Living a long and healthy life is, generally, a much-desired outcome for those saving for retirement. Two thousand years ago the poet Virgil wrote: “The greatest wealth is health.” And yet many believe that wealth can buy you health.
So which came first — the chicken or the egg? Does wealth bring you health, or does health bring you wealth? Maybe neither is true, but there are traits that help to make you both healthy and wealthy. Traits that you can grow and learn, if they aren’t a part of your basic DNA.
Studies have found that there is a relationship between planning behavior and positive health and financial management practices (O’Neil, Xiao, Ensle 2016).
Trait 1: They plan long-range.
Health goals — whether they are losing weight, running a marathon, or lowering blood pressure — are accomplished over the long haul and often have many aspects. Let’s take the goal of lowering your blood pressure: you may change your diet, enroll in a yoga class, and take medication. However, you will need to give the changes time to work! Maybe your financial goal is to be mortgage free at retirement. To assure such an outcome you need to make sure you don’t buy more house than you can afford, keep your credit score high, and refinance when lower interest rates are available. Then remember, it is going to take 15 to 30 years!
Trait 2: They organize their time and data.
Regardless of your health and financial goal, the first step is to ascertain where you are currently and then begin to track your progress. Let’s say your goal is to lose 20 pounds: start with recording your current weight, tracking your calories, and recording your exercise. Just recording the information forces you to focus on the task at hand and helps you reach your goal. On the financial side, a common retirement goal is to have a nest egg of $1,000,000 by retirement. Reaching that goal requires you to save at least 15% of your salary (including deferral dollars, company match dollars, and any profit sharing), invest in accordance with your risk tolerance, and have an asset allocation appropriate for your age.
Trait 3: They are conscientious and follow through.
All the planning, organizing, and tracking in the world will do you no good if you don’t conscientiously follow the plan. Here’s where you have to “know thy self.” What motivates you? It could be a reward for reaching a certain weight (think new jeans!), or maybe journaling would help. Listen to your internal voice! It just might be your best motivator is stating the goal out loud to a friend or loved one. Talk to your spouse about increasing your deferral rate by 2% to reach the goal of putting away 15% of your income; the more people you have on your side the better! It’s that old “strength in numbers” concept.
So, neither health nor wealth comes first. However, an individual’s health and personal finance behaviors are related, and will definitely impact both your life expectancy and productivity. If you want to be healthy and wealthy you will need to become wise. Concentrate on long-range planning, use all the organizational resources available to you, and, finally, stay with the plan!
Visit our Retirement Education Center for tools to help!