Around the time I had my first child, I discovered minimalism. I was drawn to its white space—the absence of knickknacks and clutter, the carefully staged feeling, as if there’s nothing to do in your home except sit down every Saturday with a cup of coffee and look out the window.
At the time, I was 36. Another kid followed soon after. Kids, as it turns out, don’t pair well with minimalism—what with all the clothes, celebrations, and stuff.
Discovering minimalism well into adulthood feels a lot like discovering retirement planning later in life. The ideal time for minimalism is before you accumulate all the stuff. Likewise, the best time to start planning for retirement was a long time ago.
Most of us were not that diligent young adult who starts saving a few hundred dollars a month after college and continues the practice throughout her career, enjoying decades of compounding.
Many future retirees who visit financial planners have faced career setbacks or divorce. Maybe they invested heavily in their children’s education or navigated a family health crisis. A great many savers have taken 401(k) loans or withdrawals for some of these needs.
On the other side of life’s choices and surprises, here you are—a Gen Xer sitting in our office and asking us to help assess the situation.
While recommendations vary by age and circumstance, the good news is that there is usually one big thing you can focus on to meaningfully improve your prospects moving forward.
Our most common suggestions are:
- Build cash savings
- Pay off debt
- Invest more
Build Cash Savings
Cash savings are critical to retirement success. Having a few years of basic spending set aside by the time you retire less risky, accessible accounts allows you to weather market volatility and cover unexpected expenses.
Many people do this instinctively—much like stocking up on groceries before a winter storm. Others, however, have spent years trying to “hide money from themselves” inside retirement accounts and don’t trust themselves with large savings accounts. The closer you are to retirement, the more likely this lands at the top of your to-do list.
Pay Off Debt
Debt reduction before retirement can be another big win.
For some, this is second nature. They want vehicles paid off, major home projects completed, and no lingering obligations before leaving the workforce. Others have carried vehicle loans, credit card balances, or even mortgages well into their 60s and 70s.
When talking with clients, I often share a simple reality: most of the successful retirements we see are debt-free. Fewer monthly bills mean less pressure on your savings. While there are mathematical arguments for holding certain debts, middle- to upper-middle-class retirements generally work better when they’re free and clear.
Invest More
I saved “invest more” for last on purpose.
As we age, the magical unicorns-and-rainbows years of compounding start to fade—right alongside our desire to stay out late partying with friends.
The dollars you save just don’t have as many years of growth potential.
Imagine a 60-year-old client with $800,000 saved. At a 7% return, that becomes about $1.1 million by age 65. Adding $1,000 a month for five years increases the total to around $1.2 million.
That’s more spending power—but at what cost?
In this scenario, $60,000 over five years might be better used to pay off a mortgage, eliminate a vehicle loan, or build a robust emergency fund. These trade-offs deserve careful consideration.
Adding to the “saving late” conundrum–especially if you have competing priorities like debt payoff–is the fact that you’re investing in a season where best practice typically dictates you invest less aggressively, thus minimizing any upside.
This is a hypothetical example and is not representative of any specific investment. Your results may vary.
The Good News
Although I didn’t discover minimalist ideas and headline-grabbing tidying techniques until I was older, the awakening wasn’t for naught. Our family still benefits from having less clutter and a regular tidying habit.
For clients who wake up in their 40s or 50s wishing they’d considered retirement planning sooner, there is usually one big thing you can do today that meaningfully improves your situation moving forward.
Our job is to help you figure out which one matters most.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.