Focus on the Why not the What

Lots of boomers are playing catch-up with their retirement investments and plans. The government even provides some “catch-up” help by allowing the over-50 set to make larger contributions to their 401(k) and IRA retirement plans. 

This catch-up incentive also applies to HSA contributions if you are at least 55.  (If you are in an HSA plan, don’t overlook the tax-free investing benefits that an HSA provides.)

Unfortunately, just making “catch-up” contributions won’t solve the problem of a grossly underfunded retirement nest egg. Solving that problem requires some serious sacrifice.

I heard some excellent professional advice on a radio talk show the other day about the psychology of saving for the future by sacrificing today. The advice was elegantly simple but often overlooked:

Put your focus on why you are sacrificing, not on what you are giving up.

After I processed this principle for myself, I looked around for ways that others have expressed it in their own lives. I liked this summary from Simon Sinek:

Success comes not by trying to find something you’re willing to sacrifice, but by being inspired by the thing you’re pursuing.  When you are in pursuit, sacrifice doesn’t feel like sacrifice…it feels like balance.

The concept of “balance” is clearly applicable to those of us trying to moderate our pre-retirement lifestyle now so that we can have a decent (and affordable) retirement lifestyle later. Some economists would put this in the framework of “consumption smoothing” in which you invest and spend for an even ride before and after retirement, without dramatic changes in lifestyle.

Achieving a balanced financial life, has to be a good thing, don’t you think? If so, next time the “instant gratification” part of your brain is telling you to upgrade your vehicle or even buy that $5 latte, allow the rational part of your brain to have its say. Let it speak to “the thing you are pursuing” – a contented retirement – and not to what you are sacrificing.

I’m struggling through this now. We have three vehicles – all over 12 years old and with at least 115k miles. (One is primarily a tow vehicle.) I have been researching used vehicles to replace our three oldies with two that are younger. I have targeted two models and have been monitoring prices in the used car markets.

This past week I learned about a brand new model just released to the market. It looks to be perfect for our needs as a combination everyday and heavy-duty tow vehicle.  It has received excellent reviews from even the toughest critics.

But I have vowed never to buy another new vehicle. I want others to take the initial depreciation hit so we can save that money for retirement. On the other hand, the average market prices for the three-year old vehicle I have targeted as our best used option are the same or greater than the MSRP for a mid-range version of this new model.  That creates a clash between a philosophical financial principle and actual dollars.

Anyway, whatever decision we make, we must try to maintain our focus on the why, and not the what. I hope it works out!

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