This weekend, I am participating in the Sarasota Orchid Society's Annual Orchid Auction as a "runner." My job is to walk across the room and deliver the orchids to the winners. It's a fantastic event. Click here to learn more.
The botox my wife got for her migraines has started wearing off. We didn't even realize how much it was helping. She gets shots every three months and they next one isn't until November 26th. We have some other pills that help but I think she'll have a difficult month.
None of my kids are interested in Halloween anymore, except my youngest, Jesse. He is going to go out with his neighborhood buddies. He is going to dress up as a Steeler's fan even though he doesn't watch football.
I previously mentioned that my in-laws lost several trees during the hurricane. Yaya had transformed her backyard into a tropical fruit tree grove, but many trees that had been growing for over 30 years snapped like twigs. Mango, papaya, durian, longan, lychee, jackfruit, pomelo, coconut, and guava— all gone. It was truly heartbreaking.
Last weekend, my boys and I, along with a group from Bayside Church, helped restore the yard as much as we could. It would have taken Yaya months, if not years, to accomplish this on her own.
Are you concerned your kids are not properly preparing for retirement? You may have a good reason. According to a Business Insider website article, "Only half of Gen Xers have a retirement account, and that's a catastrophe in the making." Only 36 percent of Gen X are actively saving for retirement. (Conversely, millennials seem to be starting retirement saving earlier and are more actively saving.)
With the Thanksgiving holiday approaching, now is a good time to broach the subject. Let me give you a few facts and insights to pass to your kids with the mashed potatoes.
5 Tips to Give Your Kids About Saving for Retirement
1. Pay yourself first. This simply means your savings should come automatically from your paycheck or bank account. Do not promise to save whatever is left over at the end of the month. It does not work. At all. This tip is more important than all the others combined.
2. Give until it hurts. Maybe saving $200 a month sounds reasonable and comfortable. I strongly suggest you save $400 or even $600 monthly. Choose a number that feels a little scary and uncomfortable. You can always lower the amount if it ends up being too much. Most people adjust quickly to their new savings plan and find they can save more than they first thought. In my experience, few people increase their contribution once they start.
3. Invest into a 401(k) or IRA. These accounts give you a tax deduction upfront and defer taxation until you withdraw the money. In addition, using a retirement account makes the money more "tied up" than normal savings. This might make you hesitate to use money from your retirement accounts for non-retirement reasons. Another great reason to invest in a 401(k) is matching. Many companies will match their employees' retirement contributions up to a certain point. Don't throw away free retirement money.
4. Invest 100 percent of your money in the stock market. Don’t complicate things. We are talking about long-term investing here. Historically, stocks have returned an average of 10 percent over any significant period. A simple starting point would be to invest in the S&P 500 through an index fund. The ticker "VOO" is a great option to consider.
5. It doesn’t especially matter how much you save, but for how long you save it for.
The table below assumes somebody invests $100 monthly into a 401(k) or IRA and places 100 percent of the money into the stock market.
Start at age 20
$54,000 of your own money saved
$948,000 Final Value at age 65
Start at age 30
$42,000 of your own money saved
$357,000 Final Value at age 65
Start at age 40
$30,000 of your own money saved
$948,000 Final Value at age 65
Start at age 50
$18,000 of your own money saved
$42,000 Final Value at age 65
Whoa. That is eye-opening, even for me.
Here are a few bonus tips:
In my business, we have a saying: "To be financially successful, you need to follow this rule: One house and one spouse." Divorce is hard on anyone's finances, and a second home is a money pit.
Stay away from "lifestyle inflation." Instead of upgrading your life with more stuff, take increases in income as a chance to increase savings. I see this as a real problem with Gen X.
The size of your monthly budget is far more important than your 401k balance.
Encourage your kids! There's no reason to make them feel bad. Remember, the best time to plant a tree is thirty years ago, and the second best time is today.
Be Blessed,
Dave