In a recent survey released by HSBC, retirees list the best pieces of financial advice they’ve ever received.
- Start saving at an early age – this is simple and straight forward. Participate in your company’s retirement plan from day one. Each year, try to increase the percentage of your salary you save. I believe you will have confidence in retirement if you’ve saved 20% each year.
- Start saving a small amount regularly – We call this Save First. Take advantage of additional retirement savings accounts like Roth and Traditional IRAs. Set up automatic deposits each month. This allows you to pay your future self, and avoid both numbers 3 and 5.
- Don’t spend what you don’t have – It is easy to fall into this trap and hard to get out of. With the simplicity of credit cards and the appeal of immediate gratification, making these mistakes are easy. Stay disciplined, use your credit cards wisely, and pay the full balance each and every month.
- Buy your own home as soon as you can afford to – Owning your own home has historical been part of the American dream. Even as a home owner, I won’t 100% agree. This is not for everyone and your home should not be considered a financial investment. Here is a great article from one of my favorite bloggers firmly against buying a home. Do your research and only buy if it makes sense for you.
- Buy only what you need – This is similar to retirees’ 3rd piece of advice. I would be willing to bet most overspending falls in the discretionary spending category beyond the necessities we need to survive. This doesn’t mean don’t enjoy the fruits of your labor. Save your 20% First, then you can have all the fun and toys you want.
- Develop a financial plan for the future – Starting with a simple budget to track income and expenses can be a good start. Over time improve the plan by increasing your financial education, insuring against risks, increasing annual savings, and choosing a wise investment strategy.
Also from the survey, younger workers expect to retire earlier than today’s Baby Boomer generation. Workers below age 34 believe they will stop working at age 58! I hope they are all following the wise advice from the retirees above; otherwise they will be part of the 12% that believe they will NEVER be able to fully retire. Source: Plan while you can & Life after work – 9/18/2013