Here’s an important step when planning your retirement: Before crunching numbers or setting up investment accounts, let’s step back and look at the big picture. Why are we retiring? What do we hope to accomplish with our time?
Shane and I are 26. We don’t know what our lives will look like 10 years from now, much less 33 years when we’re 59. Still, we’re going to dream a little. Join me.
- When you retire, does that mean you want to leave the workforce? Or do you want to continue part-time? I expect we’ll want to be away from the paid workforce.
- How do you want to spend your day-to-day? Reading, light exercise, a cheap hobby. Spending time together, and with friends and family.
- What do you want your special activities to be? The day-to-day stuff sounds nice to me, but I think we’d also like to go on a few vacations per year. Cruises! We’d like to go out to eat at nice restaurants, and see a good theatre production.
- What is your projected lifespan? Our calculated results think we’ll hit our upper 90s. We’ll have to eat well and exercise and generally take care of ourselves now and forever so we can not only prolong our life, but our quality of life.
I think we will have stages of retirement. If we leave the workforce in our late 50s, early 60s, we should have the health and energy to really do what we envision as the golden years. Spending winters somewhere warmer, taking regular vacations, visiting the grandkids, spending time with friends and family.
As we get older, we might find that our energy levels are slowing down. Maybe we won’t want to travel as much. That’s ok! This season of life might be a little less expensive in terms of entertainment costs. But, it could be more expensive in terms of health care.
Shane and I would like to stay active as long as possible. That’ll give us more freedom with our choices, and hopefully less stress.
- We’d like to do volunteer work with charities and our church. We’ll still have a lot to contribute to society, and it will be rewarding for us and we’ll keep a solid purpose.
- Travel! We love traveling now, and we hope to continue traveling in retirement.
- Spending time helping and visiting our children and grandchildren. Perhaps we’ll live nearby, and if not, we’ll want to budget for travel expenses to see them.
- Going out to nice restaurants. We like it now and will forever.
In a lot of ways, how we’re envisioning our retirement looks a lot like our ideal time off now. If Shane has vacation time, we like to visit family, go out to eat, take in a new museum, or travel. We don’t have time to volunteer right now, but perhaps as our kids get older we can get the whole family involved.
While we are spending our working years saving for retirement, it would be best to make time for these same activities that we enjoy.
We are not guaranteed a chance at retirement. We cannot predict how long we will live. People get sick. People get injured. Death happens at any age, we all know.
So, save as much as you can for your older years now, while keeping a balance in your present. Like nice restaurants and vacations? Don’t wait until you’re 65 to do those things, if you can afford to do them now.
It would be a shame if we had big plans for our future, yet didn’t save enough money. What if we didn’t save enough for retirement? What if we chose our investments incorrectly? What if we never got to the point where we could leave the paid workforce?
It’s one thing to keep on working because you want to. It’s another to keep on working because you have to. We can’t guarantee that our health or interests will allow us to keep on working into our 70s and beyond. That’s why it’s so key to save now. If we’re 75 years old and want to keep on working, cool. Our investments will keep on growing and we can still take time off if we’d like.
Other things to consider:
- Do you want to live in the house you have now? Another house? Condo? Renting? We won’t want to stay where we are now. We have a two-story, with no bedrooms on the first floor. We’d be far better to downsize to a smaller one-story.
- Will you have a mortgage? I hope not! Pay off that mortgage before retiring if at all possible. It’s just too expensive to keep around. Consider refinancing if it makes sense, or make extra payments to ensure you won’t have a mortgage. You could also sell and pay cash for a cheaper home.
- Will you have a vacation home? It might be fun to join the snowbirds who head to Florida or Arizona or So. Cal (or wherever!) to get away from cold weather. Depending on your goals, you could buy or rent a property. If you bought something, you could rent it out to generate income.