A quick internet search shows that college grads are still barely saving anything for retirement. And how can you blame them? Aside from the difficulty in finding a job and high student loan repayments, the fact that retirement is decades away gives many the false sense of hope that they can catch up at a later time.
What many don’t realize is the power of compound interest and the fact that you can get away with saving a lot less today and still have a comfortable retirement. However, when you put off saving for retirement for a few years or even a decade or two, you suddenly need to save hundreds of dollars per month just to have a hope at retirement. So how can you make saving for retirement a priority when it seems so far away?
There is one way to do this. I’ve been using this trick for the last few years and have taught it to many others as well. When they start using it, they are amazed at the transformation their retirement savings takes on. So what is this trick? It is simply to get specific about retirement.
Now, you might think this is a letdown, but hear me out. If I were to ask you about retirement, what would you tell me? Probably you would no longer work and sleep in late. It should come as no surprise then why you aren’t saving for retirement. How exciting is not working and sleeping in late? While it would be nice, you have to admit, it is nowhere near exciting.
This is the problem with most when it comes to retirement. Their retirement picture is vague. They have no clue what they want in retirement or what their life will look like. As a result, they don’t save because of something else that is more exciting, like a new pair of jeans or a smartphone catches their eye.
To overcome this, you have to get specific when it comes to your retirement. What do you want? Do you want to travel? If so, that is a good start, but you need to get more specific. Where do you want to travel to? What do you want to see?
As you figure this out, write it down and keep it somewhere accessible. Refer to it when you think about saving for retirement. Suddenly, instead of retirement meaning not working to you, it means traveling to Africa and seeing Victoria Falls. Imagine seeing that. Now that is something to get excited about and is something you probably would want to save for.
Your Dreams Can Change
Understand that you are young and your dream of travel might change in 10 years or so. This is OK. This is why you need to write down your retirement goals. You can change them as much as you want along the way. Nothing is set in stone. Doing this will keep you motivated and excited about retirement. This will increase the likelihood of you saving money every month for your retirement.
When it comes to your retirement, you have to get specific. Doing so gives meaning to retirement. You have a clear cut goal in mind as opposed to an arbitrary thing called retirement. While at first just getting to sleep in and not work might motivate you to save for retirement, it is not enough to keep you on track for years and years. This is why you need specific goals and dreams for retirement. When you do this, you will find an excitement surrounding retirement. You will second guess the thought of getting the new smartphone. After all, what is more important to you, a new gadget or the trip to Iceland to see the Aurora Borealis?