Many people approach retirement with wonderful fantasies of trips to exotic locations, long luxurious cruises, hanging out at the beach or golf course, shopping in great specialty shops, and pretty much doing whatever they please. The problem with some of these fantasies is that they require more money than the individual or couple made while they were working full-time.
There is nothing wrong with fantasies, but they don’t come free. Most advisors would tell you that you can probably retire comfortably on 75% of your working income. To some that might sound like a severe reduction, but it’s actually a lot of money. With inflation and a falling dollar, that 75% may not be enough. Because people tend to live longer these days, that will also impact that 75% figure.
You can expect to save money once you retire based on how much money you spent every month in relation to your job, including commuting expenses and eating out or buying cafeteria meals. Beyond that, it is important to be brutally honest about what you plan to do with your retirement and how much that will cost. The dreams will have to fit the reality of your potential income.
You can’t base your projections on current expenses because inflation will continue to take a bigger bite from your income going forward. You need to be realistic about such potential changes.
It is possible that you can extend your earning years and make some dreams come true by starting your own business after retirement or taking a part-time job. Many retirees these days, either out of necessity or just for fun, are turning their hobbies into businesses and some are doing quite well. This can be a part-time endeavor that can bring you pleasure and a sense of accomplishment while extending your retirement life by a number of years.
No one wants to curb their dreams but it is necessary to look at your values and see if there aren’t many things you can do in retirement that will bring you lots of pleasure but don’t cost a fortune. Time with family becomes important in retirement and that can be fairly inexpensive. Travel doesn’t have to include long trips to exotic locales. Investigate what you have close to home. Being with friends and family is more important than going skateboarding on the Great Wall of China. Create some realistic dreams and make sure you can pay the price. Then enjoy yourselves.