I often meet with people that are older, and for a number of reasons, find themselves woefully unprepared for retirement. One of the first questions they (usually the husband for some reason) ask is: “Can we be really aggressive with our retirement savings to make up for our small nest egg?” My answer never goes over well: “No. Your investments won’t save you so you will need to save yourself. You have three basic options: Save more, work longer or live on less in retirement. And just to be brutally honest I usually find that it takes all three of those things to make a retirement plan work for people in your situation.”
Here is the deal. Simply being aggressive with your investments allows you to avoid making hard decisions now and instead blame someone else (like me) when things don’t work out. And chances are that being aggressive with your investments when you plan on retiring in a few years won’t work out. In any given year the stock market will take a nose dive. If that nose dive comes when you need the money (or even if you are close to needing the money) you will be digging a hole that is impossible to get out of in time.
It’s time to ask yourself the tough questions you have been avoiding: Can you really afford to send your kids to a private college? Can you afford that big house? The new car every 5 years? Vacations to the ocean? Cable TV? Cell phones for everyone? Maybe sending your kids to a private school was more important to you than fully funding your retirement. We all have priorities and that may be yours but make those decisions with your eyes wide open.
It’s time to stop drowning financially. Save yourself with brutal honesty.