The #1 Way You’re Sabotaging Your Plan for Retirement (It’s Not What You Think)

You’ve probably heard that to succeed, you must take big risks and go all in. But what if I told you that wasn’t true? In this blog post, I’m going to talk about the momentum myth and how playing it small can actually help you achieve your goals faster. And don’t miss the bonus tips on how to apply this information to your financial life to get ahead!

Hey there, friend. In this post, I want to talk about something many of us struggle with- retirement savings. A lot of people think it’s because they don’t make enough money or they don’t have the right investment portfolio, but that’s actually not the case. The real reason is something else entirely. So stay tuned while I walk through an example!


Have you ever found yourself browsing through social media and feeling like everyone else has it all except for you? Maybe you see all your friends and acquaintances with big houses, fancy cars, and luxurious vacations, and you start to wonder why you can’t or don’t have the same things. Or you find yourself trying to keep up with all those big purchases, stretching your budget to the max. But what if I told you that comparing yourself to others and trying to keep up is likely preventing you from saving more for retirement, and in ways that go beyond your initial thoughts?

It’s very natural to want more, to desire nicer things and experiences. But you see when we compare ourselves to others, it’s easy to fall into the trap of thinking we NEED to have what they have. In doing so, it moves that desire from a WANT to a NEED. 


The issue here is that we are creating our dreams from other people’s actions. Or deciding we want something because it’s advertised to us. To avoid this trap, we must first define our objectives and then ensure the way we spend is in alignment with those dreams. So often, we base our behaviors on what the trends are around us, not on what will actually move us forward individually the way we need. 

Let me put one myth to bed before we move forward in this discussion. I’m NOT going to tell you that you can’t have nice or luxurious things now or in the future. Or that the way to financial greatness is to cut out your daily coffee. This is simply not true. The magic in defining your dream path and not copying others is finding a way to afford the things that are important to you!


This trap of living up to others’ outward expressions, believing that we NEED (not want) more, pushes retirement further out of reach in two ways. 

First, when we spend money today on things outside our long-term goals, it takes away from our ability to save for the end goal, resulting in using our retirement funds instead of leaving them to grow and provide for our future. 

Second, it raises our expected needs for the future, making our overall goals higher. Which in turn pushes the overall financial goals further out of reach. Success is about making informed choices, not blind cuts.


So how do you understand what you actually need in retirement and reign in your goals? Let me walk through an example to get you started. 

First, let me introduce the Rule of 25 if you’ve never heard of it.  The Rule of 25 is a simplified method of calculating the total amount that you will need in retirement. It assumes that 4% is the safe withdrawal rate at which you can spend your retirement savings, such that you don’t run out in your lifetime.

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The math behind the rule is that a safe average return rate for investments is 7% per year before inflation. Inflation eats 3% on average, and you have 4% to live off in perpetuity. Saying this another way, taking 4% out of your investment account each year allows the overall balance to continue to grow, not shrink, forever.

Let me stress this is an idealized and simplified version for calculating your retirement needs. For example, you can certainly debate what the average inflation might be after our current run, but this rule is a great place to start as you get to know your numbers. 


Now that the concept of the 4% safe withdrawal rate is clear, how do we calculate our retirement using the Rule of 25? 

For this example, I am going to use a monthly budget of $5,000. To convert that into your yearly budget, multiply the $5,000 by 12 months to get a $60K annual budget.  Then to get your total retirement estimate, multiply the $60k by 25, and that translates into $1.5M as the rough number that you’ll need for retirement.

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To do the math the other way, the 4% yearly withdrawal rate of $1.5M is $60k per year, letting you start visualizing how the Rule of 25 works. 


Okay, now that we have an overall number to start working with, let’s look at the impact spending can have.  Lowering your monthly budget by $500/mo can change your overall retirement need from $1.5M to $1.35M. ($5,000 – $500 = $4,500. $4,500 x 12 = $54,000. $54,000 x 25 = $1.35M.), and you could retire with $150K less in your accounts. 

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When you start looking at how much you can save a year, this could literally shave years or even decades off your retirement date. Or it could provide you with the cushion or insulation for your savings to tackle things in the future like inflation. 


With this type of calculation, I want you to start thinking about how LITTLE I can retire with, not how much I need. This shift turns traditional thinking on its head and starts to put those far-off goals within reach. 

Comparing yourself to others is not only emotionally draining but can also lead to sabotaging your long-term financial growth and goals. So, don’t keep up with the Joneses; focus on your own financial journey creating your dream path, prioritizing savings and spending in alignment with what matters to you rather than falling for the pressure to equalize your standards of living with others. It’s the magic that will allow you to find your financial freedom!


Want more on this line of thought? Then read my article on “Why I Think You Should NEVER Retire” by clicking on THIS LINK, which will share with you a life-changing secret about retirement.

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