The Retirement Planning Secret that Doubled My Savings

How I Doubled My Savings

Doubling your savings is an achievable goal. Unfortunately, when you hit one of these articles, you’re often met with unrealistic financial advice from people trying to sell you something. Frankly, that’s not what we do at VestCred. Our team members are all fans of radical honesty and authenticity about retirement planning and personal finance. That’s why I want to give you a look into my finances. Not because I’m some guru who knows everything, but because I took realistic steps to change my habits. And if you’ve hit this post, I think what I did to double my savings can help you too. 

My average monthly retirement savings deposits:

Mar 2016 – Feb 2017: $700

Mar 2017 – Feb 2018: $1,500

Above is a snapshot of the average amount I was able to save for retirement every month. From March of 2017 through February of 2018, I was able to double my retirement savings monthly deposits. 

So, what happened? 

You might be thinking I met with a brilliant advisor who gave me some incredible advice that I was able to put into practice. 

And you’d be right.

In February of 2017, I met with Dave Wasserman for an annual review of our family’s financial plan. I’ve been fortunate enough to have met many advisors throughout my career, but I chose to work with Dave because the experience was unlike any other financial advisor I’d ever met. Our conversations never started with accounts, balances, financial issues of any kind. 

He always asked a thoughtful, piercing version of ‘how are you doing.’ He really wanted to understand how our family was doing. 

Occasionally he got dismissive responses because I just wanted to get to the numbers. But this time, for some reason, I was a little more open. 

He and I had worked to put together an alternative retirement strategy after my accounts were devastated during the ‘Great Recession.’ I’d been very pleased up to that point, but I was worried that I wasn’t doing enough to make sure my wife and I had lasting retirement income. 

I wasn’t saving enough, and I didn’t know how I could save anymore. After all of our costs of living, $700/month was all I could afford to put towards retirement. 

 

The Secret That Doubled My Retirement Savings 

Dave heard my worry in earnest, and instead of starting a conversation about risk tolerance or accumulation strategies, he simply said –

Let’s take a look at all of your spending, in the chronological order that each expense leaves your account. 

At the time, I was using Mint to track all of our accounts and spending habits, so this was a pretty easy conversation for me to have with Dave.

We mapped every expense an emotional response and put them into two buckets – Required and Unsure. Of course, nearly everything was in the Required bucket. 

Then we pushed all of that aside and returned to the chronological list of our family spent money each month, but this time we added my income, and a big issue appeared! 

I wasn’t paying myself first.

I was depositing into my retirement account an amount I felt comfortable with when we implemented the strategy, but I’d never really challenged that assumption. 

Seems simple right? Like most things, it’s easier to say than to do.

So, How Did I Start Paying Myself First? 

1. Rescheduled Expenses –

    When you deposit your income, pay yourself before you pay anything else. Send the amount due to yourself. We stress-tested all of our underlying assumptions about what I could afford by deprioritizing every expense that fell into my Unsure bucket. Anything not required, wouldn’t get funded by my income until after I’d paid myself first. For us, this meant reducing dining out, entertainment expenses, and creating a small fixed budget for clothing.
   

2. Stress Tested –

   Remember to be flexible and not to beat yourself up too much. After 1 – 3 months of paying yourself before you spend on anything not required, ask yourself if your choices have been creating too much unbearable stress on you and your family. If you’ve shifted too much away, to create a stressful daily life, start to move some funds back. Don’t stress yourself to the point of breaking.
   

3. Repeated 1 & 2 –

   Continue to challenge your assumptions on a regular schedule to create the ideal balance for your family.