Don’t Underestimate the Importance of Your Mindset Toward Your Finances
- March 13, 2023
- Financial Planning, Psychology, Retirement Planning
The concept of retirement planning seems simple. Despite changes in the economy or in life itself, the concept of planning your retirement has remained unchanged. We work, save, retire, and repeat for generation after generation. But while the concept may be the same, the puzzle is evolving. In other words, individuals and families currently saving for retirement are facing challenges that were previously never considered. Without pensions and hefty Social Security checks, it is now equally as important to maintain a healthy attitude towards spending and generating income as it is to actually save throughout your journey toward retirement.
Create a Habit out of Saving
In today’s world, more and more U.S. companies are phasing out defined benefit pensions and are instead replacing them with 401(k)s or Roth IRAs. Unfortunately, these contribution plans are more subject to market ups and downs than traditional pension plans, which means you could face some risk while you save. This, however, does not mean that the retirement of your dreams is out of reach.
As many of us know, the earlier you begin to save, the longer your money should last you. But the reality is that an individual’s income, spending, and ability to save vary significantly throughout life. Given all the work environments, lifestyle changes, and economic shifts that you have experienced, the traditional idea of accumulating wealth and generating revenue for retirement is not necessarily as feasible as it appears. With that being said, it is important that you do not lose focus or give up on your goals. For some currently striving to save, this feat may feel unreasonable. But by dedicating a chunk of time, effort, and a portion of your paycheck to this goal, you can actively better your future. Refer to this period of life as the “accumulation” phase, as it is vital to continue to grow your savings while you are still working. Having the proper retirement mindset could be the difference between the fear of unpredictability as we age and experiencing the joys of freedom in creating new, exciting memories during our golden years.
Steady Your Transition-Period Mentality
Shifting from saving to spending takes a whole new set of rules to follow and habits to employ (or break). You spend a good portion of your life accumulating your finances in preparation for this next chapter, but now comes the time when these savings are put to use.
At first, you may find it hard to start spending this money. It’s likely that once you reach retirement age, you have created a habit of collecting your paychecks. But it’s important to remember how hard you have worked for this and that now is the time to be rewarded. However, it goes without saying that your retirement plan and spending habits need to be flexible. As you settle into this new phase of life, lean into the “give and take” mentality. Naturally, people are tempted to indulge in some of life’s luxuries after receiving a raise or promotion or experiencing a big change like retirement.
But keep in mind that constantly altering your lifestyle may cause your accumulated earnings to dwindle fast. So, checking in with and adjusting your retirement plan is necessary to instill a solid plan and maintain a healthy income. While your mind no longer needs to be set in savings gear, your financial well-being should remain at the top of your priority list.
Ultimately, retirement planning exists so that we can spend more of our time in retirement doing the things that are important to us. If you want to start mapping out your retirement plan, reach out to us for a complimentary review of your finances!