Legendary actress Bette Davis famously said, “Getting old ain’t for sissies.”
And neither is saving enough money for a fulfilling retirement. It takes determination, willpower and a well-considered plan.
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But it can be done and there’s a pattern of behavior among the ones who do it successfully.
The generation currently in the process of doing it — the baby boomers, whose youngest members are in their early 60s — have some wisdom to impart.
Here are five savvy moves that made many boomers wealthy by retirement age.
1. Avoid lifestyle creep
An improvement in your finances, such as a raise at work or an inheritance, shouldn’t be an excuse to go out and spend.
The strategizing boomer knows that any boost to income should go to savings and investments. In other words, they live below their means.
However, it’s all too common for a lot of people to spend what they earn — a losing proposition when it comes to saving for retirement. Instead of indiscriminate spending, follow the advice that finance writer Elizabeth Aldrich’s father gave her, and create a retirement budget and stick to it.
As Aldrich told Business Insider, her father managed to retire at 55 — five years later than his target age of 50, thanks to the Great Recession of 2008 — by figuring out exactly how much money he needed to comfortably retire. He then worked backwards to figure out how much he needed to save each year, including the expected rate of return on investments. Aldrich’s stepmom did the same and retired even younger, at 49.
To get there, they reduced their spending and made sure any extra money went toward their goal.
2. Auto-save, always
Out of sight, out of mind is the smart payday rule for the boomer who has managed to retire with confidence. That means earnings are automatically transferred to savings and investment accounts as soon as the wages are deposited.
Also known as the “pay yourself first” strategy, it’s based on the idea that investing as much money as possible each month means maximizing the accumulation of interest and, eventually, generating exponential growth. The process is also known as compounding, and it’s crucial for building wealth.