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How to Cultivate Money Mindset for Your Retirement

How do you imagine your retirement to look like? Do you picture yourself strolling along a beach or basking in a mountainous view atop your dream retirement home?

The ideal retirement differs from person to person, but one thing’s for sure. Everyone wants to retire securely, living their best life without worrying about living expenses any longer. If you’re going to achieve this, then you need to set your financial plans according to your retirement goals as early as possible.

According to a white paper published by Empower in 2019, Americans have high expectations for retired life. With U.S. workers starting their retirement planning at an average age of 42, it begs the question of what kind of financial mindset they have. One must have a proactive mindset to make key financial decisions every day that support their ability to achieve their retirement goals.

If you’re wondering how to attain such a mindset, then you’ve come to the right place! This article will teach you the importance of preparing for a successful retirement and how to cultivate the proper money mindset for it.

Why should you prepare for retirement?

It’s vital to prepare for retirement since the future isn’t guaranteed. Once you have a retirement plan in place, you’ll be creating a safety net for yourself if you run into trouble later in life. A firm plan will also ensure you don’t become a financial burden to your loved ones and may even allow you to be in a position to help them rather than the other way around.

As you live longer, you’ll need more retirement funds saved to sustain your needs. With the average human lifespan at around 72 years old, that means you’ll be needing to stretch out your retirement savings further—especially if you’re fortunate enough to live well above that age bracket!

However, it’s important to note that retirement should no longer be about reaching a certain age but should be more of a “next chapter” in one’s life. Expect to live your best life in retirement, whether you plan to become an explorer, traveler, volunteer, or continue working or joining the economy through freelancing or consulting.

By planning for retirement at an early age, the funds you save will accumulate over time and will leave you with a large nest of money for your retirement dreams. Your mindset must view retirement as a stage for more growth and opportunities. But how does one even begin to form that mindset?

Taking Control of Your Financial Future: What is a Money Mindset?

The ability to be or feel in control, especially when it comes to your financial future, has everything to do with perspective. This is your money mindset or the unique attitude and narrative you create using your thoughts, actions, and beliefs toward money.

When you become aware of your money mindset and understand how it’s formed, you gain a clear picture of where your financial habits come from, how they influence your thoughts and actions, and how they can have positive and negative consequences.

If you have a healthy money mindset, you’re more likely to feel confident, knowledgeable, and motivated about navigating your financial life. This is essential in preparing for retirement as it requires a constant exercise of good habits.

Since your financial perspective will inform how you manage, save, spend, and invest your money for retirement, it’s crucial to start forming the ideal money mindset right from the get-go. Here’s how:

7 Ways to Form the Proper Money Mindset for a Successful Retirement

  1. Set your goals

Goal-setting for a successful retirement requires knowing what makes you happy. Spend some time thinking about what you enjoy so you can focus your attention on these areas. By doing so, you can make financial decisions accordingly.

For instance, if your goal is to travel once a year upon your retirement, you’ll be needing a savings account or another form of retirement savings where you have enough funds for your travel goals.

From there, you can then determine how much you need to put towards retirement. Financial experts advise people to put at least 10% to 15% of their income towards retirement annually. If this isn’t feasible, create a plan that will allow you to reach that 15% eventually. You could begin by putting 5% towards your retirement and slowly increase your retirement savings until you get to 15%.

The important thing is that you’re now able to form a definite savings plan by setting a specific, desirable retirement goal.

  1. Picture your future self

Visualizing the future can help ensure you reach goals and improve your overall wellbeing. However, many people don’t have a specific picture of what they want to achieve.

Vague ideas are always a good starting point, but remember that they can be hard to measure and lead to missed goals. For instance, the statement “I want a financially secure retirement” does not qualify what being “financially secure” actually means.

It’s essential to determine why being financially secure is important to you and how you will achieve it. How do you picture yourself when you’re financially secure? Is it reaching a certain amount of money? Where are you living? Are you fulfilled?

You might suddenly realize you haven’t started saving for this or aren’t in the right type of business to achieve it. Perhaps you need to commit to maxing out your retirement accounts or increasing the contributions to your other investments at this point. Whatever the case, fill in the missing pieces to bring that future vision to life.

  1. Make wise social comparisons

In a world driven by material things, it’s easy to compare what you have to what others have. Whether it’s through social media, the TV, or even a simple chat with friends, you can quickly find out how someone has “more” than you. This can push you to strive for more, even if you’re already happy with your current status.

A report by Aegon suggests that the more people compare themselves to other people who are better off, the lower their financial wellbeing. Thus, although comparisons are inevitable, being wise about it is key.

For instance, compare yourself to your past self to see how far you’ve achieved. Find similar role models when making comparisons, such as those who have roughly the same age or who live in the same locale. Finally, be grateful for how comfortable you are compared to others and how much good you have in your life.

All these can put comparisons into perspective, allow you to set more achievable retirement goals, and make the road towards retirement more pleasant and harmonious with what truly matters to you.

  1. Widen your financial knowledge

Learn healthy financial habits to combat current, negative ones. Put in the effort to work toward ideal financial management and spend time to get it right. Read books, blogs, articles, news, and other resources that broaden your perspective and help you improve on areas where you’re struggling.
Share financial ideas and questions with family and friends—you’ll never know what wisdom they can share! Working with a professional such as a financial advisor can also help train your money mindset and give you practical tools to improve it.

  1. Prepare for unexpected risks

The COVID-19 pandemic has shown that no matter how well one plans, unexpected risks can occur and completely change or eradicate those plans. Millions of people were driven into early retirement going into the pandemic, and businesses were also adversely impacted.

Some may be fortunate enough to receive retirement or separation benefits from their employers in these realities, but unfortunately, a large percentage would not be as lucky. As companies can go bankrupt, employees won’t get their due retirement or separation benefits. And even if they do get re-employed, would they have enough time to rebuild their retirement fund?

The main source of your retirement funds can disappear into thin air because of such unforeseen events. Thus, preparing a retirement fund now or at an early age is the right time to do it—even if retirement may be far from your mind.

  1. Focus on preservation and distribution 

Growing up, you’ve probably been told of the importance of accumulating wealth for your retirement. For instance, in the United States, people are told to be regular savers by using tools such as 401(k)s, IRAs, and brokerage accounts, among others.

Essentially, it would be more important that you saved compared to how you saved. However, as retirement draws near, your focus needs to change from accumulation to one of preservation and distribution.

You must consider strategies and tools that ensure your freedom to make choices in retirement instead of simply building your net worth. For instance, consider moving from passive to active investment management for retirement income. Separate your nest egg for different purposes, so your money isn’t co-mingled.

Finally, find the right mix of investments, insurance, and banking-related products specifically appropriate for your needs.

  1. Believe that you deserve and will achieve success

The proper money mindset will follow the belief that you will reach your financial goals and achieve a successful retirement. A negative outlook will make you give up from the start. It’s vital to approach money from a place of openness, curiosity, and excitement. This foundation will allow you to cultivate habits that support that belief for success.

Of course, this doesn’t mean that your financial road won’t be paved with setbacks or adversity. So how do you shift your perspective from one of fear and anxiety to one of positivity? Again, spend some time re-calibrating or setting new financial goals, as these make up the groundwork for your financial plan.

Once you have these goals, set key milestones to celebrate as you achieve them one by one. Looking forward to such milestones will create a positive headspace and help you make choices that are aligned with productive thoughts toward money.

Your Best Asset is a Growing Money Mindset

Now that you know the basics of forming the right money mindset for your retirement, it’s time to take full advantage of the best part about it. Like any perspective, money mindsets can shift.

Whether you plan on retiring overseas or somewhere close to home, finding retirement success will depend on your ability to control your money mindset wherever you go. When you consistently make an effort to be aware of and improve upon your money mindset, you’ll be better equipped to make intentional decisions toward positive financial health.

Financial health is one of those things that you may feel like you don’t have control over when, in truth, you do! You need not fixate on money aspects that are truly out of your control, such as the market and returns. You can, instead, focus on things you can control—such as savings, spending, investing, and goal-setting. All these are essential for a successful retirement and will come naturally with a constantly improving money mindset.

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