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How To Trick Yourself Into Actually Reaching Your Retirement Goals In 2017

Expert Panel
POST WRITTEN BY
Elle Kaplan
This article is more than 7 years old.

It might be hard to believe, but the end of 2016 is quickly approaching. If you also think this year flew by, you may have missed some of your resolutions this year, whether they were to save more of your paycheck or to shed some pounds.

If you did miss out on some of your resolutions, you’re certainly not alone. In fact, it's been reported that only 8% of people actually follow through with their resolutions. Although I can’t shed any light on trimming those holiday pounds, I do know that retirement planning is certainly one of those oft-missed goals. According to Time, one in three Americans has not saved for retirement. The good news, however, is that this can be overcome.

I've been helping individuals retire for over a decade now, and I’ve seen how retirement is one of the goals many procrastinate over and put on the shelf (after all, it's a ways away for most), only to scramble to play retirement catch-up years later. However, with some careful planning and goal setting, my clients have been able to set (and reach) successful retirement resolutions, and you can too.

Here are some steps to set the right retirement goals – and actually ensure you reach them in the new year.

Focus On The Future

A study done by Stanford University found that a major reason we don’t properly plan for retirement is because we don’t connect our current efforts with their future rewards. Oddly enough, they found that even the act of seeing a virtual reality version of your future self increased your likelihood of planning for retirement. As strange as it might seem, this tool helped people connect current efforts to their results far down the line by enabling them to (literally) visualize their future.

Even if you don’t have access to VR tools, concretely tying your investing efforts now towards future gains can produce a similar effect. With the incredible power of compound interest over time, this can become quite the motivator. For instance, if you invested $10,000 a year from only age 25 to 35 (with a 6.5% return), you’d wind up with nearly $1 million by age 65.

One easy way to visualize your future returns and ensure you reach them is through a free retirement calculator. Take a look at your retirement goals and see just how much of an impact saving more now would have. The National Bureau of Economic Research found that when people were shown how their current contributions translated in retirement, they contributed $1,150 more per year on average.

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Avoid "Golden Handcuffs"

The phrase "golden handcuffs" refers to being shackled to your salary, no matter how high it gets. I saw this time and again during my days on Wall Street, where employees would spend raises and bonuses nearly as fast as they got them. Quite simply, if you’re spending more every time you up your income, it’s like a hedonic treadmill.

Harvard professor Sindhil Mullainathan found that the biggest problem with getting a bonus is it will likely create a desire to celebrate and spend it all; his solution is to pretend like you didn’t get it.

Although I’m an advocate of celebrating a little (after all, the best diet plan is the one you actually stick to), you would be better taking out $100 or so, and then sticking it straight into a retirement or savings account.

Treat Retirement As A Bill

You hopefully treat paying your electric bill and your mortgage or rent as absolute necessities. Although these bills might cause some anger every month, you most likely pay them right away without thinking.

If we treated our retirement the same way, we’d be far more likely to plan ahead. After all, keeping your lights on in retirement is just as important as it is now. By treating it as a necessity, you’ll ensure you actually put this first before discretionary purchases, just as you would your water bill.

Keep Your Inertia Going

Keeping the ball rolling is a well-documented phenomenon with habits. Research has shown that if you make a sporadic effort, it will feel like such a burden to start over that you likely won't end up accomplishing your goals. This can be seen in fitness, where going to the gym is at first difficult, but it becomes second nature if you do it regularly.

Financially speaking, a great way to ensure regularity with your retirement efforts is to set up automatic contributions. With certain retirement accounts like 401(k) plans, there are options to have a portion of your paycheck contributed automatically. That way, you regularly save without thinking. Another smart option is to have a portion of your deposits go directly into your savings account, so you have that money set aside for investing instead of being tempted to spend it in your checking account.

Get Specific

If you haven’t already, get specific with your goals for retirement. This is not only a great way to ensure you have the right investments, but it can also help you stick to your goals.

A great way to start is by picking a realistic retirement date. "Referring to a specific age helps you transport yourself into the future and think of the needs you will have then," said Shane Frederick, a marketing professor at Yale School of Management.

Meet Your Goals

Just because most Americans fall short of their New Year’s goals – retirement or otherwise – doesn't mean you have to as well. Even though retirement might seem eons away, it is possible to set the right resolutions and put the wheels in motion today.