Black Belt Guide to Saving Money for Retirement

Investing, Investing Strategy
black-belt-guide-to-saving-money-fast

By Brearin Land

Learn more about Brearin on NerdWallet’s Ask an Advisor

When I began to study Brazilian jiujitsu, I wasn’t biggest, strongest or fastest, so I got squished by the big guys in the class. All I could really do was show up and try to get better, and I showed up more than everyone.

I draw a ton of parallels between my experience in martial arts and the work I do with my clients as a financial planner. “Showing up” — or in financial-planning terms, regularly saving for retirement — is the key.

Whether it’s martial arts or saving money, I see the same story play out time after time: Most people don’t show up in the first place, and of those that do, most burn out in the first year.

In jiujitsu, a small percentage of students ever make it to the black belt. While a much higher percentage of people save enough money to retire comfortably, the numbers certainly aren’t anything to celebrate.

According to Census Bureau, the median liquid net worth for an American between 55 and 64, it’s just $45,447. Sure, the majority of them will have Social Security to pull from, but the average benefit comes out to only $15,500 annually. With pensions going by the wayside, this means that the average American approaching retirement is entering their retirement years essentially broke.

You don’t have to get to black belt to learn how to defend yourself, and you don’t have to be among the 1% to build a comfortable retirement. But if you want to fare better than average, you are going to need to hustle.

Here are four principles that I learned from jiujitsu that can help you build your “hustle muscle” and save for retirement.

1. Just get started

There’s no time for excuses, in training or investing: You have to put in the effort, even when you’d rather be doing something else. In terms of investing, that means you should start saving and save often.

There are plenty of options, including 401(k) and other workplace-sponsored plans, along with Roth IRA and traditional IRA plans. Each of these has different tax advantages and features that might be appealing depending on your stage of life and overall economic situation.

The most important thing for those of you who are not currently saving or not saving enough is to build that initial principal. In the world of investing, principal is king. If you are just starting out, your plan doesn’t have to be perfect. For instance, you could try saving your first $25,000 by breaking it into more manageable parts.

Just get started!

2. Hone a strategy

While just showing up is the most important thing in the early stages of learning a martial art, you won’t get very far if you don’t refine your skills.

Similarly, while the hardest part of building a retirement fund is simply starting to save, it doesn’t end there. As you begin to invest, you can start refining your strategy.

Over time you will learn from little mistakes. You will figure out the type of investment strategies and vehicles you like, but you have to get some money built so that knowledge can be put to good use.

Investing in your company-sponsored 401(k) up until company match is a great idea, for example, but you might consider also having a professional check out how expensive the fees within the plan are to decide if it makes sense to max it out as a next step, or whether maxing out a Roth is a more effective option.

A representative probably visits your workplace every once in a while to give you 401(k) advice. Definitely show up to that session, but take that information with a grain of salt. The rep’s job is not to act as a fiduciary on your behalf, but rather to give very general advice on the plan itself and get you excited to put more money into the fund.

3. Work with a professional

When I decided that jiujitsu was right for me, I ended up at Gracie Barra Springfield, the best jiujitsu academy in Illinois.

Martial arts was interesting at that time because you had so many people who just trained with friends or trained in their garages. I quickly realized that one day of elite training was worth a month of random, aimless training.

In personal finance, working with a professional is just as important, but it can be hard to in the beginning. The majority of financial planners are not willing to help someone who has less than $100,000, $500,000, or even $1 million.

Look around for firms that offer comprehensive financial planning for those of you who are still in the process of saving for retirement.

4. Plan for hard times

Whether it’s training jiujitsu or building a retirement fund, you’ll experience moments you weren’t ready for — an opponent who is bigger and more skilled, or an unforeseen financial setback.

The only way to overcome those challenges is to lean on your fundamental principles. Setbacks are going to happen, but with the right training and planning, they don’t have to result in falling short of your retirement goals.

Take these basic steps to ensure you are protecting yourself during financial hard times:

  • Balance your monthly bills so you aren’t paying more one week than the next. This will make your overall spending patterns more consistent, so you aren’t skimping on contributing to your retirement plan because you’re slammed with bills during certain times of the month.
  • Setup a rainy day fund with three to six months’ worth of expenses. This will keep you from having to dip into your retirement accounts — and likely paying early-withdrawal penalties — when unforeseen expenses occur.
  • Keep this fund at a separate bank with no direct access to your primary accounts. This will help you resist the temptation to make short-term decisions at the expense of long-term planning.

By making a commitment to show up, then continuing to work on your financial plan, you’ll be surprised with how far you can get — and how powerful you’ll feel.

In Brazilian jiujitsu, some days you are the nail and some days you are the hammer. I was the nail for a long time. Fast-forward 10 years, and none of those big guys that used to pound me are even training anymore. They are probably sitting on the couch right now, pounding beers and eating Doritos.

Brearin Land is a financial planner and CEO of Irvine Wealth Management in Irvine, California.


Image via iStock.