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7 Financial Secrets of Successful Retirees

Everyone loves a success story and we at Innova are certainly no different. One highlight of our job as financial advisors is hearing our client’s success stories. What’s most surprising to us is that the success stories we hear rarely include multi-million dollar incomes filled with lavish spending and retirement by age 40. Actually, the common success story goes something like this:

“My spouse and I both grew up with very little. We were taught early on that it’s usually more important to consider what goes out of your bank account than what comes in and you need to save because no one else is going to save for you. After following these rules we’re excited to retire! It’s exciting to think about traveling around the US, spending more time with family, and improving my bridge game with friends.”

I’m sure this might sound boring to the 20 or 30-year-old reader, but there is a variation of this story that could work very well for you too!

Through the numerous success stories we’ve heard, here is a list of the most common ‘nuggets’ we hear:

  • Pay Yourself First – What does this mean? When your paycheck hits your bank account your first action should not be a spending spree on Amazon. Your first step should be to move funds out of your bank account into specific savings vehicles. Those could be a 401k or IRA for retirement savings, a 529 or similar account for college savings, or an interest-bearing account for your ‘Emergency Fund’. Speaking of emergency fund…


  • Have an Emergency Fund – An emergency fund is not your retirement account or your personal investment account or a CD with your bank. An emergency fund should be a separate account where the principal is secure and the money is readily available to you. Accidents occur and no one can predict when. Your emergency fund is there to help you through the period after you lost your job, were injured and have immediate medical bills, or your house flooded and there are questions about insurance coverage. An emergency fund should be no less than three months of expenses and ideally could cover six months of expenses.


  • Know What You Spend – You cannot know what should be in your emergency fund if you don’t know what you spend on a monthly basis. Let’s take this monotonous task one step further and begin understanding what are fixed expenses (and likely must be paid in all circumstances) and variable expenses (entertainment, shopping, eating out, etc.) which could be cut in a bind. This task has become substantially easier recently as many technology apps online can record this information for you.


  • Use Credit Cards Wisely – Many credit cards today offer rewards points or cash back for purchases made on a monthly basis. This is simply another ploy to build up balances on credit cards which come with interest rates as high as 25%. This means you pay $250 per year on that $1,000 credit card balance you carry. Avoid this while still gaining your rewards by paying all your credit cards to zero every month. If you find yourself incapable of doing this, it means you’re spending beyond your limits and it’s time to review your expenses.


  • Use Autopilot as Often as Possible – All financial institutions now allow you to make transfers and payments on a set schedule without your action. Use these, often-free, services to automatically transfer money to your savings or retirement accounts (same day you’re paid!), pay credit card balances in full to avoid interest charges, and pay your fixed expenses on time to avoid late fees.


  • Use Bonuses & Pay Raises Wisely – If you’re earning $10,000 per month and can maintain your lifestyle effectively, when you receive a raise to $10,500 per month adjust your savings plan aggressively to make sure this new money isn’t wasted on extra Starbucks coffees and expensive clothes. As an example, use the additional $500 per paycheck as follows:


  • $100 for taxes (yes, your taxes will increase since your pay increased)
  • $200 automatically towards your 401k
  • $100 automatically into your investment account
  • $50 into your ‘fun account’ (wait, what?!?)
  • $50 to remain in your bank account for increased expenses


  • A ‘Fun’ Account? I Want One! – Yes, not all financial decisions need to be boring and suck the air out of your life. Having a fun account and putting a reasonable amount of money into this account each pay period hopefully gives you things to look forward to. When this account hits milestones use one quarter of it for something you normally would not… Upgrade to a better room on vacation, buy better seats when you go to the next sporting event, rent a pony for your kid’s next birthday. Use this account to improve an experience for yourself or your family that you normally wouldn’t have.


All of these items take effort and planning, but what we consistently see and learn from our successful clients is that they use their wealth effectively. They’re careful with their expenses, they are excellent savers and always ‘pay themselves first’, and when it’s available they use their extra money to improve experiences with the ones they love.



Innova Wealth Partners, LLC (“Innova”) is a registered investment advisor. Information presented herein is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. 


Readers of the information contained on these performance reports, should be aware that any action taken by the viewer/reader based on this information is taken at their own risk. This information does not address individual situations and should not be construed or viewed as any typed of individual or group recommendation. Be sure to first consult with a qualified financial adviser, tax professional, and/or legal counsel before implementing any securities, investments, or investment strategies discussed.


The tax information and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Innova does not provide legal or tax advice. Innova cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Innova makes no warranties with regard to such information or results obtained by its use. Innova disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.


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