What’s your Retirement IQ?

What is your retirement IQ? IQ is short for intelligence quotient! IQ testing was popular for many years because it was a way of assessing your intelligence and potential. Unfortunately, it also measured parental social status. It was used as a predictor of educational achievement, job performance, income and special needs. Saving for retirement does not take a high IQ or even much money. How is your retirement IQ?

Savings – This is the first step to achieve your financial goals. Intellectually, we all know we need savings to achieve your goals, but it is difficult. I disagree; you can start small and add to it. You can start with as little as $5 a week and add to it until you reach 10% or 20%. For some of you, $5 a week seems like a big number! You can adjust your lifestyle by giving up the daily Starbucks, dining out every night, or some other expense. Yes, it is that simple!

Investing – Saving for retirement can be easier if you use pretax dollars and set up a payroll deduction for a 401k. Yes, the IRS actually subsidizes your retirement and you benefit. There are other tax deferred accounts such as IRA, Roth IRA and a variety of other tax deferred accounts. You can also invest through tax empt accounts or even brokerage accounts. In all cases, you will pay lower taxes because you generally withdraw the funds in retirement when you income is lower.

Cut your lifestyle – Too often, I hear people say they do not earn enough money to save or their expenses are too high. They follow-up with they cannot cut their expenses. Several years ago, I wrote an article called How to become a Minimum Wage Millionaire where I describe how you can start with as little as $4 a day in savings and start investing. Cutting your expenses is not as bad as it sounds. I changed my lifestyle more than forty (40) years ago and I do not feel the least bit deprived!

Start a Business – Starting a business is a dream for most people, but achievable. I started a business on the side initially as an investor. It grew into a business and financial independence. Everything depends on the amount of investment you are willing to make and the amount of time you have to work at it. Sometimes, the amount of investment is your effort! It may take the form of your time, money or for ming a partnership. For some, it may even be a venture capital investment.

Training – Additional training whether specialized or graduate school will almost always increase your income. Increased income generally removes all the reasons for not contributing to your retirement. For some, it changes your lifestyle and others it represents confidence or achievement. Either way, more skills mean more income! What is your excuse?

Budgeting – The majority of people think they are in control of their spending without the benefit of a budget. The key characteristic of success is achieving your financial goals and not over paying for your expenses. I achieved my financial goals about thirty-one (31) years ago. I did it with a goal and a plan. Saving and investing 10 or 20% is the easy part! I analyze my expenses every month to make sure I am paying the least for any particular expense. It can range from cable/internet to utilities. Good fiscal financial management yields real dollars every time. It ranges from as little as pennies to dollars, but adds up to hundreds of dollars per month.

Final thoughts

Retirement is just one important goal for everyone, but you could substitute a different goal and the steps are still relevant. How are you doing with your goals? If you are doing well, please share. If not, please share too and I will help you. I achieved a great deal of success reaching or achieving my goals and I would love to help others achieve their goals. How is your retirement IQ?

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