Help yourself stay the course by automating saving. Image: William Potter/Shutterstock.com
By: John GrobeIt may be a little early to start thinking about what New Year’s resolutions we will make for 2024, but here’s some food for thought.
We have a difficult time keeping resolutions, and it’s relatively rare they result in the desired change in behavior. In fact, there is such a thing as Fall Off the Wagon Day, and it generally falls in early February, and was February 9th this year. This is the day when the trend line for gym visits (on its downward trajectory) intersects with the trend line for fast food visits (on its upward trajectory).
Whether or not the data is accurate and February 9th is the day when broken resolutions hit a certain level that represents falling off the wagon, it is true that many resolutions (New Year’s or otherwise) are broken within a month or two of their being made. I’m sure that one of the resolutions that is getting broken is that of saving for retirement.
Saving for retirement via the Thrift Savings Plan is a resolution Feds should consider; either beginning to save or increasing the amount they set aside for their retirement in the TSP. A bit of good news is that the “wagon” of saving in the TSP is harder to fall off of than some other wagons. In order to implement our resolution of saving more, we have to take an action; the action of increasing our payroll deduction by a set percentage or dollar amount.
Once we have done that, we would have to take another action (decreasing the amount we set aside) in order to fall off the wagon. Remember, “if you don’t see it, you don’t miss it” and refrain from undoing any of the positive changes you have made in retirement savings. Payroll deduction is a great way of automating your resolution.
If you vowed to fund an Individual Retirement Arrangement (IRA) this year and already sent off a couple of checks to the IRA custodian, you might have found it easy to stop once the strength of the resolution waned, after all, all you needed to do was to not send any more checks. You can automate your IRA payments, making it harder to fall off the wagon; all you need do is set up a direct debit from your checking account. $542 a month would have had you reaching the 2023 IRA limit of $6,500 in twelve months. This article was written prior to the announcement of the 2024 IRA contribution limit.
Author David Bach wrote a book called The Automatic Millionaire, in which he posits that automating our savings by means of payroll deduction and direct debit is a great way of helping us meet our goals.
A couple of other exhortations on savings would be appropriate to list here. “Pay yourself first” – source unknown; and “live below your means” – a Google search led me to many sources for this quote, but it is the theme of the book The Millionaire Next Door by Stanley and Danko.
Stick with the program and don’t let yourself fall off the retirement savings wagon.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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