How do you psych yourself up to save money for a goal that’s decades away, like retirement? With a little mental trickery.
Amassing the high dollar amounts needed for your golden years takes a long-term commitment. Sticking to your resolve — both financially and emotionally — requires strategies for dealing with a steady stream of near-term spending temptations and other expenses (planned and otherwise).
Here are some ways to help you stay strong.
1. Paint a detailed picture of the life you want to live
“Retirement” is a nebulous goal. For a motivational boost, make the goal come to life by filling in the details about where you’ll live, the activities that will fill your days and the people you’ll be with.
Vacationing where you plan to retire, or even staycationing to live for a week like the retiree you hope to be, will make it even more tangible. Once you get a real taste of how all your hard work is going to pay off, you might be inspired to save more and reach your goal sooner.
2. Give your willpower muscle a break
Willpower is a finite resource, and your psyche can run out of gas dealing with daily, weekly, even hourly financial decisions.
Give your brain a break by putting your long-term savings on autopilot: Set it up once and let it ride.
If you have a workplace retirement savings plan, like a 401(k), simply sign up; money is automatically routed from your paycheck into the account regularly. Some 401(k)s even automate annual contribution increases, inching them up a few percentage points at a time.
You can lift the cognitive load outside of a workplace plan, too, by setting up automatic deposits to an IRA. Then any time you get a raise, bonus, tax refund or other cash influx, commit to increasing your contributions.
3. Calculate the cost of today’s spending decisions
The snowball effect of compound interest — the money you earn on your savings, plus the interest that growing balance continues to earn — is what powers those “skip a latte today and it’ll be worth a lot tomorrow” calculations.
The advice may feel stale, but the math stands.
When you’re tempted to pull your wallet out for an unplanned purchase, grab your phone instead and run the numbers using a compound interest calculator. Passing up a $100 purchase and investing it instead (earning the stock market’s average annual return of around 7%) would give you more than $500 in spending money in 25 years. Given enough time, even small sums can add significant padding to your retirement portfolio.
4. Reward your selfless behavior
You’ll be on the retirement savings treadmill for a while. Along the way, give yourself credit — and a little something special, like dinner at a posh restaurant — for sticking with it.
Celebrate each time you hit a specific retirement savings milestone. For instance, high-five when you complete a particular task, like sitting down with your sweetheart to use an online retirement calculator to project your future investment income, or save a specific dollar amount, like increasing your tax-favored contributions. The IRS recently raised the annual cap for 2019 to $6,000 for IRAs and $19,000 for 401(k)s.
Don’t wait decades to pat yourself on the back for all the hard work of saving for retirement. Regularly toast your progress — and your retired future self’s well-being.