Recipe for a Financial Comeback

Some studies show that people are generally happiest in their 50’s because they quit striving so hard and learn to accept the fact that some of their long-cherished dreams won’t happen. I can understand this. Our goals have to adapt to reality. Many things are out of our control and there is great peace in acceptance.

To be forced to give up on a goal, however, is not the same as giving up. There is always another goal that is appropriate for the moment. Abandoning or modifying a goal does not require succumbing to mediocrity or despair.

I see our mission as doing our best under the circumstances and being content in the process. This mission takes our stewardship seriously while trusting the outcome to the good providence of God. It’s about being diligent and content simultaneously.    

I’m not saying it's always enough to work hard and be content. Sometimes we have to redirect our efforts. To quote Steven Covey, “If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster.” 

Then again, sometimes our ladder is leaning on the right wall and we’re just one or two small tweaks in our method from experiencing a breakthrough. So wisdom is also needed.

With this in mind, I want to encourage those of you who may feel like you are behind financially. If your balance sheet has not turned out the way you had hoped and you are worried about not being prepared for retirement, here’s what I suggest:  Set a new goal to catch up…to get back on track...so you can be financially free to do the things you want to do in the future. 

I’ve seen it done many times by my clients. Encouraged by the story of Ben and Ruth (a hypothetical couple), here is my recipe for a financial comeback.

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Ingredient 1. A clear perspective

The first ingredient for a financial comeback is gaining a clear perspective of where you are now and where you want to go. You may have to address where you’ve been in the past; but what you don't want to do is let the past hold you back. You have to release it, forgetting those things that are past and pressing toward a better future for you and your family.

You also can’t afford to stick your head in the sand and pretend all is well when it is not. Facing the facts honestly is an essential step in moving forward. Procrastination is often motivated by fear--and you need to overcome the paralyzing effect of fear. Getting started is often the hardest step; but the wind is at your back and taking the first step will make the next step much easier.

Business coach Michael Hyatt gives five reasons for procrastination.

• Reason #1: You aren’t clear about your goals.
• Reason #2: You haven’t identified your why.
• Reason #3: You haven’t chunked the project down to bite-size pieces.
• Reason #4: You are distracted by too many tasks.
• Reason #5: You haven’t built in any accountability.

Gaining clarity about your financial status and goals will not only give you a road map to follow but also energize you in a way you couldn’t have imagined.

Ben and Ruth are a hypothetical couple who will serve as a case study for illustrative purposes. In 2006, Ben and Ruth were 55 and 54 years old and had a liquid net worth of less than $150,000. They knew they were behind and needed to bare down if they wanted a retirement income that would sustain their lifestyle. They didn’t pretend otherwise and they didn’t cover their ears to the truth. They looked at the numbers to gain a clear perspective on where they were and where they wanted to go. 

Ingredient 2. A hopeful spirit

Gaining a clear perspective when you are financially behind can be a little disturbing. It is critical at this point not to be discouraged but have a hopeful spirit. An optimistic attitude can propel you to accomplish great things.

You can’t control many of the circumstances around you, but with God’s help, you can have a good attitude. A good attitude is in our control and is a success in itself.

To quote an old Roger Miller song,

 You can’t roller skate in a buffalo heard

 You can’t roller skate in a buffalo heard

 You can’t roller skate in a buffalo heard

 But you can be happy if you’ve a mind to

Ben and Ruth knew they were behind, but they were full of faith, believing it was possible for them to catch up if they applied themselves. That hopeful spirit made all the difference, motivating them to work hard for the goals they knew were achievable. 

Ingredient 3. Raw hustle

Few people achieve financial success without raw hustle. I mean going the extra mile to get the job done, doing what others aren’t willing to do, putting in the extra hours, making the sacrifices, and taking some calculated risks.

Relatively few people are at the right place at the right time and it seems success falls into their lap. But usually “good luck” is found at the intersection of hard work and opportunity. Bloom where you are planted and good things tend to happen. It's the law of sowing and reaping.

When I think about the success stories of my clients, I better understand what it took for them to get where they are financially. I am in awe of their grit and determination in the face of fierce obstacles.

This grit and determination rarely coexist with being comfortable. Constantly telling yourself how hard it is is self-defeating, so be aware of the negative self-talk like "this is too hard".  The goal is easy if you consistently do the right things.

However, embrace the fact that it will be uncomfortable. Own this: "If I pursue comfort, I will not experience a financial comeback." There can be no victory without a struggle.  

Ben and Ruth had worked hard and helped put their children through college. With their children now established, Ruth went back to work full-time and Ben continued to develop his skills in his profession. They continued to hustle in their late 50’s and early 60’s to achieve the retirement they wanted.    

My first financial planning mentor was recently quoted in a U.S. News article about stay-at-home parents going back to work after their children leave the house. The numbers are not everything (i.e., personal happiness and satisfaction have to be considered), but the financial benefits of heading back into the workforce is significant. Some of the main benefits are saving more, delaying withdrawals from savings, and generating a higher Social Security benefit.

Ingredient 4. Strategic thinking

Have you ever noticed how some people work harder than others but get less done? That’s because they are not working efficiently. They are not thinking strategically. Having a sound strategy will help you work smarter. It will focus your resources in the right direction.

Ask yourself, “Do my actions today point toward my future goals?” This is so important because human capital is your biggest resource. Yet it can be so easily piddled away with mundane activities that do not move your vision forward.

In 1918, Charles M. Schwab was the president of the Bethlehem Steel Corporation, the largest shipbuilder and the second-largest steel producer in America at the time. He paid consultant Ivy Lee $25,000 for his advice to the company’s executives on setting priorities, based on the increased productivity Schwab observed after following Lee’s recommendations.

Basically, Lee advised writing down the six most important things you need to accomplish each day and prioritize them in order of their true importance. Then start at the top and don’t work on any task until the most important tasks are completed. Repeat the next day.

Have you ever found an old action list and noticed the number of unfinished tasks that didn’t really need to be done at all?  These are the small pebbles that maybe can filter through the big rocks to fill the jar. Just make sure you get the big rocks in the jar first because “if you don’t put the big rocks in first, you’ll never get them in at all.” (Source: Covey, S. (1996).  First things first. New York: Simon and Schuster.)

Surround yourself with counselors who can help you think strategically, so you’re not trapped inside your own echo chamber. The Bible’s wisdom proverbs convey this principle of having a multitude of counselors (Proverbs 11:14; 15:22; 24:6). Good counselors will help you discover things about yourself you hadn’t realized...and innovative solutions to your problems.

Dan Sullivan, founder and president of The Strategic Coach, suggests this kind of conversation. "If we were having a discussion three years from now, what has to have happened over those three years for you to feel happy about your progress? Based on your answer, what are the biggest dangers (problems, worries, or concerns) that need to be eliminated? For you to be happy with your progress over the next three years, what are the most important opportunities that need to be captured? Over the next three years, what are the most important strengths that you already have, both business and personal, that need to be maximized?"

One more thought. If you are in a rut, it may be difficult to decide whether to keep investing your time, energy, and money into the same project or cut your losses and move on. There are many factors to consider in decisions like these. Some situations call for a clean break. Others call for continual improvements in what you are currently doing. The latter is often easier and will give you quicker results, especially if you have already built momentum and enjoy a good degree of satisfaction and success.  

Ben and Ruth have both worked hard from 2006 until now. They have paid off all their debt (including their house note), built their emergency cash reserves, and maxed out their retirement plans (both Roth IRA and 401k) every year--while investing quite conservatively (but not fearfully). Their cash reserves and retirement savings are now substantial. Ruth has retired. With Ben’s delayed Social Security credits increasing his future payments, and an increasing nest-egg due to their aggressive savings and sound investment strategy, he is in a position to either work a little longer, work part time, or retire altogether--whichever pleases him. Ben and Ruth now have options--and it’s always good to have options.  

For practical suggestions on catching up financially and other nontraditional retirement options, see Are You on Track with Your Retirement Savings?

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