Baby Boomers and Gen X’s Need More Love (Money) Too

Why wait until 2020 to start investing or increasing your investments to generate greater wealth or more income for you and your family?   After over a year of sharing my book, Make It Rain – Increase Your Wealth & Financial Security, I’ve met hundreds of hard-working Americans, who are 10 to 25 years away from retirement earning $20,000 to $50,000 a year.  Many of these folks are already mentally resigned to living a bleaker existence or undignified future after retirement than they should.  I often hear the following phrases during our conversations with older folks who are worried about life after retirement:

“Why don’t they teach this in schools…I wish I’d know what you shared when I was in my 20s or 30s…”

“It’s too late for me to become a millionaire now… so what’s the point of investing… I’m too old.”

“I plan to work until I’m 70 or 75 when I’ll receive the social security max to help me get by in retirement.”

“I can barely pay my bills and keep my head above water now…I can’t afford to invest or save…”

“It’s too late for me but I want to buy your book and give it to my grandkids so they get a better start in life.”

If you’re a Baby Boomer or Generation Xer, who’s still working, planning to retire in 10, 15, 20, 25 years, but feeling down and resigned to living on much less income than you need after you quit working this post is my Christmas Gift to you.  It is solely dedicated to helping you and your family find a different way to retire with more wealth (money), income, and dignity.

Let’s Make It Rain

First – Start Your Journey Regardless of Your Age, Income, or Family Circumstances.  Start Before Jan. 1st, 2020. “Start where you are.  Use what you have.  Do what you can, starting now.” is my take on a quote from the late great Arthur Ashe.  This quote feels so appropriate to share with you, the Boomers and Generation Xers, today.  If you’re in your 40s, 50s, or 60s you have lots of time and life ahead to make things better when it comes to your finances.  Commit and do a few things differently, the few simple things I suggest in today’s post before or just after the New Year begins.

Second – When you get to work tomorrow or sometime next week call your HR department benefits rep and change your automatic payroll deduction to increase your investments to 5, 10, or 15 percent of your pre-tax pay.   Take full advantage of the gift of money provided by investing in their retirement plan or pension plan.  The sooner you start the sooner your worries about the future will begin to fade away.  Just investing 5 to 15 percent of your pay starting tomorrow in low and moderate-risk investments will likely accumulate an additional $25,000, $50,000, or $100,000 in personal wealth before you actually retire.  This simple action, this simple change to your payroll deductions, will generate an additional $100, $200…, or $500 a month in guaranteed supplemental income for the rest of your life if you currently bring home a salary of $25,000 a year as an example.   Start investing now if you’re not or start investing more if you’re not investing at least 15% in your Company 401k, 403b, Pension Plan, or any other retirement plan they offer.   You’ll be amazed how much money you’ll accumulate from making a small (5% or 15%) investment of your pre-tax pay from now until you actually retire.

The charts below illustrate the potential wealth you could accumulate if you decide to automatically invest 5% and 15% of your pre-tax pay of $25,000 into investments yielding 5-7% return a year.  Note:  These are estimates, not actual results the charts provide a reasonable model before taxes.  If you happen to earn more than $25,000 a year the amount of wealth you’ll likely accumulate in the same amount of time will be much much higher.

Third – I bet some of ya’ll are thinking…this sounds good in theory but I’m really strapped for cash.   I need to buy more gifts for my kids this Christmas…I need to pay off my credit cards are maxed out before I start investing…I make just $10,000 to $20,000 I can’t afford to invest.  If you’re in this situation or a similar one take an even smaller step to start investing before the start of the new year.  Meet with your Human Resources Retirement Benefits representative before the first of January and have $10 a week or $20 bi-weekly automatically deducted from your pre-tax pay.  Use that $10 to $20 to start building more wealth at the start of the New Year (Jan 2020) and after you get out of the current cash crunch gradually increase the amount you invest each year until you are investing 10% to 15% of your paycheck.  The rewards of investing just $10 a week (the cost of going to Starbucks or ordering take out for lunch) will pay huge rewards in 10 to 20 years so don’t wait to pay off your debts or other bills, go get started.

Fourth – Have Some Faith.  Learn from my journey.  I started my journey by investing just $25 a week when I was making $7.50 an hour ($15,000 a year) as a laborer performing lawn work, painting, digging ditches, and other maintenance jobs at Monsanto Research Corp.  If you’re living off of $15,000, $20,000, or $25,000 a year taking that first simple step of automatically investing a little of your pay before taxes (before you receive your paycheck) won’t cause you to have to make a huge dent lifestyle changes/choices.  Change your investment behaviors and you’ll significantly change your financial fortunes (wealth) before you decide to retire.  I guarantee it!

Fifth – Stop Giving the Government More of Your Hard-Earned Money Than You Should.  Let It Work for You!  By the way, if you’re not investing or investing enough of your money with each paycheck the money you could be investing is likely going to the IRS (The Government) in the form of Income Taxes versus making you richer.   Don’t give the government your hard-earned money so make a few small behavioral changes stop doing that.  Set up automatic payroll investment deductions to put more of your money to work for you and if all else fails skip a few Lattes or Sodas each week for the next 5, 10, 15, 20 to fuel your life after retirement. Doing the little things lead to bigger and bigger results. Your wealth will begin to grow from hundreds to thousands to tens of thousands over the next 10 to 20 years.  Overtime will make a huge difference in the amount of additional income you’ll gain after retirement.  Our government and financial investment firms have created an easy (low risk) way for ordinary, hardworking Americans to generate more and more wealth to live a better retirement life down the road.   

Even if you don’t understand how it all works talk to your Human Resources Retirement Benefits office to get help getting started.   

Sixth – A Bonus Tip For All The Baby Boomers Out There.  Take advantage of “Catch Up Contributions” If you’re age 50 or over and work for a company that offers a 401k retirement plan you can invest up to $19,000 for retirement tax-free.  It’s rare that our government provides good policy but they did in this area of our lives.  Take advantage of it to accelerate the amount of wealth you can accumulate before you leave work in 10, 15, 20 years.  Who wouldn’t want to make more money (income) and never have to work another day for it once they retire?  I know I sure do!

Seventh – Don’t take your money out of the Stock Market when it crashes and keep investing automatically.  It Always Recovers.  If you’re still a skeptic Boomer it’s easy to let your emotions take over and cause you to pull your investments out when the stock market falls. That’s the worse thing to do unless your 2-3 years from retiring.  Keep automatically investing in good (up) and bad (down) markets to maximize your growth over time.  As you weather the ups and downs you’ll gain more confidence and see bigger and bigger returns.  You’ll see your retirement account value rise more than you can likely imagine today.   Don’t just take my word.  Check out this chart showing how the markets have continued to rise higher and higher over decades even after lots of political, economic, and societal meltdowns.  Trust the markets.  They always return and rise higher and higher.  Since the time I found this chart the S&P returns (Trends) have over doubled in value for those who decided to keep investing after the last crash in 2007/2008.  Those who panicked and pulled their money out and never reinvested it have missed another great opportunity to build more wealth (fortune) for their futures.  Keep investing unless you are 2-3 years from retiring and need the money you already have accumulated to provide the income you need to live off for the rest of your life.

We may not all become millionaires but I hope you don’t pass on this opportunity to add more wealth to your life and if you’re a Boomer or Gen Xer apply some of the suggestions from this particular blog pose.  This is a gift to you in hopes that it helps you enter and exit 2020 with a big financial bang!