For many, the idea of retirement is overwhelming. Deciding what you need to live on, what your goals are, and what you need to have saved… is a lot, to say the least. My goal when working with clients is to help them simplify the process. To simplify, we should consider that retirement is about more than money. This article’s goal is to show you 5 considerations when planning your retirement.
1) What are you sacrificing today, to plan your retirement?
Many people come to me and say something to the tune of “I can’t retire for another 10 years, I don’t have enough saved.” My response to that would be, “if you could retire today, would you?”
People approaching retirement should keep in mind that they should live now, and not only for retirement. If you are enjoying your work and want to keep working, that is great! If you are burnt out and dreading every day, what is your opportunity cost there? Time with children and grandchildren? Volunteering? Going on a trip with your spouse?
The next step is aligning your money so you can live the life you want.
2) Are you ready to retire monetarily?
A common question is, “do I have enough to retire?” My answer to that question is never a one-size-fits-all because everyone has different income needs and income sources available. The starting point for determining what you need to have accumulated by retirement is to evaluate income sources. Income sources may include a pension, social security, IRAs, 401(k)s, etc. Then you should determine your income needs. This is really where the planning needs to be intentional. You are working to create a lifestyle and a happy retirement, so there is not one dollar amount that will cover that. Additionally, your monetary goals, lifestyle, and health will all change throughout the course of retirement. Therefore, planning early can be so important as it allows time to plan for the unpredictable.
3) You know what you need to have saved for retirement, but how do you get there?
Once you understand what you need to accumulate to fulfill your dream retirement, you have a few options to reach and maintain that goal. Obviously, you can continue saving to your retirement accounts if you feel that you are currently missing the mark, but if you have been saving for 20-25 years, you may consider decreasing your savings rate and allowing compound growth to work its magic. At this point, reaching your goals becomes more about your investment allocation and necessary returns than adding more funds. Many people view their lives as part A (work) and part B (retirement). This should not be the case. If the option is available to you, you may want to consider decreasing your savings rate and enjoying some extra cash flow towards the end of your working years. Remember to ask yourself, “what am I sacrificing today, to retire in the future?”
4) Is a part-time work alternative right for you?
Everyone has a different vision for retirement. You may have a clear and exact plan, but let’s be honest, you can only golf so many days in a row! While retirement is very exciting for many, it can feel uncertain. You may be looking at your retirement portfolio and feel confident you can live off that amount, but what does that matter if you think you are going to be miserable? Alternatively, you may not feel confident in your savings for retirement and force another year of work just to build more funds. If you find yourself saying, “I only have a year left in me, but I can’t monetarily retire yet,” you may want to consider part-time work that can pay the bills and allow you to be happier. In the meantime, compound growth can keep building your portfolio.
5) What is a successful life to you?
This is a highly personal and thought-provoking question. When you are on your deathbed, do you think you will wish you had worked more hours? Probably not. Remember not to put off “living,” until you retire.
P.S. there is a different retirement plan for everyone. Consider this, there are 20 different ways to cook a steak, but I assume you prefer yours a certain way. We look at retirement planning the same, individualized, and suited to your needs.
For help determining your dream retirement and your path to getting there, please do not hesitate to call or email. I would love to assist you.