Die Rich by Living Poor or Die Poor by Living Rich?

Every man is rich or poor according to the proportion between his desires and his enjoyments. ~ Samuel Johnson

A remarkable story of a gentleman who passed away in March 2016 at the age of 92, with an estate worth nearly $8 million, stunned his friends and everyone who knew him. The gentleman had amassed a small fortune during his lifetime by investing in quality companies and living an extremely frugal lifestyle. What was truly amazing was the fact that he earned a minimal salary during his entire career, working as a maintenance worker, janitor, and gas station attendant.

The question many had was, what if he had spent some of his money and enjoyed it during his lifetime, rather than saving it and leaving nearly all of it unspent.

We each have our own priorities when it comes to saving. Unlike the gentleman who diligently saved throughout his life, it seems for many their purse-strings are perpetually caught in a tug-of-war between enjoying the moment and saving for the future. While it is fine to allocate funds to specific luxuries, there is one key area all of us need to save for – retirement.  In fact, retirement is by far the most popular type of savings. Over 80 percent of Americans’ savings is in a 401(k) or individual retirement account.

However, the number one reason Americans save money is for travel, not retirement, or even emergencies. In a study by SunTrust Bank, 45 percent of adults say they save their money for travel. Just 30 percent set money aside for retirement.

Even if retirement is several decades away, it is imperative that everyone begins saving for it as early in their career as possible. Retirement savings need time to grow into a large enough sum to sustain us in the future. While Social Security will provide some income, it won’t be enough to fully support your retirement needs.

The general rule of thumb is that we will need about 80 percent of our former earnings to live comfortably as a senior. One of our main goals while working should be to focus our efforts on consistently building retirement savings throughout our career.

The challenge for many individuals is the task of being both an investor and a saver, where a delicate balance of the two lies in careful planning and goal setting.

For many, identifying short-term and long-term objectives are simple and straightforward. Such objectives include saving for college, buying a house, and of course, retirement, each with specific timelines attached. But for others, goals can be difficult to establish, with uncertain marital issues, kids that may or may not go to college, loss of a job, and ill health.

The two variables of how much one saves, and how well (or not) one invests can determine the outcome of one’s remaining years. So the importance of having objectives and maintaining careful oversight of how much to save and tracking investments is critical to knowing where we will end up. This is where you place the Madison team at the center of your customized plan, working with you to deliver in-depth and ongoing wealth management services.

To be clear, there is nothing wrong with saving money for travel or other luxury items, but we shouldn’t neglect important goals like our retirement. After all, saving for the future buys something very important today – peace of mind.

Important Note: This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Madison Wealth Management does not provide tax, legal or accounting advice. © Madison Wealth Management 2018