It’s tough out here! For the private sector, layoffs are very common! For government employees, it’s possible that leadership and administration changes can impact agencies and positions within them. We find ourselves in a very pivotal time regarding work in general. “Job security” can be perceived as a contradiction in terms. Even with pension programs and such, how can you possibly think about the future when the present feels so unstable? The real question should be, “How can you not focus on the future during such unstable times?” We’ve all heard that old adage, “If you fail to plan, then plan to fail.” It’s time to plan for your financial future.
[Disclaimer: This post is directed at the independents of the working world. Some folks come from money or have wealthy family support. The info that follows here is for the rest of us.]
The view on social security right now is dim. It’s advisable, for the time being, to dismiss it as a source of income when you retire or are no longer able to work. That way, when the system improves, which we all hope it will, it’ll be a bonus to add to your fixed income situation. So, what’s left to ensure a more financially stable future? The answer to that requires some self-discipline and willingness to take on some challenges, but the results are sweet! Picture yourself as a competitor who has spent countless amounts of time training, and it’s all about to pay off when you win that big event. You are now a kind of financial athlete. Time to start training!
“The best time to start saving was yesterday. The second-best time is now.” – David Chilton, The Wealthy Barber
This book is a very easy read, and it points out the vital importance of paying yourself 10% of your earnings first, before addressing other expenses, to ensure a more stable future for yourself. Let’s do the quick math to create an example: (Remember — this is theoretical.)
- Let’s start with a base annual salary of $100,000 (gross, not net).
- Your gross pay is appx. $8,333.33 per month. If you get paid bi-weekly, that’s appx. $4,166.67 per paycheck. (For this example, forget about leap years and odd calendar impacts.)
- Your 10% savings goal is $416.67 per paycheck.
- Take this out before you do anything else. This can be spread across a 401k account, auto-transfers to savings, and any other savings resources you prefer.
- For added security, put this amount in savings, and THEN participate in a 401k or IRA.
Now that you’ve conquered the self-discipline part of implementing the auto-pay-yourself-first strategy, you can determine what you can afford in terms of your lifestyle.
Let’s face it — we all hate to say, “No,” to ourselves when it comes to spending money, but the forward-thinkers and savvy savers are ensuring their independence well into their retirement years. Just imagine the kind of lifestyle you want to be able to maintain throughout your life, and work toward that vision as if you’re on your own in the effort. It’s like picturing that athletic victory and sticking with the food and training that will get you there. It’s tough.
David Chilton says, “It’s not about how much you earn, but how much you keep.” Those of us who have been working for over a couple of decades, have made those tough choices about when the splurge and when to resist extravagance. Trust me, we’re glad we did.
Need Resources?
- The U.S. Office of Personnel Management (OPM) and Department of Labor (DoL) share planning tools specifically for government employees. Take advantage of these!
- If you’re all set up with your Federal Employees Retirement System (FERS) account, just make sure that your total savings works out to 10% of your gross annual compensation, and you’re golden.
- NerdWallet is probably one of the most user-friendly sites out there. They make it easy for everyone of all financial competency levels to understand what is best for your own retirement planning. It’s a good general site for double-checking best practices.
So, just like an athlete in training may pass on that slice of pizza or late-night club hopping with friends, you can choose the spend and save actions that are right for you to yield the same benefit; a better future. You got this!
The multi-faceted nature of Susan Powell’s professional background paints the picture of a lifetime learner who has always taken full control of her career path and decisions to apply her learning experiences in the most productive ways possible. Susan has brought her passion for writing and communications to every career upgrade and role, which helped her to secure the Marketing Director position for a cybersecurity company that she holds today. Fueled by her continued enthusiasm for earning applicable certifications, she continues to develop her marketing prowess and channel partner marketing skills. This former elementary teacher-turned-marketer is still a happy work-in-progress.
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