No one has a crystal ball so most of us try to plan for our retirements with the information we have at the time. Throughout the years we have been surprised by different changes to our financial situation that have altered how we will meet our retirement savings goals. In some cases the changes have been positive, but for the most part they have been negative. Being an optimist, I always try to think how I can find a silver lining in any negative situations that come my way. With regard to our retirement planning, I've had plenty of opportunities to roll over and give up. Instead, I've literally rolled over my 401(k) account, which has given me new hope.
Rolling over my 401(k)
I was surprised when my company was sold. I had been contributing to the same 401(k) plan for 10 years. Because I no longer work for the same company as I did a year ago, I was able to rollover my old 401(k) plan into a regular IRA. I look at the change as a tremendous opportunity. My 401(k) restricted how often I could move money from one fund to another. By having my money in an IRA, I can invest in virtually anything rather than the limited number of funds offered in my company-sponsored retirement plan.
Dealing with no company match
My company used to match 6 percent of my paycheck, but then they temporarily suspended the match during the Great Recession. After the recession, they brought back the company match but at a lower percentage. Now that I work for a new company, I actually receive no company match. Because I don't get a company match, I contribute to both a Roth IRA and to a regular IRA. Because I have no company match, I'm more motivated to put money in a Roth, which I think is superior.
Compensating for no pension
I also have no pension plan. I received a retirement pension plan for a few years with my former company. However, they discontinued it due to the expense. Since I won't have a pension to lean on in retirement, I try to be especially careful with my money. I think about all the things I'll want do when I'm retired such as travel, to the movies or eat out. I put money aside in specifically-labeled savings account so that I won't have to give up on my dreams to travel when I'm older.
Counting on less equity in our home
We always assumed that when we retired we would have a lot of equity built up in our homes in case we wanted to downsize. However, we purchased our home for $183,000 and now it has an appraised value of only $130,000. Even if the value of our home recovers by the time we retire, we will only be breaking even. Also, if we sell our home we still have to buy another home in the same real estate market. Because of the predicament, we are paying off our mortgage years before we retire. At least we won't have to pay a mortgage.
I've learned that it's impossible to know what kind of financial challenges will face us in the future. By being conservative with our spending and aggressive with our savings, I know we will be prepared for retirement. It may not be a glamorous retirement, but at least we will be secure.
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