It’s Time to Step-Up Your Game!

It's Time to Step-Up Your Game for Retirement!Hey everyone, it’s time to talk about something that most of us out there know, but not enough of us are talking about.  And with that, I’m referring to retirement savings.  Although this is a site focused on financial freedom and early retirement, the fact is that most of us out there have a slim shot at either one of these.

I almost threw up when I learned on The Motley Fool that the average American’s 401(k) balance is $72,383.  And even worse, the median balance is only $18,433!!!  That’s insane!

Now, you could look at that and think maybe that’s because new entrants into the workforce are bringing the number down or whatever it is that helps you want to justify this.  However, the scariest numbers are actually for older folks out there.  According to The Pew Charitable Trusts, the median retirement savings for those between 55 and 64 is $76,381 and only $72,957 for that are 65 and older.

How can anyone retire with so little money?!!!

Look, I know this might not be the whole story.  Maybe some of these people hate the stock market (like myself) and have their money invested elsewhere, such as real estate.  Hell, this doesn’t even take into account other places people might have their money – savings, Roth IRAs, etc.  But even if that’s the case, that’s only going to be a sliver of a percentage and would barely affect these numbers.  This is horrible and the outcome doesn’t bode well for a lot of people.

On top of that, the subject of retirement money (and finances in general) seems to be almost taboo in society.  I’ve said it before, and I know a lot of you agree, we need to be talking more about money.  We, as a society, have no problems discussing everything from sex to toilet humor, but for some reason, money is either not that exciting or is too scary to bring up.  But in the long run, it can help you understand things better and it’s mutual – it can help your friends and family with their financial struggles as well.

I just got done watching a clip of John Oliver talking about retirement plans… very nice segment.  His point was that many of us don’t even realize just how ripped off we are by the financial industry.  If you have a 401(k) or 403(b) plan, do you realize what you’re paying fees?  If not, it’s time to get educated and fast.  You might brush it off thinking that the amount you lose in fees is small, but it can easily turn out to be tens of thousands of dollars!!!  There’s no good reason why most of us shouldn’t just be investing in low-cost index funds in your plan.  See why I changed the funds in my 401(k).

The Steps to WealthThe Steps to Wealth are few but important and will take some work.  You can’t put this off.  We live in a society of people who feel they are entitled to have whatever they want.  Well guess what – you can’t.  Or you can enjoy it now and suffer later, which you are almost guaranteed to do.

If you’re new to really doing much with savings and retirement, you need to step-up your game.  The sooner you take control of your finances, the more prepared you can be for retirement.  If you are able to do just a few money changes every month, you can really start to accelerate the process of building up a bigger retirement savings.  The biggest key is to keep learning.  Reading sites such as mine and some of the others that are out there can give you some great ideas on small tweaks that can save you money in the long run.

Maybe you just need to saddle up and quit buying crap to get out of debt.  Maybe you should be upping your 401(k) contributions to take advantage of a company match.  Did you know that when you up your contribution, the amount you get taxed on your paycheck is less?  By doing the numbers, you can actually have the same take home pay even though you’re contributing more to your 401(k)… how’s that for cool?

Every little thing you find out and act on can have a dramatic effect on your financial status and future, but it’s up to you to make it happen.  Stop accepting the norm – don’t be the person with barely anything saved for retirement to live off of… you can take a stand and make a change for the better!

I’m in good shape to become financially free before age 50 which, although not as early as I want it to be, is still pretty exciting.  But, I know that there are plenty of people out there who have just accepted that they will be working until they die or can’t work anymore.  I know because my parents are in a situation like this.  And it’s not because they want to keep working, it’s because they want their cake and to eat it too.

They paid off their house which is fantastic, but then they went out and bought an expensive RV, which they couldn’t afford and now have a loan on until they die.  And they’re working ridiculous hours to help pay for the RV.  The irony of it all – they rarely get to use it because they’re working all the time to pay for it.  And they’re now getting too old to be able to physically handle the work that they do.

It’s time for them to downsize the house, pay off the RV, and enjoy the travelling.  Or just sell the RV.  But that’s the problem – a lot of people (including them) don’t want to make sacrifices to make things work.  It’s crazy and it doesn’t have to be that way.

Mr. Money Mustache, who is a phenomenal example of living below your means, just wrote a great article on stopping your excuses, sucking it up, and making some changes for the better.  He’s 100% on the money with this.  How your life and your money work is entirely up to you.  Your finances won’t change by themselves – you need to start making the moves to make it happen.

So if you’re not already on a solid path to financial freedom, it’s time for you to step-up and start making some changes.


Thanks for reading!!

— Jim

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16 thoughts on “It’s Time to Step-Up Your Game!”

  1. It’s great to get more people talking about money. A lot of people get caught up associating their self-worth with income, which doesn’t matter nearly as much as your savings rate. One of the great things about MMM (and partially why I think his site is so successful) is that he’s made the conversation accessible to everyone by making that subtle difference in focus. If he only talked about building up a $1M war chest, I think his message wouldn’t be heard as loudly.

    1. That’s a great point about income versus savings… it’s great to be making a ton of money, but if you’re not saving a lot of it, it just becomes a showpiece for the present day and not an investment on your future.

      — Jim

  2. I wish more people would talk about this and strategize together. It’s not okay to not be prepared. No one wants elders starving due to poor planning.

  3. My situation is even worse.
    We have $9500 in our 401(k), but in my defense I have to say that we’ve started contribution since Jan 2016. Everytime when I take a look at the numbers it scares me and motivates at the same time.
    Starting 2017 my goal is to max-out all the retirements options: 401(k), IRA and save 2000 per month extra in mutual funds

    1. The good news is that you actually see the situation you’re in and you’re making the changes to fix it. Your goals for 2017 are fantastic!! At that rate, you’ll be built up in no time at all!

      — Jim

    2. Thats what I did and if you can just keep doing it for years I think the results will surprise you someday. Set it on automatic and you wont even miss the money. Treat it as a “bill” you have to pay. My accounts are now pretty huge and I didnt really put much effort into it (other than the going to work part).

  4. Folks need to wake up, increase financial literacy and take action! We all need to be accountable for our own retirement and not make excuses. Those stats you pointed out paints a pretty sad picture. And for retirees, with how inadequate funding is for Medicare and Social Security, we can’t expect to tax the rich to subsidize everything. We need to take control of our own situation! Good post, Jim.

    1. Thanks, GS – people definitely need to wake up and take hold of their financial future. It’s true that a lot of people are relying on the rich to throw in more than their fair share… bad idea.

      — Jim

  5. I saw that John Oliver episode on HBO and could not stop laughing! It was so spot on – especially when he finds out that the adviser assigned to their 401k made a mistake on his speadsheet. I considered doing a whole post about it – so hilarious. I also loved their parodies of the retirement commercials with the dominoes.

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