start compartmentalizing your budgeting approach. You need to split your money into three areas. Firstly you need to assess the needs and put money into this. The next one would be investing funds in a money pot that is labeled “nice to have.” The third one is about the things that you want. When you set aside three different accounts, this makes everything more tangible. But it also makes you truly think about what you really want in life. You may believe that you want a certain amount of holidays every year during retirement and if you want to make this a reality, you’ve got to start investing in that third money pot.
Looking at Your Income Sources
As spending goes through peaks and troughs in retirement, so does your income. This means that we may have different levels of income depending on the year that our Social Security started in comparison to our 401(k)s and IRAs. And as retirement income can peak and trough throughout the first 10 to 15 years and then even out, it’s important that we address these issues using retirement planner tools and identifying all of our different sources of income. We need to look at how these things will evolve over the course of our retirement so we can live our best life.
Looking at Your Opportunities
Now is the time to get into investing if you never have. When you start to address how you can invest you need to think about the level of risk that you can take with your assets. Saving accounts are crucial, but you also need to look at how you will be withdrawing the money after you retire. A good example is if you are delaying the start of your Social Security to the age of 70 but you intend to retire at the age of 65. If you do this, you will need larger withdrawals during the first five years of your retirement but you need these withdrawals secured with safe investment options.
It’s not just about the pot of money we have, but it’s about what we do with it. This is crucial to saving for the retirement you want. Fix your mindset, and you can fix your retirement.