Remember that you can work in retirement.When our parents retired, they played golf, traveled, and — not counting social security and their pensions — didn’t bring in a dime. That won’t be the case for most of us. According to one recent survey, 63 percent of us expect to work for pay during our retirement. If there’s any silver lining to this scenario, it’s that continuing to work will stretch the money you’re saving now.
Attach numbers to your retirement dream.The key is to know what sort of retirement you’d like: Will it involve moving to a new part of the country? Starting a business? Will you have a mortgage? Still be paying college bills? Once you have that vision (even if it’s likely to change), calculate what it will cost. Then play around with the Employee Benefit Research Institute’s Ballpark Estimate calculator at saveforyourfuture.org to help you figure out how much you should be putting away.
Pay more attention to the money you have.There was a period in my younger life when I was out of control financially. My credit card debt added up to six months of my salary. (Shoes were, and still are, my Prozac.) Finally I started tracking my spending, and the madness stopped — essentially overnight. (It’s amazing how you don’t need another pair of black pants when you have to cop to the purchase by writing it down.) I also opted for a tougher-to-botch approach to my retirement accounts by putting money in target date funds that are routinely rebalanced to become more conservative as my projected date of retirement approaches. I also elected automatic contribution escalation, so that I began investing more without having to remember to do it. And I started banking online, which helped because I — like just about everyone who banks online — now look at my money four times as often as I did before.
And you know what happened? My stomach stopped churning. When you control your money, you control your life. Sure, financial fear still strikes at night every once in a while. But these days, my rational self knows I’m doing what I have to do to keep the true emergencies at bay.
Originally published in MORE magazine, October 2008. Read more of More's personal finance expert Jean Chatzky's advice here.