Retirement is quite a contradiction of definitions, emotions, and meanings as you go from one person to the next. In some cases, it is the classic view of an endless summer spent on a beach as the reward for having worked hard for years. For other people, it is the ability to change what they are doing and to choose a job out of enjoyment rather than necessity. Still others view retirement as something between these other two options – or even beyond anything already listed.
Preparing for retirement has to be dependent upon what you are seeking in retirement. You cannot plan how to reach your goal if you have not defined what that goal is. Otherwise you will waste time getting there or find that you do not have the resources you need when you are ready for retirement.
1. To start your retirement planning, take some time and define in detail what retirement is for you. If you are married or partnered, include them in this vision. You may be surprised at how different their vision is from yours. You may also be pleasantly surprised by what opportunities become available by merging both visions. Ask and find out.
2. Once you know what you are seeking in retirement, figure out what you will need to have when get there. If your vision includes a yacht berthed in Miami, ask how much will that cost to buy and how much will it cost to dock it for every year. If you want a private cabin up in the mountains, check on both the purchase price and yearly taxes. Do not forget the basics of life either. Food, clothing, entertainment, even toilet paper all cost money. Once you know how much it will cost you, do not forget to add in for inflation.
3. Turn these estimates into a financial plan. This is the most difficult step. Not everybody has the background or skills required to turn your basic estimates from step 2 into a long term plan. If you do not have those skills, hire a financial planner to help. Their skills will be worth more to you in the long run than the up front cost.
Financial planners have nothing invested in your retirement, so they can view your goals objectively. Their training and experience will help find any pitfalls. Plus, they can tell you if your goals are realistic or not. If not, they can help you set new goals that you will be happy with and which are achievable. The plan they help you craft can be the difference between living your retirement and dreaming about it.
4. Implement your plan. Save your money and invest it wisely. Avoid unnecessary expenses. Diversify your investments. Avoid taxes legally. Review the plan regularly, and do not be afraid to revise it as necessary as your situation changes. You may have the best plan in the world, but if you do not follow it, your dreams will continue to stay dreams.
Follow these guidelines and the chances of you getting to enjoy retirement will be very high. Knowing what you want, how to get it, having a plan to get there and following through on the plan is the best recipe for success that anybody has discovered yet. Use it for your retirement and enjoy those golden years to their fullest.