If you break your long-term goals into shorter and more easily measurable increments, saving for retirement won’t seem quite so overwhelming.
It’s pretty clear that Americans need to save more for retirement. For one, people today are living longer, which means many will live in retirement for as long as 4 decades. You’ll need to save up for that! Second, depending on the number of years you have until you retire, Social Security’s as a supplement to retirement income may no longer be plausible.
One of the key obstacles for many people when it comes to saving is the instant gratification trap—spending is easy, saving is harder. Investing may be hardest of all, though, because it’s not just burrowing money away. Investing is actively learning how to make your money work for you. This involves time and effort now that won’t pay off until later.
Investing for retirement is a decidedly long-term goal. Once you’ve established your investing goals, implemented your strategy, and set the money aside, the next steps are to stick to that plan and just wait it out.
Bored already? Here are a few ways to make the waiting seem a little less mundane.
Set intermediate goals.
The idea behind an ad campaign Fidelity ran a few years ago was to “find your retirement number,” which, granted, wasn’t a bad concept. The ads were quickly discontinued, though, because they depicted people walking about hauling huge amounts of money like $2,000,000. The people hauling those numbers around looked like they were dealing with an albatross.
Thinking about a huge end number of multiple millions can make the day-to-day investment seem pointless and the long-term goal overwhelming. Don’t follow this ad campaign’s advice—break it down into smaller increments. Instead of resolving to be a billionaire on your retirement day, resolve simply to max out your retirement investments this year.
Be aware of your progress.
Saving for retirement yields promising evidence as the value of your investments begins to increase slowly. Many of us, though, receive our retirement statements, glance at them to make sure nothing catastrophic has happened, and move on with our day. Instead of just taking a glance, try taking a closer look. You may find those incremental rewards that will help you keep on track.
Rebalancing your portfolio is an often forgotten but necessary step for all investors. Investments change constantly with market swings, stock values, bond values, and the like, which can shift the value and allocation of your portfolio. Try getting things back in line to give yourself something to do while you’re waiting for your savings to pile up.
It’s not an easy task to build up a fund for your future, but it’s one that is important. The key is providing rewards along the way and breaking the goal into shorter, more easily measurable increments.