I’m dedicating this entire episode to Barb! Barb, a wonderful audience member from a speech I gave last week in Michigan, asked the best question I’ve heard in years. What do you do when, 10 to 15 years from retiring, you realize your Power Percentage isn’t where it should be and you aren’t sure if you can turn the ship around?
Whoa. Am I excited to tackle this one.
This episode is the turn around episode and we take on more Power Percentage challenges. To answer Barb’s question, I start with diagnosing the problem. How can you truly know you’re struggling? In what area are you struggling? Power Percentage answers this. More often than not, it’s a lifestyle problem. It always boils down to poor financial behavior. You’re either spending too much, in too much debt, or not saving enough. The hard truth is, no matter what caused it, the financial struggle is oftentimes due to your behavior. I know, I know, we all have different situations and circumstances, but if you’re looking at retirement and you aren’t fully prepared, saying, “It’s not my fault” is the same thing as saying, “I can’t fix it.” Look in the mirror and stop lying to yourself. You’re either on a path to retirement or you’re not. There is no “kinda”.
That being said, how can you truly fix this? To answer this, I look at a couple case studies. Overall, I break it down in a few steps:
- Figure out exactly how much they need to pay per month to make sure their mortgage is completely paid off by retirement.
- Immediately crank up your Power Percentage by increasing your retirement contributions. No excuses.
At this point, you’re probably asking, “Where is the money for this supposed to come from?” And this is where I get real with you. The reason you’re in a tough spot is because you’ve let other priorities move ahead of retirement. So should you live a rough life just to retire successfully? The answer is YES. We are talking about putting away enough money to survive without your income. If this sounds terrifying, it’s because it is.
- Never absorb a pay raise again. Put your raise directly toward your retirement fund.
- After these steps, it comes down to slimming down your lifestyle (i.e. cutting vacations, dining out less, downsizing your home, etc.)
Feeling a reality check coming on? Watch the episode on PTPTV and share with someone else who needs a reality check.