Now is the time to think about what all of us might do differently in a new year to help us move forward in life. For some it is working out. For some it is eating less. And for some it might be saving more for their retirement. I have watched many successful people over the years and the one thing I see them doing better than the rest comes down to one word: discipline.
Discipline is the key to retirement. Without it, you will not save enough. Without it, you will spend too much of what you do save. And without it, you will most likely not be as happy as those that have it. Just think about what you ate over the last two weeks. There was probably more than one day where you had a donut for breakfast, a cookie at 10 a.m., a heavy lunch with friends, chips for a snack at 3 p.m., a heavy dinner with family, and a bowl of ice cream before bed. After all that, how did you feel? In hindsight, it is easy to say forgoing the snacks and eating less at lunch and dinner would have left you no hungrier and yet feeling a lot more energetic. The discipline to do that also contributes to an individual’s life; discipline adds control. In this case, controlling what you eat can actually makes your body feel better in the near-term as well as the long-term.
Retirement is no different than eating. In the years leading up to retirement, discipline will lead you to consistently save more, year after year. I often recommend people increase their 401(k) savings 2% every January with their pay raise. That way they will not feel the increased savings, but the discipline of doing this will have a large long-term effect. This discipline adds control too. People who save more, and by extension, retire with more assets, feel more in control of their destiny. They do not focus on things they cannot control, such as the stock market. They simply keep plodding along like the turtle, almost knowing that they will beat the hare. In fact, they plod so well that they often keep working past their retirement goal because they enjoy it.
Discipline sounds boring. But it is not; in fact, the most disciplined people I know often take the most risk in the stock market or their personal lives (skydiving comes to mind). In pro football, quarterbacks talk about the game slowing down and thus, they become more effective. Discipline allows our retirement game to slow down, allowing us to see which levers we can control and which ones we cannot. Having the knowledge of what we cannot control actually frees us up to not pay attention to those things, allowing us to spend our emotional bank account on those things in life that bring more fulfillment.
So when I look under the hood of those that have successfully retired, discipline keeps popping up as the single best character trait that they focused on. It was not getting lucky in the stock market, or having a large inheritance, or winning the lottery, or buying stuff (including big homes), or hearing the right infomercial, or any other of the numerous ways to get rich quick.
What I wish for you then, in 2012, is that you increase your 401(k) savings by 2%, maybe even save another $100/month into a mutual fund outside of that, and start heading down the road of a disciplined retirement strategy. Soon you will find this discipline thing addictive, which is very helpful when cutting back on eating and trying to hit the gym more often as well.