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6 Tips You Need to Know to Avoid Working Until You're Old

By: Alan J. McMillan

More than half of American workers over 40 have less than $50,000 saved for retirement, a new study from the Survey of Consumer Finances finds. This amount is even lower with younger generations, as the median Gen X household has less than $39,000 in assets. This is nowhere close to the amount these generations should have saved for retirement.

The closer the Baby Boomers get to retirement the more vivid and bleak the picture becomes.

I speak to thousands of young people on campuses across America and when I quote this study I always ask for a show of hands, “How many of you dream of working until you are 80?”  I am still waiting for a hand as I have never received one.  Working until you’re 80 because you want to is okay; but working long because you have to is not. 

Before I share some facts on the Baby Boomer generation, the good news is, this does not have to be you.

The opposite of success is not failure, but conformity. Following the status quo is not a path you want to take.

Normally I let these weekly blogs travel their own path in cyberspace, but this message is so very important I urge you to spread it to Twitter, Facebook, and the rest. You and your peers are very much all in this together. Spread the word.

You cannot squander your 20’s. The effect of starting as soon as you enter the workforce and using compound interest over time to your advantage is the game changer.

To warn you where the status quo goes, look no further than the most vivid case study on your horizon, the Baby Boomers in America:

  • 45% of boomers have NO retirement savings. This means they will have to live off of social security alone, which would be a big decline in the yearly income of boomers
  • 41% of people plan to work past the age of 65
  • Boomers have a median in retirement savings of $290,000, which equates to about $12,000 in income after retirement. (Experts recommend having around $430,000 in retirement savings)
  • Younger generations are struggling with saving for retirement even MORE than boomers are

This is a horrible way to treat your retirement. This does not have to be you but you need to:

  1. Leave campus with as little debt as possible.  You may have student loans, but know debt is your enemy and you have to fight to have as little of it as possible.  Every dollar you don’t spend on campus is a victory.
  2.  If you use your credit card to buy something which loses value over time (say clothes or entertainment) and you cannot pay it off at month’s end, then you can’t afford it. “But everyone else does it,” remember what I said about conformity.
  3. When you begin work, immediately fund your 401k at minimum to the match amount most employers contribute. Working toward fully funding it is a priority.  The goal is to put 15 percent of your gross income toward your future financial independence (and with this you will get there). And never, ever touch those funds until your Golden Years and if so, they will be Golden.
  4. Read David Bach’s The Automatic Millionaire or better still, go to his website for the free downloadable update, “Start Over Finish Rich 2010,” which is still very relevant today.  My advice, as Nike would say, read it and then “Just Do It.”
  5. Install, learn, integrate and use Quicken or Mint.  Both of these are leading personal money management programs from Intuit, the leader in this space. Everything in life starts with awareness. Awareness provokes actions, actions repeated over time become habits and habits define who we are. The problem is most people are NOT financially aware and these products will change that. Also, while you’re at this stage of your life your finances are the simplest they’ll ever be. You’re more computer savvy than most and you have the time to do this. Integrate this software with all of your bank accounts and credit cards so you have your own personal financial radar screen. This will serve you well over your career and life.

If you:

  • Do not squander your 20’s,
  • ‘Get it’ regarding navigating to financial independence,
  • And know ‘getting there’ is an intentional decision, where you in fact become intentional relative to building your financial independence, all will be fine!

You will end up one day, at a relatively early age, with enough discretionary time and discretionary funds to follow your heart’s desire. This, my friends, is freedom.

Now run toward this goal!

For a deeper dive into topics like this, check out LearnEarnRetire's course offering here.

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