DENISE: Hi, there. I’m Denise Richardson for howdini.com. We all know that saving for retirement is something you’re supposed to start doing as soon as you enter the work force, but fewer and fewer of us are actually doing it until very much later – and that’s a problem. But then what? How do you catch up? Can you catch up? Here to answer that and much, much more is David Bach, bestselling author of, among other books, Start Late, Finish Rich. Baby boomers: the time is here; it’s not coming anymore. Are we in trouble?
DAVID: Well, we are in trouble. And we’re in trouble because so many of us have put off saving money. You know, I always joke that at thirty we think about it, forty we worry about it, and fifty, we hyperventilate. And really, that’s why I wrote Start Late, Finish Rich. I was doing all these workshops and seminars, and I would have a lot of people come up to me, in their late forties or early fifties, and they would say to me, you know, I blew it. It’s too late for me. What do I do? And what they were really saying to me is, I’ve given up. So, do you have a lottery ticket for me.
DENISE: Oh, really.
DAVID: And, and, and my message is really simple. My answer is no, don’t stop don’t give up. Because the truth is, if you’re fifty right now – fifty, by the way, is the new thirty – and so if you’re fifty, it’s not too late. The key is to get started. And I would always start with something simple. It’s literally saving an extra five to ten dollars a day. Because the good news is, if you’re in your fifties and you happen to be watching right now, chances are your kids are out of the house finally, and so you finally have some money coming in, that you’re, it’s not all going out to the children unless you have college costs – and one of the things I tell people before, by the way, is stop paying all those college costs. Because you’ve got to fund you retirement. So the key for you, if you’re watching right now and you, you feel like you’re behind, a couple of things, really simple. One, you have to pay yourself first, faster. So that means that the first person that gets paid when you get a paycheck, it’s got to be you.
DENISE: Ten percent? Fifteen percent?
DAVID: Well honestly, if you’re really behind, you need to get as high as twenty five percent. So I always look in terms of hours. One hour a day of your income is a great place to start, that’s twelve and a half percent of your gross income.
DAVID: If you are, if you’re working, you know, forty, fifty hours a week; I want you saving an hour to two hours a day of your income. And so for those, you know, baby boomers watching, the key is save money, pay yourself first, but make it automatically. You have to make it automatic, to save the money automatically.
There’s so many people right now who are on the edge financially. They’re –
DENISE: I know. Maxed out in their credit cards. They’re in the throes of losing their homes, and they’re, they’re crashing. Everything’s crashing around them. What do they do?
DAVID: Well, here’s what you really have to do. You have to go on what I call a debt diet. You’ve got to cut what you spend. It’s so, you know, go duh. But no, really, that’s what you have to do. You have to look at where you spend money, and start being more honest with yourself. One, do I have to have this? Or two, do I just like to have it?
DAVID: I mean the average American is saving less than three percent of their income.
DENISE: You mentioned little ways to save money. Can you give us a few tips?
DAVID: I’d pull out; I’d pull out your bills. And I’d look at every fixed expense you have. Cell phone, cable bill, gym membership, utilities; just go right through your list. And I’d call every single company, and I’d look for a better deal.
DENISE: And it’s possible to get one?
DAVID: You will save hundreds of dollars in a matter of hours by just doing that. You’ll get a better deal on your cell phone, you’ll get a better deal on your cable, and, and the easiest way to get a better deal, is to call these companies and say, I quit. I’m canceling my cable. ‘Cause then, they’re trained to keep you on the phone, and keep you working with them. So they’ll say, well wait a minute, why are you leaving? Well, because I’m, I’m, you know, looking for ways to save money right now. It’s a recession, I need to cut back. Well, we have a special package right now for the next six months; maybe we could switch you to blah blah blah blah blah. And I’m telling you, whenever we do our makeover shows, and we just start there, we find two, three, four, five hundred dollars a month in savings just by doing that. Just by renegotiating every deal you’ve got.
DENISE: Absolutely. David Bach, thank you so much.
DAVID: Thank you so much.
DENISE: I’m Denise Richardson for howdini.com.