Have you ever stopped to think about what you want your retirement plan to be like? Do you want to be sitting on a beach drinking a drink with a little umbrella in it? Do you want to stay close to your family? Or perhaps you want to find time for that hobby that you can never seem to fit into your busy schedule. The first step to achieving your retirement is to figure out what you want in retirement. If you fail to start thinking of your retirement plan now (regardless of how old you are), I think you will fail to achieve your goals.
Why Retirement Planning is Financially Important
If you are thinking of starting to plan for retirement but haven’t begun just yet, it is important to start right now! Well, okay, maybe not this instant (you should finish this post first), but soon! What happens when you fail to think about retirement is that you put it out of your mind. If you keep postponing your retirement planning, most likely you aren’t contributing any savings or money into your retirement fund (assuming you even have retirement funds).
If this is the case, this not only means that you will get to retirement without any money saved, but it also means that you are living at a more expensive lifestyle than you would be if you were saving 10-20% of your income. When someone who avoids saving for retirement reaches retirement, they are forced to radically reduce their cost of living to survive (assuming they are financially able to retire in the first place).
By envisioning your retirement, you keep it at the front of your mind. In doing so, it forces you to work towards accomplishing this goal. It is hard to get through the year without saving money for retirement if you are thinking about it as life progresses.
Retirement Planning isn’t Just About Money
While being focused on your lifestyle in retirement will help you be intentional about contributing money towards your retirement, it isn’t all about finances. In fact, thinking about your retirement now can help make the adjustment socially when it comes time to adjust. Switching from working full-time to either not working at all or part-time is a huge transition.
A coworker of mine, whose husband just retired, talked about how it took him almost two months to find things to fill his time. Prior to establishing new hobbies, he spent his time waiting for his wife to return from work. Part of the day was even spent calling his wife (my coworker) to ask how her day is going. Take it from me – you don’t want this to be you! I don’t think anyone plans their retirement like this. Then again, this is most likely a result of lack of planning.
What My Retirement Plan Looks Like
When I first thought of retirement, it was merely to continue life as it was, travel a little bit more with my free time and relax. As I started thinking about retirement, I realized that I didn’t like this idea of retirement at all. I decided that I wanted to keep busy in retirement – there is only so much TV a person can watch without dying inside. I also decided that I didn’t like the idea of waiting my entire life to travel or do the things that I enjoy. This is part of the reason why I am building passive income streams right now. I am not only contributing funds towards a retirement fund, but am creating fund that I will be able to manage in 3 days a week. I figure that if I can replace my income from my day job with other efforts, there is no reason to keep working.
In developing my early retirement plan, I realized how much closer I am to achieving my goal just because of the fact that I am narrowing down what I want to accomplish. Just by writing down your goals, you can be one step closer to achieving your ideal retirement. Don’t wait! Start brainstorming things that will be part of your retirement.
What does your retirement look like?
This was a guest post from Corey at Passive Income to Retire, where he is keeping track of his progress to retire by the age of 27.
Honestly, I have no idea. I don’t even like the idea of retirement right now. It just seems boring, and I think I’m much happier imagining that I’ll always have exciting projects to work on.
That said, there are a lot of things I’d like to do in retirement, such as playing golf multiple times a week, and traveling and living in other countries (perhaps Latin America?)
I think the fact that you are now asking yourself what you would like to do is a step in the right direction. Also, who says retirement can’t have it’s own projects. Many retired individuals go back to work anyway.
I agree that focusing on building additional income streams if very important. This topic has been on my mind a lot lately. It’s funny when I read that you didn’t like the idea of retirement, I was right there with you. At least, the way most people envision it, it sounds downright boring, which incidently I just wrote about earlier today. Good luck with your retirement goals!
I want to be a serial entrepreneur in retirement. I have always had a dream of owning my own driving range so I can just hit golf balls all day. And, then I have always dreamt of owning my own bar so I can drink all night. Maybe the two can be next to each other and save on my commute.
haha – I like this idea. 🙂 If you end up doing it, maybe you can give me a discount for both. 🙂
I haven’t thought too far about what my retirement looks like. Is that sad or what?! I’ve been saving for a low-key, close to family retirement, but I think I want to RV across the US for a year or two. Decisions, decisions…
Yes, decisions are always difficult. You’ll figure it out. 🙂
Great tips – I really havent given my retirement much thought – though I do know there are a few things that I’d like to be able to do during retirement, if not before.
Thanks Jeff. Yes, why not tackle them now. That’s my approach at least.
I am planning to retire by the end of this year 🙂 My husband will work though, does that count 🙂 ?
I have a very busy retirement schedule and totally looking forward to it. I will be working a lot during “retirement”, except it will all be volunteering and I won’t get paid every month. I am planning to go back to school as well, this time not with a career in mind.
Sounds fantastic Suba! I can’t wait to hear more details!
I think I’ll be busy in retirement with all sorts of businesses. I don’t know if I’ll still be blogging (blogging 40 years later sounds crazy) but I’m sure there will be something to keep me busy!
haha. True – blogging for 40 years does sound a bit crazy. You never know though.
I’m with you Corey. My retirement won’t be me sitting on my butt watching t.v. I consider retirement a retirement from any work that I don’t truely love to do. I like my day job I just don’t love it. I only love the pay checks. So when I retire from my day job I will be a full time finance writer and RIA
When I think of retirement, I am along similar lines as you do. When I retire, specifically I will retire from the job I don’t but not necessarily stop working completely. I don’t know exactly what yet but I suspect I won’t have any problems filling in my time. I would probably work part time in something I enjoy (and easy and not stressful), I would volunteer in an organization I believe in or simply do something to help others (this may include international volunteer both in third countries as well as eco initiatives), I would exercise (probably train a couple of run/walks (10K or half marathons), I would spend time with family, I would (learn) to cook, I would grown my vegetables, I would travel for extended periods of time (ie months verses weeks) once or twice a year, etc…I can’t wait to till retirement :). First thing first, I need to have financial freedom to do so.
Sitting around watching TV gets old after a while, if you ask me. I am sure you will retire early as well with that attitude.
I am just 5.5 years away and I am planning the non financial portion and putting my plan in action this year. I am starting volunteering.
I think you present some strong points here Corey. The reality for most people is that it’s very difficult to save the recommended allotment every month. Even if you can do this, a speed bump alongthe way can crush your best laid plans. Retirement preparation takes a sustained effort over decades, and we’re all well advised to take measured doses of inspiration (like this post) along the way to help stay on course
That’s a good point Hunter. It does take discipline. Although, I am hoping to speed up the process. I am not one to wait for decades. 🙂
Every time I think about my retirement I have a vision of me old and hardly moving in some retirement home. It is a pretty sad picture. I save and plan for retirement but I don’t think in terms what and where I want to be at age 60. We have a very complicated relationship. 😉
I am sure everyone has thought that same thing Aloysa. We just have to do as much as we can to avoid that from happening. 🙂
I have recently been saving a much higher proportion of income, while also building up side income. This is the path I want to continue down in 2012 to get closer to financial independence.
Nice! I am sure you will get there before you know it. Keep up the great work!
Maybe I have already retired. I have worked for a Fortune 100 company had a career that was leading to a gold watch then I realized that the company does not care about it’s employees it cares about it’s stock price. Even though this company was one of the Top 100 companies to work for in America, consistently. Yeah, the benefits were great but Corporate America is Corporate America. I am retired from Corporate America. I bought into a partnership of a company that has been around for 15 years and am truly doing what I love. Spending more time with the kids and the wife, maybe this is retirement.
Wow David, that is amazing. You might just be right. I think you are living your retirement. I am glad you are able to have time for so many of the things that you love. To many, this is what retirement is.