Don't Resent Your Retirement

With our baby boomer-in-chief turning 60 earlier this summer and the baby boom generation marking that same milestone this year, we're providing a number of articles that might be useful to this noteworthy generation. This article was originally published on March 15, 2006.

Retirement can be a deceptively simple subject. It's easy to talk about how much we should carve from each paycheck for future savings, or which stocks and bonds we think will deliver the best long-term returns. It's a bit harder to address some of the other psychological factors that go into preparing for retirement -- specifically, the risk of growing to resent it.

Resentment can be a nasty turn of events. You might find yourself undersaving, making poor decisions, and generally harming your financial prospects for a comfortable and secure future. One of the better ways to avoid resenting the retirement savings process is to better understand where that resentment might come from.

The road to resentment
There's a good reason why most doctors don't prescribe overly strict diets. Most patients seeking to lose weight do OK for a week or two, but the feeling of being locked in eventually leads them to start gorging on forbidden goodies. Then, more often than not, they just give up, not even trying to get back on the wagon. Isn't it better to allow yourself the occasional ice cream and stick to the plan six days a week, rather than go at it fanatically for a few weeks, only to discard the entire plan prematurely?

Similarly, focusing too intently on your retirement savings can lead to a real sense of deprivation for you or your family. Even if you know you've got to sock away part of every paycheck for your later years, you can still find yourself wishing that you actually got to spend that money now. If you start feeling penned in, it's better to allow yourself to send a little less cash toward your retirement funds once or twice a year, and spend the money on something fun, rather than entirely giving up on a savings plan.

Slow and steady wins the race
Time itself may also be a problem with retirement. If you're like most Foolish readers, you probably have 15 to 35 years between today and retirement. Unless some of us turn out to be entrepreneurs capable of creating the next Dell (NASDAQ:DELL) or Wal-Mart (NYSE:WMT), we need to figure out how to stick to a plan where the ultimate payback is years down the road.

While it's certainly useful to have expectations against which you can track your performance, make sure those expectations are your own. Peer pressure rarely improves your life. Among your own friends, coworkers, or family members, I'm sure there are people who brag about the luxuries they buy, the bargains they find, or the amount they manage to save. Don't assume that their habits should be yours. Pick the goals that matter most to you, and create a plan that will help you reach them.

Beware bad debt
Avoiding bad debt can also help you maintain your pace. Paying ridiculous amounts of interest for things you don't really need robs you of money that could be saved for tomorrow. If you've got to borrow from Best Buy (NYSE:BBY) to afford that sweet new HDTV you want, you probably don't need it. Same goes for other forms of questionable debt, whether you're using credit cards for frivolous purchases or locking yourself into the expensive debt offered by companies like Nautilus (NYSE:NLS) for its home exercise equipment.

Know your weaknesses
It's valuable to really understand your weaknesses. Once you figure out your financial kryptonite and how it affects your spending, you can work around it. Maybe you can't help yourself when you hear that a new book or CD from an artist you like is available on Amazon.com (NASDAQ:AMZN). Maybe you have a hard time going to Coach (NYSE:COH) without snapping up the latest and greatest item for your collection.

The key here is moderation. Part of sticking to any rigorous long-term program is building in a series of rewards -- benefits beyond the mere satisfaction of an ever-growing account balance. Put a little impulse-spending money aside, and don't begrudge yourself the occasional splurge. Just make sure to keep your rewards under control, limiting them to a comparatively small piece of what you're socking away for retirement.

Strike a happy balance
The future is important, but so is the present. Don't assume that there's a one-size-fits-all solution for retirement savings. It could prove unworkable, if not downright dangerous. You've got to find your own happy medium between "spendthrift" and "miser."

I think all of us want to have a comfortable and enjoyable retirement, when we can spend our time doing the things we really want to do without worrying about money. But sometimes that goal can be clouded by the resentful feeling that we're stealing from today to build for an uncertain tomorrow. While my advice won't guarantee that you'll build a retirement nest egg sufficient to have you lounging on a yacht off St. Kitts, it will help you feel better and more confident about the process.

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Best Buy, Dell, and Amazon areMotley Fool Stock Advisorpicks, while Wal-Mart is aMotley Fool Inside Valuepick.

Foolish research associateKatrina Chanupdated this article, which was originally written by Stephen Simpson. Katrina has no financial interest in any stocks mentioned. The Motley Fool has a goldendisclosure policy.


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