As you may or may not know, I’m retiring from the world of work at the end of this year (just 338 days to go at the publishing of this blog entry – not that I’m counting or anything).  It’s a funny thing, the reactions I get when I tell people this fact.  First, they always look me up and down and quizzically ask, “how old are you?”  When I tell them I’ll be fifty-seven at the end of this year (a mere babe on the retirement spectrum), they politely nod, but I can tell from their faces that they have another question, but out of politeness, they never ask.

“How are you doing that?”

So today, without going into too much personal detail, I’m going to tell you.  If you’re a younger reader, I hope you use this advice to help chart your own course (so you, too, can say the same sentence in your mid-fifties – or earlier).  If you’re “of a certain age”, there are still some tips and tricks that I’ve used that could also help you, no matter where you’re at on your retirement journey.

Let me also say that I’m not a certified financial planner (nor do I play one on TV), and there are lots and lots of resources and experts you can consult to chart your own path, so while I freely offer advice, don’t take it as gospel.  There are all kinds of financial situations out there, and what works for me may not work for you, but I can tell you that it’s really not that hard – if you have some self-discipline and patience.

Time Is Your Friend – and Your Enemy

You’ve heard it before, but the earlier one starts saving for retirement, the better.  The power of compound interest is unbelievably lucrative, and if a person starts early, not only do they not have to save as much each week/month, but they can handle the ups and downs of the investment world.  For example, if a twenty-year-old working a minimum wage job ($15/hour in my state) sets aside just 4% of their weekly income (a mere $24) and has a work-based 401(k) with a company match, they’ll have over $300,000 squirreled away in their retirement fund by the time they hit their 60’s (based upon a 5% annual return), even if they never get a raise during their entire working career. If you’re older, you have to save more and more each week to make up for that lost time (and get the same level of returns).  I started saving for retirement in my late 20’s and looking back, I wish I had started even earlier, but younger me didn’t listen to anyone else except who he saw in the mirror every day, and even then – rarely.

Pay Yourself First – and be a “Saver”

I preach this to my own kids all the time.  Just got a raise at work?  The first thing to do is increase your own retirement contribution level (by maybe a percentage point), start a savings account, car fund, emergency fund, or some other savings goal.  Set it up with your bank or financial institution so that it’s an automatic withdrawal.  Always pay yourself first, then you can think about what to spend that little bit of extra cash on.  If you can get into the habit of saving 15% of your weekly income towards retirement, trust me, you’ll be cruising into your late 50’s with a sizeable nest egg.  If it’s a savings account (like a Christmas Club account), you’ll be surprised at how much is in there after leaving it alone for a year.

Know Your Expenses – and Control Your Debt Load

Look, I know having a budget is not fun, but it is absolutely necessary in order to track your money, spending habits, and cash outflows.  If you’re spending more than you’re making, you can’t just pile that overflow on the ol’ credit card and hope to keep making a minimum payment every month.  Track your expenses and understand what you do and don’t need.  Internet service?  Yes, you probably need that.  Starbucks every day?  You might want to re-evaluate that one.  Some debt in your life is probably inevitable, like a mortgage or college loan, but unnecessary debt, like carrying a balance on a credit card?  Now you’re working just to pay someone else every month.

Live Within Your Means – to Hell with the Joneses

If you’re caught up in the latest fad, trend, or care about what your neighbors think, you’re going to have a hard time saving for your retirement.  Stop worrying about what other people think about your car, house, or vacations.  No, you don’t need a colorful Stanley cup to drink water out of every day.  I’ve only ever had one brand-new car in my life (and I’ll never do it again).  I buy used and I drive them until the wheels fall off.  Your pals just went to Maui?  Good for them.  Be happy with your Ocean City trip.  If your friends are more concerned about material things, then maybe you need some new friends.  Stop buying things you can’t afford.  That credit card bill is full of dinners, I-phones, and “extras” you didn’t need and now are forced to pay for later on.  Want to take a nice vacation?  Save up for it.  Make it a goal.  Then, when you’ve acquired the funds, by all means – take it and enjoy yourself.  No one said you had to live like a Gregorian monk, but there are very few of us who can travel first-class on a regular basis.  You know what?  Economy gets you there just as fast.

I’ll get off my soapbox now.  Believe me, I could lull you to sleep with financial minutiae, but I do encourage you to do your own research, talk to a professional, and get your finances and retirement planning on the right track.  Someday, you’ll thank me – and maybe you’ll get to retire, too.