Saving for Retirement | Setting Goals & Shopping

Saving for Retirement: The advice on saving for retirement is fairly straightforward: save as much as you can, save as early as you can. These two factors can maximize your savings and how long it has to grow. However, the reality is that trying to increase savings actually has a dual positive effect on reaching retirement: not only does it mean there is more money in the account to grow, but saving more reduces your retirement savings need. Simply put, the more you save for any given income level, the less you spend to live. If you don’t spend as much to maintain your lifestyle, you don’t need as much saved up to replace it.

Saving early, as we know, has the benefit of compounding interest. It is possible to accumulate $1,000,000 by doing nothing more than saving $300/month for 40 years from age 25-65.

If you find yourself as a “late-stage” saver who wants to catch up, because the time horizon is shorter, the more raw savings itself must bear the load. As a result, the goal of reaching $1M by 65 (for example) would require a 35-year-old to save $702/month, a 45-year-old to save $1776/month, and a 55-year-old to save $5,695/month.

Lifestyle management is an approach that can help you reduce expenses to save up money. The rising lifestyle that often comes with rising income can actually set you behind in retirement.

Do you feel like you have an accurate picture of retirement and your finances? What changes (if any) would you like to make to ensure you are saving as needed? What lifestyle changes could you bring in 2024 to help you achieve these goals? We would love to grab a conversation regarding these questions and others you might have. Please reach out today and let us know how we can help.

Setting Goals: We’re quickly approaching the “New Year resolutions” stage as January 1 is only 21 days away. Chances are that you, like us, would have no problem setting ambitious goals. There is a chance, however, that in aiming to reach those goals, you become miserable as you strive to achieve them. An article we came across this week suggested that maybe we consider framing our goals a bit differently—not necessarily what we want, but what we don’t want. There’s power in inversion, in looking at problems backward. It allows you to approach your goals with a different perspective. Consider reading the article here. What do you think? What do you not want in 2024? How can that inform your goals?

Business Briefing

• Job Openings: U.S. job openings fell in October to a 2-1/2-year low, adding to evidence that the Federal Reserve’s aggressive interest rate hikes to bring down inflation are having the desired effect of damping the economy. The Labor Department’s Job Openings and Labor Turnover Survey indicated there were 1.34 vacancies for every unemployed person last month, down from 1.47 in September and the lowest since August 2021. (Reuters, Forbes)
• CVS Prescription Pricing: CVS is simplifying its prescription drug pricing by restructuring the system for reimbursing its pharmacies for the medicines they sell. Under the plan, pharmacy benefit managers will pay back CVS’s 9,500 retail drug stores for what they spent, plus a flat fee for their services in getting the prescriptions to customers. The plan is similar to entrepreneur Mark Cuban’s model at his Cost Plus Drugs company, according to The Wall Street Journal, which first reported the CVS plan on Tuesday. The new CVS CostVantage approach could change the cost of prescriptions for some patients, but it won’t necessarily reduce prices on all drugs. (The Wall Street Journal)

Last-Minute Shopping: We don’t recommend this for your last-minute shopping over the next two weeks, but we found it funny.