I’ve traveled all over the country, and I’ve coached thousands of people. In that time, I’ve heard just about every excuse for not investing for the future:
“I know people who lost money.”
“I don’t have any money to invest.”
“I’ll invest later.”
“I’ll just work until I die.”
I’ve talked with countless people whose retirement strategy is to work until they can’t anymore. They figure they won’t retire. They’ll live on the income from their job, so there’s no need to set aside money for retirement. Problem solved.
That’s a horrible financial strategy. And I can prove it.
What If You Can’t Work Anymore?
To be honest, in my younger days, I didn’t quite know what to say to people whose only retirement plan was to work until their death. And then I met a man who changed my perspective.
I’ll call him Carl. He was 48 years old. He was an average guy with an average salary. And he had just been diagnosed with early onset Alzheimer’s disease.
I was stunned. I’d never met anybody who’d been diagnosed that young. He had come to get his financial house in order, so to speak. He knew his time was limited—and uncertain. His body was still strong, but his mind would betray him. And he would not be able to work.
That’s the problem with thinking you’ll just work until you die. You’re making a huge assumption—that your body and mind will let you keep going to the office every day
What happens if you get a diagnosis like Carl’s? Or what happens if you’re sharp as a tack but you get cancer? Work may not be possible anymore. Then what?
You Can’t Predict Your Future . . .
If Carl’s story doesn’t convince you to create a financial plan for your future, then maybe statistics will. Earlier this year, the Employee Benefit Research Institute released findings from a study on retirement confidence. It found that 48% percent of retirees leave the workforce earlier than they planned. That’s almost half of retirees! That means either you or your spouse or best friend will fall into that group.
Do you know what that statistic tells me? Life happens. You can’t count on a future that you can’t control—and you can’t control the future! Like Carl, you may face a debilitating disease. Your job could be phased out. You could have a horrible accident and be left unable to work. Your mind or your body may prevent you from that lifelong career. You need a better plan.
. . . But You Can Plan for Your Future
You can’t control the future, but you can plan for your future. If you’re going to err one way or the other, err on the side of preparation! Not only will you be helping your family, but you’re also giving yourself a better future—one that doesn’t involve you clocking in every morning. And the sooner you decide to take action, the better off you’ll be. Here are some steps to take:
- Get on solid financial ground. Ditch debt and live on less than you make. It’s a radical way to live in today’s culture, I know. But the rest of the culture is flat broke and swimming in debt up to their eyeballs. To change your future, you have to change your behavior. Believe me—it feels great to write that last check for your car payment. With debt behind you, you can focus on your future.
- Invest 15% of your income. Once you’re out of debt (except the house), you can start working on your plan to build wealth. Talk with your HR department about opting in to your company’s 401(k) program. If you’re just starting out, you may have to work up to saving 15%, but the earlier the better. Remember, time and compound interest are your best friends. Taking this one step could radically improve your future. If you need help, talk with an investing professional.
- Buy life insurance. The purpose of life insurance is to replace your income should something happened to you. It’s a loving way to provide for your family—and you should take that responsibility seriously. If you’re single and don’t have any family or debts, you can forego this step. Just make sure you have enough money in the bank for your funeral expenses. I know all of this sound a little morbid, but it is an act of love. Your family will be grateful if the worst should happen.
- Protect your wealth. That means getting your will done. Designate beneficiaries and set up trusts to control the distribution of your estate (the stuff you own, like money and stocks) after you die. You can spell out exactly what will happen to your assets, so there’s no question and no painful squabbling among family members.
Here’s the deal: You control your finances—they don’t control you. The moment you decide to become the boss of your money, you’re giving yourself a better future. If you need help, talk with a financial coach and be honest and transparent about your situation. Together (and with your spouse if you’re married), you can create a plan that puts you back on track and gives you the best chance for a retirement you can enjoy with your family and friends. That’s a much better plan than going to the office forever.