A thought on accumulation…

If you’re retired, your goal should be asset preservation with the best returns possible – making income last as long as you live. If your 45, or 50 let’s say, you are likely in the “accumulation” stage.

So many people over the years have said the same thing regarding saving for retirement: “I can’t afford to save anything, I have too many expenses. I’ll start later”. Well, we all know that later never comes, and this is why you see 70 year old people working the fryer on nightshift at the local burger franchise – they never saved.

You can save. Consider this. You go out, get a new positon with a company, and let’s say for simplicity sake you come in at $100,000 yearly salary. What do you do? You go out, celebrate the new positon, then proceed to procure new and better lodging, get a new car, buy some toys, and start living the good life. What you have done is created a lifestyle that requires $100,000 to support. Your new lifestyle has consumed it all. You are correct, right now you can’t save. Hope you can work the fry machine. And it logically follows that if you had started at $90,000, or $80,000, you would have gone out, done the same things, consumed the income, and created lifestyles based on those amounts that would have eaten up that income. You wouldn’t have noticed much difference between the three….very little, if anything – and you STILL would not be able to save. But……

What if you got the job for $100,000, but you were told that your new income was only $90,000, and you believed it. You would then go out and consume, and create the $90,000 a year lifestyle, because that’s all you COULD spend, and there really wouldn’t be much difference between the two lifestyles based on the income. And what if this non-disclosed $10,000 was put aside for you – but you didn’t know it. If you did that, you would have $10,000 a year saved and you wouldn’t even know it was gone. You would barely feel it. People usually push the envelope and spend as much as they can on lifestyle. So when people say they can’t save, it’s not really true – they can, they have simply chosen not to.

For those who have already consumed their income, and already have a job, begin now to cut some things down, reduce, pay some bills off and create a lifestyle that consumes only 90% of your income. Get rid of some stuff – downsize -you will hardly notice a difference, and not only will you survive it, you will be on your way to a retirement of your choice. You may realize that your life has hardly changed as result of the downsizing, and you may ask yourself “why didn’t I do this a long time ago?” Food for thought…………….
So, accumulation and savings is largely psychological. You have choices. Outsmart yourself – it’s worth it in the long run.