Much has been made about Americans' general inability to save and plan for retirement. On one hand, this is absolutely true. On the other hand, we aren't wired to save for such a far-off event, and calling this a "crisis" is a bit dramatic, historically speaking .
Putting aside what we are and aren't wired for, imagine if there was a "cure" to what ails our retirement planning. Imagine there was a pill that could change many of your financial behaviors. Among them, you would:
- Decrease your expenditures
- Use less credit
- Repay your debt
- Save more for a "rainy day"
- Lower your expectations for financial comfort prior to/during retirement
- Find a better-paying job
- Be more involved with your finances
- Discuss your finances more often with your partner
- Learn more about saving and investing
If everyone in the United States took this pill, I have little doubt the average American would breathe easier, sleep sounder, and move about the day lighter, free from anxiety over their finances.
The good news and the bad news
If this pill sounds enticing -- or you think it would be useful for someone you know -- I have good news: it exists, though not in pill form. But with that comes some not-so-good news: it's a tough pill to swallow (metaphorically speaking, of course).
Last year, TD Ameritrade conducted a survey of Americans who had experienced a "financial disruption." Researchers defined that as "all major life events that can disrupt long-term savings and investing strategies and negatively impact retirement plans." That includes things like getting injured, divorced, or losing your job. Ostensibly, financial disruptions could better be referred to as "huge, depressing, pain-in-the-butt life episodes."
But here's the funny part: When researchers asked individuals who had been "disrupted" what type of changes they made to remedy their situation, they responded with the actions listed in the bullet points above.
Just as importantly, while almost no one plans on experiencing a disruption (who would want to think about divorce, sickness, or unemployment if they don't have to?), the overwhelming majority of us will experience one.
The best news yet
If you're reading this and you haven't yet experienced such a disruption, you have an opportunity to get all the benefits of this "pill" without facing any of the negative precursors. How? Voluntarily choose to do all of the actions listed above.
If following these tenets sounds a little too simple and unsexy to make a big difference in your life, I think you are confusing "simple" with "easy." While decreasing spending, paying down debts, and lowering your expectations are simple enough, they can be exceptionally difficult to implement on a day-to-day basis.
That's why I like to take an alternative approach to accomplishing the same ends. Instead of making a checklist with all nine bullet points, I find it easier to start with one simple goal and let everything flow from there.
That goal is this: "Find your Enough." By that I mean start with nothing in your life, then find out what needs to be added to give you a happy, meaningful existence. In doing so you will work from a position of strength, and I believe you'll be pleasantly surprised by how easily all nine of the bullets points above naturally take care of themselves.
Of course, for many, it might be a little late in the game for such an approach to make a huge difference. For those, I strongly suggest ways to maximize your Social Security benefits, like the one we offer below.