Tuesday, September 7, 2021

Retirement Savings: Choosing a Path

I've recently returned to the city from a month away.  Immediately, I hit the trails of Inwood Hill Park, a natural oasis that is virtually in my back yard, and rarely gets the praise it deserves.  It contains the largest remaining old-growth forest in Manhattan with hiking trails that easily allow you to forget the busy city that surrounds you.  In fact, the trails seem to contain a bubble that very nearly shuts out the city entirely.

When I'm in town, these trails have become a critical part of the composition of any day that doesn't require me to commute to work.  They contain a certain energy that allows for a somewhat meditative rebalancing.  I've noticed that the most beautiful things in the trails require ascending rugged staircases or dirt pathways. You see, without the ascension, there is no arrival; no overlook with a grand view; no fruit to be spotted on the beautiful Osage Orange tree.   These arrival points are the ones we like to boast; post bragging pictures on social media, photos that highlight the majestic accomplishment of that one moment in time.  What we see pictured less often is the journey up: the moment we got a bit lost or had to stop and catch our breath... but without these moments of resistance, the destination somehow loses a bit of its beauty...  But just how often do we miss the overlook out of a desire to avoid the discomfort of a journey that appears to be largely uphill?  

In order to master finding my way to the overlook, and collect that brilliant payoff, I had to learn the trails, face the climb, pace myself, pause when needed, and ultimately choose to keep going.  I also had to realize that there was something up there worthy of my energy.  Planning for the financial future feels much the same way. It starts with a vision of that which we desire.  Then, we begin to educate ourselves on the strategies that are available to us.  Most likely, this new education helps us to become inspired and find the inspired action, or path we'd like to try out.  Perhaps we bounce between trails a bit, but that's okay because we've come to understand that there is more than one way to get to that beautiful overlook.  We pace ourselves, pause when needed, and most importantly we come to realize that we love not only the destination but also the journey.    

What would you like your financial future to look like?  Do you want to retire early?  At a traditional age?  Do you long to live nomadically?  Travel the world?  During this Retirement Savings series, we've studied so many pathways to obtaining the retirement of our dreams.  We've studied each individual trail and compared it to the one next to it.  We've come to understand the advantages (and disadvantages) of these various trails.  At a certain point, it becomes time to choose a trail and begin the hike.  Otherwise, we're left on the sidelines and miss the overlook entirely...  So friends, where are we going?  Perhaps we should start now.  

A friend on the trails reminded me of the value of starting right away and pacing myself.  My friend happens to be a gorgeous, grey squirrel.  You see, today it was 82 degrees and sunny.  Not even the slightest hint of Autumn in the air.  Meanwhile, I look over and see the most brilliant, grey squirrel scurrying along with a rather large nut in its mouth.  Now, I watch these amazing creatures all summer long and notice that while they are clearly enjoying their time, they are also constantly setting aside for later.  It's as if they inherently sense that this is something they need to be doing, and then as if by magic, several months later, it's all just there waiting for them.

Many of us are in the most abundant season of our lives.  Like the squirrel, we can set a bit of that abundance aside for the future while still enjoying much of the bounty now.  So, let's start traveling along that trail we've chosen, deliberately making our way toward the future of our dreams, setting a bit automatically aside from our abundance, and enjoying some along the way.  Also, don't be afraid to start on one trail and then switch to another one.  It's okay to change strategies along the way!

I realize this post is a bit more metaphorical than the remainder of this series. So, let me ground a bit of this in a concrete example.  I have a fairly vivid image of where I'm going.  I would like to achieve Coast-FI in the next couple of years.  For those that don't know, Coast-FI is a term for people that have invested enough to secure a traditional retirement without adding any more money to their nest egg (basically the power of compounding will allow it to grow to the desired number by retirement).  Once someone has achieved this, they only really have to worry about their monthly expenses.  They can just "coast," hence the term.  Anyhow, I'm on a trail leading me to that point.  In fact, I've taken a few interconnected trails.  What pathways am I using?  I have woven together a combination of pension, rental real estate, Roth 401(k), and Roth IRA.  Since I'm likely to max out my Roth 401(k) this year and have access to a Roth 457, I am considering weaving that into my plan.  I also have my own business, and could take advantage of a SEP or Solo 401(k), but am currently holding off on that.  Since I have access to a 457 through my employer as well (and the investment options are pretty good), I am most likely going to take advantage of that for the time being.

So, I urge you too to consider: Where are you going?  In other words, what would you like your life to look like?  What are the various trails you can take to get there?  Consider re-reading the other posts in this series as a launchpad for your research.  Then, most importantly, get started!  Enroll in a plan and set it up to be automatic so that you can be simply enjoying your life while setting aside from the current abundance toward the future of your dreams!

For Further Reading:

Retirement Savings: SEP vs. Solo 401(k)

Retirement Savings: Traditional IRA vs. Roth IRA

Retirement Savings: Roth IRA vs. Roth 401(k)

Retirement Savings: 401(k) vs. 457

My 3 Bucket Approach to Retirement Savings

A Roth vs. Traditional IRA (This one is from 2017, so some of the info is old but the chart in this piece is pretty useful still)

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