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.