by Craig Erwin, Ph.D.
RETIREMENT ON THE HORIZON
I am approaching retirement. I guess we all are, but some are much closer than others. And, sadly, some will never be able to retire, but will have to work during their golden years to survive. So, it really pays to educate yourself about money and develop good financial habits.
KEY FINANCIAL DECISIONS
As I look back on big decisions I’ve made in my life, I have made many mistakes, some very costly. But I have also made some good decisions, ones that will enable me to retire in great financial shape.
One good decision I made was to buy a modest house in a good location, but not to constantly pour money into it. Remodeling and upgrading are costly. Instead I poured money into the stock market by saving aggressively in retirement accounts (and, for the most part, ignoring those accounts and ignoring the news). If I had poured money into my house instead, I would have received a much lower return on my investment than I did by pouring money into the stock market.
SPENDING ON YOUR HOUSE VS. SAVING FOR RETIREMENT
Was my wife happy that I poured money into retirement accounts instead of our house? Not so much. My wife has been disappointed at times that our house isn’t bigger, nicer, and fancier. And at tax time she has frequently gotten steamed when she has seen how much money I have funneled into retirement accounts.
But now that we are both close to retirement, we are both pretty happy that, although our house doesn’t look like something the Kardashians would live in, our retirement savings are more than adequate. And even though the Kardashians would not be caught dead driving our cars, those cars do just fine at getting us where we want to go.
What’s the lesson? Save early, save often, save as much as you can, and invest in a stock mutual fund, or a balanced stock and bond mutual fund, or something else that will give you a healthy return on your investment (e.g., rental property, high yield bonds).
Instead of pouring your money into home remodeling or new cars, gadgets, and clothes that will rapidly lose their value, save aggressively for retirement. Some day you (and your spouse too, if you have one) will be awfully happy that you did.
For more information on how best to save and invest for retirement, read the articles below by clicking on the links provided.