Late to the Game? Here’s How Gen Xers Can Catch up on Retirement Goals
A little brainstorming to put some more dollars away for those golden years
Your retirement race has its finish line. You determine when that is, but it's like running a race.
When you are behind and nearing the finish line in a race — you need to push yourself to catch up. Your legs may be aching, your lungs may be on fire, and you may already be in pain. You need to reach down inside yourself to move your legs to pump faster and block out the agony.
Saving extra for retirement is painful when you may not think you have the cash to do so.
I've already discussed the catch-up amounts you can contribute to your retirement funds once you reach the age of 50 (Deadly Retirement Sin #4).To be clear, we're trying to get ahead — so it will require some extra effort, bucking up, and doing what needs to be done.
I’ll present some common methods of catching up that some conservative financial gurus recommend, which you’ve probably heard from financial talking heads online. At the end, we’ll examine an alternative approach to catching up for retirement.
Bound for budget town
Before trying any of these tips, you must make a budget.
You'll need to analyze your cash flow and where it's being spent. Then you can determine how much money you can save and if you can put more away from your current job with a bit of belt-tightening or if you need to find a way to make more income. Putting together the numbers on paper is one thing, but actually sticking to a budget is the tricky part.
Hey, I started out mopping the floor just like you guys. But now... now I'm washing lettuce. Soon I'll be on fries; then the grill. In a year or two, I'll make assistant manager, and that's when the big bucks start rolling in. — Maurice in Coming to America
Actionable Tip: Set aside time to manage your finances with high-powered budgeting apps. Most are pretty easy to use, so using them is not as painful as using spreadsheets.
Trimming away the extra expenses
These are tiny steps to get some savings - but it may take all the pleasure out of living.
You may have heard the Suze Orman fable that if you didn’t get that Starbucks cup of coffee every morning for 40 years, you’d have a million dollars. I call it a fable since people remember that story, and it’s not particularly true in today’s terms. The problem is that one cup of coffee has multiplied into multiple cups of coffee, draining our bank accounts and preventing us from saving.
How many streaming services are automatically withdrawn from your bank account?
Which subscriptions do you not even use?
Does your gym even know you are a member?
Does the Uber Eats driver know your address by heart and your favorite orders?
Or did your daddy buy those for you?—John Bender in The Breakfast Club
Actionable Tip: Get a subscription canceling app and let it do your breaking up for you. And get out of that gym membership.
I need to work more?
You may have a hobby you can turn into a part-time job.
That type of side hustle may not seem like work. Say you like playing golf, and you're pretty good at it — you can get a side hustle as a coach and put some scratch into your retirement account.
One of my friends was an all-state tennis player in high school and kept playing throughout his life. He talked to the local tennis club and coached there for years, which allowed him to earn extra income doing something he was passionate about.
Strange things are afoot at the Circle K — Ted in Bill and Ted’s Excellent Adventure
Actionable Tip: If you want to sock away some extra dough for those years in retirement — find a side hustle that pays.
Automatic savings for the people
I have automated withdrawals to my savings account when I get paid.
This is on top of any retirement account savings. I can't spend money I don't think I have, so it's a natural budgeting tool. If you don't have the discipline to move that money yourself, automate it.
A man’s got to know his limitations — Dirty Harry in Magnum Force
Actionable Tip: Automate that savings deposit to send it to your retirement account at a brokerage. Try Acorns to collect your pocket change (I use this app), which will help you save automatically. They even have an option to put funds in an IRA.
You want me to become Matt Foley?
The top three household expenses are housing, transportation, and food.
You may want to look at downsizing your housing, but you don’t have to live in a van down by the river.
This may not be possible if you are sandwiched between the kids living at home or your parents living with you. However, with today’s prices, you may be able to pick up something less expensive and have some cash left over to put in a retirement account. But it may not be the best move if you like your location, are locked in at a low interest rate, or have commitments to the area.
35 years old, eating a steady diet of government cheese, thrice divorced, and living in a van down by the river! — Matt Foley
Actionable Tip: Review your housing situation and see if you can reduce one of your biggest expenses.
Don’t take that European vacation
Now that COVID is over, people want to take vacations abroad or go on a cruise.
The average American spends $2,750 on a vacation. If you think about it, you could put that money to work with a less extravagant vacation. Most people have yet to explore their own town/county/state, and plenty of attractions are within driving distance (although an Airbnb may be outrageous).
Ellen Griswold: Clark, why don't we just forget the "Pig-in-a-Poke" itinerary, and just play it by ear, like normal people?
Clark Griswold: Honey, we're not normal people. We're the Griswolds.
Actionable Tip: If you take a staycation now, you can travel when you retire.
The flip side of retirement saving
Robert Kiyosaki, the author of Rich Dad, Poor Dad, offers an alternate take on all the ways to save I listed above.
One thing I agree with him about his teachings is that you need to be an informed investor, and one way to become informed is to learn as much as you can about finance.
His main arguments are that 401(k)s are not the way to go because:
You don't know where your money is invested.
Fund returns aren't predictable.
You're investing in inflated assets (stocks are overvalued).
One of his main gripes about saving money is that your cash gets devalued by inflation ($1 today won't buy as much as it will tomorrow).
So, you need to deploy your cash to buy assets to create the retirement lifestyle you want. His options include investing in businesses (entrepreneurship), paper assets (stocks), commodities (gold/silver/oil), real estate, and cryptocurrency.
If your eyes widen at these choices and you start to recoil from this article, let's look at some less scary options that apply his principles to help you save.
You two may be quitting too late instead of too early. I have seen it before, short timers' disease. You're already looking forward to the good times. You're getting careful, aren't you? — Captain Logan in Running Scared
I mentioned above that you should find a side hustle, but becoming an entrepreneur may be a fancy way of saying "side job.” Most people over 50 have worked in their profession for many years, and becoming an entrepreneur may be a natural next step.
You don't need to go to your local Costco and buy some gold bars to invest in commodities. You can invest in commodities with ETFs (Exchange Traded Funds).
I've owned rental properties, and even with a property manager, it's a pain. Personally, I believe the best way to invest in real estate is through funds such as Fundrise, REITs (Real Estate Investment Trusts), and vehicles like Arrived.
Finally, if you have a high-risk tolerance, there is cryptocurrency. It’s incredibly volatile and may be the future of finance… but making it a driver for retirement seems foolhardy.
You determine how you want to catch up on your retirement savings, but Robert Kiyosaki offers a different approach to meeting the challenge head-on.
Closing thoughts
Catching up on your retirement savings is going to take some internal fortitude.
Focusing on the future will get you through the rough patches. Keep budgeting, learning about finance, saving, and investing. It’s easy to slip from the path, and if you do — get back to saving and make up the difference.
You’re not alone in your quest for retirement. You have many fellow runners that are traveling the same path.
It’s not about winning the race — it’s about being in the best shape to enjoy your retirement.
Gotta jet!