The Key To Boosting Your Retirement Savings, According to Goldman Sachs
Written by
Brooke Barley
Edited by
Zuri Anderson
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Increasing your retirement savings could be as straightforward as switching your mindset.
According to a recent study from Goldman Sachs detailed on Investopedia, possessing “financial grit” can result in 49% more money in your retirement savings.
What exactly is financial grit? GOBankingRates reached out to experts to further define it, and find out ways it can be developed if you are feeling a bit lacking in that area. Having 49% more in your retirement savings is a substantial amount, so here’s how you can get what you need to start earning.
What Is Financial Grit?
When thinking about financial grit, experts like Daniel Gilham, the managing director of advisor strategy at Farther, said that it’s about perseverance and passion coming together.
“Financial grit is the consistent, relentless pursuit of financial goals. Through economic gain or loss, grit is the dedication to make a plan happen through a well defined, systematic process,” Gilham stated.
No matter what ups and downs the market brings, financial grit allows you to keep pursuing your goals.
Build an Emergency Fund
It might not sound “gritty,” but having money on hand for unforeseen expenses can keep you on track when it comes to retirement savings goals.
“Unexpected expenses can keep you from fulfilling your commitment to invest in retirement, but part of grit is preparing for them,” Melanie Musson, a finance expert with Quote.com, explained. “Building an emergency savings account takes determination, but an emergency fund can cover emergencies so that you can continue to contribute to retirement savings.”
Always Be Investing
Gilham said that, no matter how tempting short-term luxuries are, having grit means passing them up to achieve your long-term financial goals. That means you need to be dedicating money to investing.
“For the investment process, investing in yourself (and your goals) first, before spending, is a tried and true way to ensure an investor is relentlessly pursuing stated goals,” according to Gilham. “This can be done through automated 401(k) savings or taxable/brokerage automated sweeps during each pay cycle. By systematically and automatically investing in your goals first, you remove the opportunity to bypass that monthly contribution for a random, unnecessary purchase or expense.”
Don’t Go All in If You’re Not Ready
Having financial grit doesn’t mean you have to do things that make you extremely uncomfortable, but it could mean stepping right outside your comfort zone.
Scott G. Kyle, CEO and CIO of Coastwise Capital Group, LLC, said that being a successful investor means knowing yourself well.
“If you have a history of panic selling when stocks are temporarily down for example, then acknowledge that,” Kyle explained. “The next time stocks are declining, and you are tempted to sell, rather than liquidating a large part of your portfolio to your long-term financial detriment, try selling just one share of a stock.”
He added that, most of all, it’s important to have clear goals and a consistent system in place to meet those goals.
“Having a clear plan will help to keep the focus on the long-term goals rather than short-term crises,” Kyle noted. “Staying calm, being patient and having confidence that today’s headlines will soon be forgotten will help any investor achieve long term financial goals — and be happier along the way.”
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