I often hear people say “I hope I can retire one day” or “Who knows if I’ll ever be able to retire.”
Retirement can seem like this large, foggy area in the future that you can’t really picture, don’t know how to predict, and are afraid to look at because what if the outlook is bad?
But taking a good clear look at it will not only take away the fear of the unknown, but it will give you the chance to make changes now that can greatly improve your situation in the future. It can make retirement into something that you can truly look forward to!
Whether you are in your 20s or your 60s – it is not too late to look at the numbers and come up with a plan. Read on for some tips to get started …
What To Consider When Planning For Retirement
The first question is – what will your cost of living be in retirement? In order to answer this question, you have to think about some bigger questions like:
- Where will you retire? Will you downsize from your current home? Is there a family home you will inherit? Do you want to retire to another part of the country, or even live abroad?
- Who will you be living with? Will you want to move in with extended family – or having family members move in with you? Do you picture living in a retirement community or other communal living situation?
- What activities will you do in retirement? Do you have a career you love that you want to continue part time? Do you want to travel the world – and need to budget for that? Do you want money to give to charitable causes, or to help with your grandchildren’s education? Do you want to start your dream small business?
- Are there family members who will be counting on you for support even when you are retired?
- If you have a spouse, what is their vision for retirement and does it align with yours?
Many people anticipate having a lifestyle that is similar to what they have now – but you may have grand dreams for retirement that you want to start planning for. Or, if you are feeling short on money for retirement, sometimes thinking outside the box on where and how you will live can help bridge that gap.
The second question is – what assets for retirement do you have right now? Do you have retirement savings? A pension plan? Do you have equity in your home or other investments? What are you projected to get from Social Security? Gather all of those numbers so you know where you stand.
The third question is – what is your time frame for retirement? The more time you have to plan and save the better, but if you consider that you may live well into your 90s, and that your retirement plan is something that needs to last your whole life, then even if you are in your 50s or 60s you still have 30 or 40 years to work with. It really is never too late to start planning!
And finally – how can you make what you have right now grow into what you need? Part of this is about how much you are saving each month, but it is also about how that money is invested. A difference of just 1% in your investment returns can make an enormous difference over the long term. Taking advantage of 401(k) matching and tax advantaged accounts can also greatly change what you end up with.
Turning Your Retirement Numbers Into A Plan
How can you take all these factors into account and come up with a plan for retirement that is specific to your situation?
- Take advantage of my Retirement Check-Up coaching package and let me do the work for you! My rate is very affordable and I will give you a retirement projection that is specific to your needs. I believe it will be money well spent in setting you on the right path for this very important stage of our lives.
- Go to a fee-only licensed financial advisor who is also a fiduciary (will act in your best interest). “Fee only” means that they are not earning money of commissions for selling you investment products — instead you are paying a flat fee for their unbiased advice. One advantage of a financial advisor is they can give you specific investment advice, which as a coach I can’t give. But they are also unlikely to want to work with you on monthly budgeting and other areas of personal finance that can be key to your retirement plan.
- Get guidance from a personal finance and/or retirement planning book. If you are in your 20s, 30s or 40s I highly recommend Ramit Sethi’s “I Will Teach You To Be Rich” – it is my favorite personal finance book because it is actually fun to read, and his advice is spot on. If you are getting closer to retirement I recommend “How To Make Your Money Last” by Jane Bryant Quinn. It is a bit technical but very thorough. Another book that is worth reading is “How to Retire the Cheapskate Way” by Jeff Yeager. It has a lot of great advice on how you can have a happy and fulfilling retirement without spending a lot.
- Use the retirement planning tools that are part of your current 401(k) or other plan. My one caution on this is that they can be very conservative and end up overstating the amount you need to save, and may not take important considerations that are unique to you into account. But they are a good way to get started as long as you keep an eye out for any assumptions they make that don’t fit with your plans.
- Use an online retirement calculator. Again, they can be overly conservative and not always well adapted to your specific situation, but they can be a good place to start, and they will do all the math for you.
No matter which method you choose, take some time now to take a good look at where you stand for retirement. The sooner you get started, the more options you have to plan a retirement you can truly enjoy.
Want to find out more about my two-session Retirement Check-up? Schedule a free, no-obligation 30-minute introductory call and we can look at your specific situation and how I can help you take the guesswork out of retirement planning.
Please note that a financial coach is not a Financial Advisor. If you are looking for someone to manage an investment portfolio, sell you investment products, or recommend specific investment products, please contact a licensed Financial Advisor.
