YOUR INVESTMENT: Wake up from your retirement saving slumber
Once you wake up and smell the coffee, it’s hard to go back to sleep. – Fran Drescher
By AARON KATSMANInvestment graph(photo credit: INGIMAGE)
For weekday synagogue-goers, the last few weeks have produced many cringe-worthy moments as less than professional Shofar-blowers try to showcase their talents to get the call to blow when it counts. In less than two weeks we will experience the piercing sound of the shofar for real on Rosh Hashanah.Many reasons are given for why the shofar in blown. According to the Rambam (Hilkhot Teshuva 3:4): “Even though the blowing of the shofar on Rosh Hashanah is a decree of the Torah, there is a hint in it, as if to say: ‘Awake, sleepers, from your sleep, and slumberers from your slumber; search your actions and repent; and remember your Creator....’ Because of this, the entire house of Israel maintains the custom of increasing their charity, good deeds and involvement in mitzvot from Rosh Hashanah until Yom Kippur, above the level of the rest of the year.”To put it simply, it’s a wake-up call.Time flies and before we know it, we are quickly approaching retirement. The realization hits that not nearly enough money has been saved and then panic strikes.Discussing the state of retirement savings, Bob Pisani of CNBC writes, “At Vanguard, the average 401(k) account value for an investor age 65 and older is $209,984. This sounds like a pretty good number, and it is, but there’s a problem. That number is pulled higher by a smaller number of “super savers” and high income earners. The median balance among the age group, where half have more and half have less, is a measly $64,811. Average that out over 20 years – most Americans should expect to live into their 80s – and that is not a lot to pull out on a yearly basis; perhaps a little more than $3,000.”What can you do to be in the group that “has more”?Be smartFirst of all, start living within your means and save. You need to make saving and investing a priority. Make it a habit to “pay yourself first” every month. Whether you invest in real estate (where you get a monthly rent check) or in a well-diversified stock and bond portfolio, focus on a slow and steady approach to build wealth. Don’t make the mistake of being “too smart.”I could write a book about the crazy investment ideas I have seen people throw money at, all in the hope of achieving an outsized return. What usually happens is that these schemes implode and the investors lose much or all of their investment. Keep in mind the basic principle: If it sounds too good to be true, it probably is.AdvertisementStartI can’t stress enough the importance of just starting. Don’t procrastinate. Too often, individuals delay investing because they think they don’t have enough money or that the market is too high. They think that if they don’t have hundreds of thousands of dollars, there is no point in investing.So they end up keeping their money in a zero percent interest account in the bank. Or they say that the market is trading near all-time highs, so they will invest after the market drops. Statistically, the stock market has been a very profitable investment over the long-term, which actually means that it trades at record high levels frequently. Don’t think that you have the secret sauce and can time market movements. If most successful investors can’t time the market, why do you think that you can?WorkIf you are getting close to retirement and don’t have enough money put away, the smartest thing you can do is to continue working. Delaying retirement by a few years can be a huge factor in being financially able to retire. By working, not only do you push off tapping your retirement funds, but you can keep saving for a couple of more years. According to The Oblivious Investor, “Retiring later is often the highest-impact thing you can do for your retirement finances. Each additional year of work is one more year to accumulate savings and one fewer year of spending from your savings.”It’s time to wake up and start taking action so that you can have a secure retirement. The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.The writer is the author of Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and a licensed financial professional in the US and Israel. For more information, call (02) 624-0995, visit www.gpsinvestor.com or email aaron@lighthousecapital.co.il.
