Having the ability to retire on time or even early relieves the daily stress and worry that comes from our careers. Unfortunately, many of us don’t have the ability to retire on time for various reasons.
According to moneyusnews.com, the full retirement age used to be 65 for people born in 1937 or earlier. Things have changed. Now, for most baby boomers the full retirement age is 66. And the age will further increase to 67 for those born in 1960 or later.
For those who work where you earn a pension, it’s possible to retire after 30 years. Sometimes, you could even draw your pension after 20 or 25 years.
For example, for the last 29 years I’ve taught in a public school. I’ve worked as a teacher in 3 different states: Oklahoma, New Mexico, and Missouri. In all 3, I could draw my full retirement benefits after 30 years.
Even though I moved to different states, I had the opportunity to roll my retirement over and purchase years in the new state.
When I think how I could draw full retirement benefits after one more year if only I’d been smarter with my finances throughout the last 29 years, I could cry.
That being said, I’m still determined to be able to retire within the next 3-4 years, and I believe I can do it.
If you’re earlier in the process than I am, please consider these poor habits and consider doing better with them.
If you’re like me and are close to retirement age but not close to retiring on time, you can also intentionally make better choices in order to retire as soon as feasibly possible.
Habits Hurting Your Ability to Retire
1. Not making a budget
Trying to manage financial goals without a budget is like trying to bake a cheesecake without any cream cheese.
If you’re in the habit of paying bills, shopping for groceries, and so on without a plan for every dollar you make, it will be seriously hurt your ability to retire.
2. Straying from your budget
What good is a budget if you don’t stick to it, right? I have been so guilty of this throughout the years.
In fact, I could fill multiple 2 ring binders with all the budgets I’ve made through the years and didn’t stick to.
Everything always worked out so perfectly on paper. However, implementation killed me every time. I either forgot to take the budget with me or simply ignored it completely because I would ‘get the wants’ for extras in the store.
3. Overspending on groceries
As I mentioned before, ‘getting the wants’ gets me in trouble. It’s true at the grocery store just as with other stores, most commonly book stores, tech stores, and pet stores. At least I’m not a clothes shopping fanatic. Ha ha
Even with a budget, it’s so easy to fudge a little and buy food off the list. After all, we can simply borrow a little from another budget category and move it to Grocery, right?
That is a habit you don’t want to get into. Dave Ramsey calls this, ‘robbing Peter to pay Paul’. Stick to your grocery budget and to your list (make a list!) so that food expense never affects your ability to retire!
4. Eating out too often
How many times do we spend hundreds at the grocery store, come home, and end up ordering take out because we’re too tired to cook? Wait, do you do that, too, or is it just me? 🙂
Seriously, though, eating out happens way to easily and is a great way to break a budget and the bank.
Coming up with solid meal plans of quick and hearty meals will help if you eat out too often.
5. Taking too many trips
Are you a homebody or do you like to see the world? My husband and I are actually a little bit of both. However, I’ve noticed something about us… when we (I) feel less content with my home, I want to travel more.
While having a vacation or going on a quick weekend trip can certainly a great way to refresh, putting yourself into debt to do it will only make things worse.
Rather than travel to get away, use a budget category for home and make your house a place you love to be. Yes, you’ll be spending some money along the way, but it’ll cost way less than taking too many trips.
6. Not saving enough
When I first started my career back in 1991, I talked to my dad about retirement investments. He also talked to me about saving money. While he told me about mutual funds, he also told me how important it was to save a steady amount of money every single month.
Of course, we talked about a steady 10%, but Dad also told me that if I ever felt I couldn’t do that to at least save $25. $25 every month from the beginning of a career to retirement can make a huge difference.
Unfortunately, for many years I didn’t even do that. Why is it we think retirement is so far away when we’re in our early 20’s?! It seems that it is, but the time goes so fast, doesn’t it.
If you haven’t been saving enough along the way, start now with a consistent amount.
7. Not planning for emergencies
As Dave Ramsey says, Christmas is not an emergency. That holds true for so many things. However, there are legitimate emergencies that happen and if you haven’t planned for them, you’ll get further behind.
You may have to use a credit card or borrow money from family or friends if you don’t have sinking funds or an emergency fund in place.
That’s a step backwards every time it happens.
Save a baby emergency fund first. Once that’s done, include every possible thing you can think of in your budget such as car repairs, home repair, and so on.
8. Expensive insurance or health care plans
If you retire before Medicare is available to you, you will have to ensure you have health insurance. In my job, I can purchase COBRA when I retire and stay with the school’s insurance plan.
Many businesses have this option, but COBRA can be very expensive. Make sure you have a plan for insurance so that you don’t need to spend all your monthly income on it.
9. Early withdrawals from retirement accounts
No matter what, leave your retirement alone!
When we moved from Oklahoma to New Mexico, I did a dumb thing. Instead of rolling over the 4 years of retirement, I withdrew it. We used the money to help us move and get set up in our new state.
I was 25 at the time and retirement seemed too far away to worry about it.
Guess what? As I mentioned earlier and I’m sure you all know, the years FLY by. Had I rolled that over so I had all of my years in retirement, I could retire in one year with full benefits.
Ugh, so frustrating. Instead I have to go at least 3 more years and would do better with more unless I can really make a huge different in my savings accounts in the meantime. That’s my goal, and I’m counting on reaching it.
10. Spending too much on your kids’ college
We want our kids to have everything, I know. And when they head to college, we do everything we can to help them go where they want.
But putting ourselves in debt only hinders our ability to retire on time.
NOT that we want our kids to take out debt in their names. That’s one of the worst things they can do.
But we do need to help them take advantage of high school tutoring programs that give tuition help, fill out scholarship and grant applications, and finding part time jobs so they can start saving.
The Difference when You Have the Ability to Retire
Having the ability to retire on time can make such a difference in our senior years. While I have not been as financially responsible as I should have been in my younger years, I am determined not to struggle throughout my retirement years.
That’s why I plan to break any of these habits I hold on to. Will you do the same? Let’s support and encourage each other.
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