As we persevere through the coronavirus pandemic, consider the following message from the 2019 Archives of TGIF 2 Minutes….
What is your reason for saving money? Is it retirement? Or are there “mini-goals” that would feel really great to achieve today?
Of course, retirement is often a primary long-term savings goal, but not always. “Retirement” encompasses more than simply stopping work and being on a “permanent vacation.” In fact, research published in the Journal of Financial Planning* reports that quitting work cold turkey often is not reality – for a number of reasons.
Here is a fun fact (and please note that the research was conducted among participants with savings between $500k and $3 million),
- If current trends play out, 26 percent of [savers and investors] who make an initial decision to stop working entirely will return to work.*
It turns out that work gives people a sense of purpose that is not entirely around making money. It turns out that “having something to show up for” is more important than the “slow moving time” of permanent vacation.
You may say, “give me the permanent vacation!” But the research says that work later in life in both the form of part-time paid projects as well as volunteering using skills from former careers provides a huge “purpose payoff”.
Let’s go back to the question of “What is my reason for saving?” Between Point A (today) to Point B (retirement) there are key intermediate goals of:
- Establishing an ample emergency fund
- Refinancing or paying off a mortgage (= 100% equity!)
- Travel and adventure
- Ability to slow down someday and choose how/for whom one works
- Creating healthcare savings for later in life
- Contributing toward charitable pursuits today and/or someday
- Being able to afford and enjoy a second home
- …Add your goal.
Achieving these intermediate or “mini-goals” can be powerful by providing enjoyment long before retirement. Perhaps thinking about saving and investing with these goals in mind – for everyone at every age – can provide more of an incentive to save and invest in the first place. And then retirement does not need to be the only goal!
Life is short – start defining your mini-goals and dreams today.
*Mitch Anthony, Lisa Kueng, Gary DeMoss, Journal of Financial Planning; November 2019.