I remember the conversation like it was yesterday.
It was the Summer of 2011, and I was on the phone with my dad, updating him on my divorce, which, after about six months, had come screeching to a halt.
The truth was that I didn’t have to tell him, and the call ended up being more of a venting/therapy session for me.
What had thrown sand into the gears of the divorce was my ex-wife’s desire to claim a portion of the revenues from a business I owned.
Because the business was considered a “marital asset,” she was legally entitled to a share.
After I explained to my dad that this seemed to be at the heart of the delay, he offered a potential solution, albeit one out of left field.
Since my dad was an investment broker, his suggestion made my jaw drop.
“Offer her your 401k balance, and see if she’ll agree to settle,” he said.
Shocked at what had just come out of my dad’s mouth, I replied, “Dad, are you crazy? That’s my entire retirement savings!”
Then, he said something that made me pause and loosened the knot in my stomach.
“Don’t worry,” he said. “You have time to rebuild it.”
Although my dad reassured me that I had time, I felt like I was running out of it.
After all, I was in my early 40s and already felt I was way behind in my retirement savings.
Handing my ex-wife what little I did have in retirement felt like it would be setting me back even further.
Not only would I be restarting my life as a single man, but I’d be starting over with next to nothing in my retirement savings.
It took me a couple of days to reconcile what my dad recommended.
After giving it some serious thought and realizing that the divorce wouldn’t get any cheaper the longer it dragged on, I advised my attorney to make the offer.
A few days later, she called to tell me that the offer was accepted.
You Have Time
Rebuilding (or starting to build) your retirement savings in your mid-40s is obviously not the best of situations.
But like my dad told me 12 years ago, there’s still time.
In fact, when it comes to saving for retirement via investment vehicles like IRAs and 401k plans, time is the most important variable.
For example, let’s say you’re 45 years old and only have $1,000.00 saved for retirement.
Yikes! Not good, but we’ll roll with it.
If you invest $150.00 a month for the next 20 years at a conservative 7% annual return (over the past 30 years, the S&P 500 has averaged a 10-12% annual return) you’ll end up with more than $82,000.00.
Let’s try another one.
Perhaps you’re 50 and only have $5,000.00 saved for retirement.
If you can invest $250.00 every month for the next 15 years at an average return of 8%, you’ll have $103,000.00 by the time you’re 65.
Can you retire on $82,000.00 or $103,000.00? Of course not.
Neither of these are ideal circumstances; however, they illustrate how a less-than-optimal situation can improve significantly with the power of time and compound interest.
Use Fear To Your Advantage
I’ve been scared most of my adult life.
Yep, I admit it.
During most of my adult life, I’ve used fear to motivate me.
Don’t get me wrong; I don’t wake up every morning in a sweat worrying about what’s going to happen to me today.
I simply like to be prepared, and a healthy dose of fear helps me do that.
I tend to think about what’s potentially in store for me down the road.
I’m always thinking ahead, and so far, it’s served me well.
I imagine a worst-case scenario and work backward from that point to develop a plan and implement steps that will, hopefully, help me avoid said worst-case scenarios.
While it may sound a bit “doomsday-ish,” it’s worked for me.
I’ve used fear to motivate me to achieve a number of personal goals.
A few of the big ones included competing in numerous drug-free bodybuilding competitions where I had to get up on a stage in front of hundreds of people wearing next to nothing (terrifying…trust me).
Another was paying off my mortgage ten years early.
And yes, rebuilding my retirement savings.
I was scared I’d end up in my late 60s or 70s with nothing saved.
In fact, I was picturing what that would like.
I’d often think, “I’ll be working until I die.”
That is, if I could even get a job at that age.
So, I used that fear as a massive motivator.
I began closely tracking my expenses so I knew where every dollar was going.
And when I say EVERY dollar, I mean EVERY dollar.
I cut out what I deemed to be wasteful spending.
I questioned if the thing I wanted to buy was a want or need.
I didn’t buy it if it didn’t significantly improve my life in some tangible way.
I implemented a strict monthly budget to redirect those dollars to where they should go, specifically, to my retirement savings.
Since I forfeited my retirement savings to settle my divorce 12 years ago, I’ve been on a laser-focused mission to rebuild my retirement nest egg.
And I’ve used fear to help me to do it.
While I’m not saying you should be terrified of your financial future, a small dose of fear can help spur you to get moving.
Start…Now!
If you’re in your 40s or 50s and behind in your retirement savings, you might think it’s too late.
Rest assured, it’s never too late.
You still have time, but you must get started right away.
You know what they say about the truth.
Sometimes, it hurts.
You may have to change your current lifestyle, which can be difficult.
Personally, I lived a bit too fast and loose money in my 20s and 30s, and that lack of discipline came to light and reared its ugly head after I settled my divorce.
But thanks to a shift in my money mindset and the power of time, I was able to right the ship and get back on track.
If you need help establishing and sticking to a monthly budget, sign up for my free 5-day email course, Straight Talk Budgeting.
You’ll learn the practical and psychological tactics I implemented to help me pay off my mortgage ten years early, rebuild my finances, and get back on track with my retirement.
Want a done-for-you daily routine to combat the “Three Pillars Of Stress” in less than an hour a day? Check out my book, Mind Body & Money.