It’s only when you reach your late twenties and beyond that, you really realize that you too will get older and one day retire. Before that, it feels like a time so far in the future, that it isn’t worth worrying about. Investing for retirement was definitely not on your radar. When you’re younger, you can often tell yourself that everything will work out in the end, only to recognize that in order to have financial security when you are older, that it is you who has to do something about it. I know… It’s shocking.
But, in all seriousness, it is one of those realizations that can hit you like a ton of bricks. You start to think about how you can guarantee that you’ll have that nest egg to be able to enjoy the later years in life. We all experience this in the same way, whether you’re self-employed, working a full-time job, or both. One of the most common things we hear about personal finance is that investing for retirement should be one of our main, if not our primary goal. But I think this is seriously misguided.
Investing for retirement should only ever be a portion of our overall financial management strategy. But what often is associated with this topic is shame and guilt that we should not be spending or enjoying our life because we “should” be investing for retirement with that money. I balk at any strategy (just like any diet) that eliminates everything to focus only on one goal.
A lot of us when we want to take action and plan for our futures, we’ll seek out the guidance of a financial advisor or planner. Once the topic comes up of retirement, there is a laser beam focus on investing. It only takes a quick Google search of investing for retirement to see all the advice and tips on how to “guarantee” financial security. Guarantee can be a dangerous and ill-used word, but more on that later.
I find it odd that there is so much emphasis on investing for retirement. Why are they synonymous? I’ve seen people buying into the idea that it is the best choice without really considering other options or the bigger picture. It can cause us to have a limiting view on how to ensure financial security and it is also incredibly risky to only invest your retirement in the stock market. I would elaborate on the latter but it goes without saying why you shouldn’t trust Wall Street or any other stock exchange with your money.
I wanted to touch on some of my own thoughts and views on the damage it could cause to focus your retirement on investing in the stock market so that you can make the best decision for yourself. At the end of the day, we need to block out all the fail and win stories we hear about investing for retirement and form an opinion and ultimately a plan that feels right for you and your circumstances.
Why Focusing on Investing for Retirement Doesn’t Help You
I get it, it sounds like an exciting way to get the most out of your retirement fund. Before you jump headfirst into investing, here are some ways that focusing on investing for retirement doesn’t help you:
Doesn’t Help You to Create Diversity in Your Wealth Building
Focusing on only one tactic in anything can be limiting with no exception to investing for retirement. I often talk about how you can diversify not only your income streams but also your investments. However, it depends on what you are talking about. This is like saying (humor me with my food analogy):
“You can live off cereal for the rest of your life but don’t worry there are many kinds of cereal.”
I don’t want you to just have cereal. I want you to have an abundance of food that is available and open to you for receiving. Diversifying only with the stock market is not enough. And yet that is exactly what most financial advisors mean when they tell you to diversify when investing for retirement. But if you are still putting all your money in the stock/bond market (even if the funds themselves are ‘diversified’) is it really diversifying?
This can be really limiting and the expression “Don’t put all your eggs in one basket” rings true.
Note to self: never write hungry.
Doesn’t Protect Income Needs Before Retirement
Don’t get tunnel vision when it comes to financial planning and management. Only focusing on how much money you’ll have in retirement will catch up with you in all the years you have before you get there.
We can see from statistics that it is incredibly likely to be disabled or unable to work at one or multiple points in our lives. Unfortunately, it will be up to you to try and supplement your income during that time which is already incredibly difficult and stressful. You’ve made all these plans for the bright future you want after retirement without factoring in or acknowledging YOU right now.
Does your financial management strategy include protecting yourself from the numerous things that could happen in the years leading up to retirement?
Doesn’t Let You Enjoy Your Life Now
Nothing in life is promised. It is important to have goals, dreams for the future, and a plan. However, not all of us will be lucky enough to get to retirement. I’m not saying this to scare you or bum you out. It is a fact of life.
Only planning for a part of your life that isn’t guaranteed could end up being a complete waste and hinder you from enjoying your life today. You can successfully plan for the future, without giving up on the now. Having a financial plan that includes all aspects of life, the unexpected, the expected, the predictable, and the surprises is what will give you that feeling of true security. You won’t falter when things come up, which they inevitably will.
Let’s sum up!
It is wonderful to plan for the future. Having a great retirement plan can have you excited for your later life and give you a sense of ease and comfort knowing that you’re working towards something. However, focusing heavily on investing for retirement can be a risky decision that has little foresight on areas of your life right now that needs just as much attention. For example, focusing on retirement:
- Doesn’t Help You to Create Diversity in Your Wealth Building
- Doesn’t Protect Income Needs Before Retirement
- Doesn’t Let You Enjoy Your Life Now
Are you finally ready to live for yourself?
Are you sick of trying all the things, and getting nowhere?
I’ve created the Bulletproof Budget Bootcamp just for you. I combine behavior psychology and financial strategy so that you can achieve your financial goals and dreams. Financial freedom isn’t just for the select few. It is for everyone, you included.
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