If I asked you how many people you think don’t know what their retirement goals are, what number would you guess? 20%, 35%? According to Tony Robbin’s book, Money. Master the Game, it is closer to 50% of people who don’t know what their retirement goals are. And the percentage is even higher for individuals that don’t know or don’t actually have a detailed plan on how to get to their goal. Surprising?
So why don’t more people know how they are going to get to their retirement successfully? Well the #1 reason why is people are afraid to know what it is. They’d rather not think about how much they need to save because they think it would be impossible to achieve such a large number so why bother trying to plan for it or even work to achieve it.
Well then how can the average person get over this hump to get on the right track? By setting the right goals for yourself to get there. We talked about what your end retirement goal should be but what about all the steps to get there? That’s why you need to do more than set that one goal for yourself.
Our advice: set short, medium and long term goals for yourself.
You want to know where you want to be one year from now and even 5 years from now. Always making sure you are on track to get there. Also it’s a HUGE boost mentally for your need to build success on top of success. You want to build momentum from achieving your small short term goals that builds confidence and drives you even more into achieving the long term goal that you didn’t think was possible.
Did I lose you? Let’s use an example to break it down a bit for you.
When you are trying to lose weight you wouldn’t just set a goal for yourself to lose 30 lbs and never check your weight? You need to get up on that scale more often and track your progress. If you stop losing weight or worse, start gaining weight again, by monitoring your progress you can course correct to help achieve your goal.
It is proven that people who set short term goals (like losing 1lb this week) or a medium goal (5lbs in a month) are more likely to succeed at achieving their larger long term goal (30lbs in a year). As you celebrate and get motivated from each completed goal, you build momentum and encourage yourself to break the mental barrier that “it is too big of a goal to achieve”.
Now the question is, what are your retirement goals? Let’s just pause in case this is the first time you’re thinking about retirement and you’re like, “Man, I don’t even know what I am having for dinner, let alone know what I’ll be doing at 50!” Do you see those nice retirement commercials and think, “Yes! I would love to ride my bike gently down a country road with my partner.” Or, “Yes! I would love to travel and take Thai cooking classes in Bangkok!” Well, you need to pay for that. Hopefully, you’ve read our previous posts and now figuring out your retirement goals. Let’s say you’re a bum who hasn’t read the previous posts (no judgement) and you don’t even have a short term goal. Here are some helpful first-steps on creating some short term goals:
- Get a Fiduciary or a Financial Advisor/Planner
- Find someone that will help guide you through your retirement journey
- Here is a link that talks about all the different types and how to go about finding someone. We will also go deeper in a future post.
- Set up an RRSP & TFSA
- If you don’t have either, set them both up, even if you aren’t ready to invest in them yet.
- Our recommendation is to do it with your bank and their investment brokerage. We have ours set up in our TD account with the TD Wealth brokerage.
- Set up an automatic deposit into your retirement (i.e. RRSP)
- If you don’t have this through work, set one up with your bank
We know that saving for your retirement can be scary, but hopefully you can learn to break it down into smaller goals to help build up your confidence that it is possible and you can get there. Just take it one step at a time.
If you haven’t figured out how much you need to set aside each pay, the rule of thumb is you should put about 10% of your pay into your retirement. Don’t think you can do that? Start small and build up to that. Start with 5% each pay cheque and each year use some of your raise to increase that amount to get to 10%. So 5% this year, might turn to 6% next year because you will use some of that 3% raise you got at work to increase it. Or find more areas to save every day to increase the amount to get to 10%.
I’m stating 10% but at the end of the day, it’s whatever you figure out in your plan that you need to save to achieve your retirement goal. You too can live like a Sunlife retirement commercial.