Retirement planning 

A true story

I know a guy who has saved absolutely nothing towards his retirement. He’ll tell you he’s broke. He makes statements like “I’ll have to work until I die; I can’t afford to do anything else.” When someone describes their retirement plans, he becomes envious and makes comments like “It must be nice,” or “You sure are lucky.” He is right about it being nice, but he is wrong about the lucky part. A good retirement requires that you to plan for it, and as with any plan, you need to take action. Action is what he never took. He bought into the myth that his Social Security would be sufficient. He knows better now, but NOW he’s at retirement age, and retiring is exactly what he is not going to be able to do.  The lesson I hope everyone learns is Retirement planning is so important.  Please don’t leave it to chance. 

For retirement to be a successful event, you need to plan it as you would any other major event. Each of us has our own conception of retirement, but without retirement planning and goal setting no one can expect it to amount to much of anything. There’s an old saying that’s very true: If you fail to plan, you plan to fail. To have a retirement compatible with your vision, you need to be frugal. You need to budget and plan for the future. The follow is a list of steps that can get you ready for retirement planning. 

10 things to do for retirement planning 

Step 1: Define your retirement

What exactly are your expectations of retirement? What do you want it to look like? Defining your retirement is probably the most important part of retirement planning.  

Many people want to move to a warmer part of the country. Some want to move closer to where their kids live. Others want to retire to a foreign country. Maybe you’d like to be on the go, take road trips and tour the United States, Canada, and Mexico? Some people want to volunteer their time and money to helping the less fortunate.

Be as specific as possible. Knowing where you want to live is important, but so is everyday life. What do you want to do? What do you perceive as a normal day in your retirement?

Step 2: Determine how much money you’ll need to live the life you want in retirement.

The rule of thumb is that per year you will need an amount equal to 70% of your income at the time of retirement. That’s if there are no changes in your lifestyle. Does this apply to you? Or, is it possible you might need to adjust that figure up? You might, if you take up an expensive lifestyle, say one that involves a lot of travel.

There are also circumstances that could reduce your cost of living.

For example, if you’ve spent your working life in New York City, but plan to move to New Mexico for retirement, it’s possible your cost of living could decrease. Life in some foreign countries is also less expensive than living in the United States. It’s a good idea to research the area where you are planning to live in ahead of time. You need to know what your cost of living will be. A good place to start researching is a web site numbeo.com.

While you are researching the cost of living, take the time to learn if the events you want to participate in are available there. (More about this later.)

Step 3: Start a retirement account

We’ve all heard it before: Save for the future.

Well, you should be saving for the future. In fact, you should be investing in your future. There are investments we should all be making.  Social security will not be enough. You don’t want to find yourself living the same story as the fellow in my opening paragraph.

Here’s a point that is seldom made: There are things you can do to offset your cost living in retirement.

The average retiree pays out 35% of available funds for housing. One way to counter that is to buy a house now and have it paid off before you retire. That move alone could significantly decrease your cost of living. And yes, I know this may not be an option available to everyone right now, but if retirement isn’t eminent you might want to look into this before too much time goes by.

Step 4: What assets do you have that you can turn into dollars

Finding money to boost savings or investment in your retirement can be a real plus.

Many people have the detritus of former hobbies stashed in closets, basements, or attics. At one time they may have been passionate about something they no longer enjoy. Are you one of them? Maybe you no longer have the time (or money) to pursue it. Maybe your interests have changed. Regardless, it’s possible you have equipment or materials from that pastime taking up space and collecting dust. Some of these leftovers may have been quite pricey (which may be why you’re hanging on to them). Well, just as you valued them in the past, someone else could now. Selling the remains of a lost interest could generate the cash to start or augment a retirement account.

What about some of the antiques that have been passed to you? Of course, some of them are going to have sentimental value. Those are the ones you use or proudly display. Others have never come out of the cardboard boxes they were packed it. Or, you may have a “collection” (I use the term loosely) of family furniture. You’re not going to use any of it, and you don’t know what to do with it. These pieces are losing their meaning, but they still have value. You can sell them to help fund your future. Think about it: If you can’t remember who loved that old wooden rocker that’s just sitting there drying out in a corner of your attic, it might be better to give it (in exchange for cash) to someone who will make some new memories with it. You, on the other hand, can use the money to help build your future.

On the other hand, you may have a current set of skills that other people would be eager take advantage of: lawn care, car repair, shopping, mending, pet grooming…the list is practically endless. You can have a side gig that brings in extra money to put towards your retirement.

Step 5: How is your health now

A fair number of people don’t take the current state of their health into consideration when they think about retirement. In their minds, retirement is a point that when reached everything will be perfect. Now, why would we assume that? In general, our health is a cumulative process. If you want something (in this case, your health) to be good in the future, you have to

make it good now. 

Health is a valuable asset. Train yourself to eat properly and exercise. Consult your doctor if you have any questions pertaining to your health.

Here’s another consideration: If you have ongoing medical issues and are under a doctor’s care you may want to weigh the benefits of remaining where you are known to the idea of “I’m getting a whole new start on life.” The right answer is the one that’s best for you (and you may want some help from family, friends and health professionals in making that decision).

To maximize the opportunities for living out your dreams, take care of your health now and continually. 

Step 6: When are you going to start receiving Social Security

You don’t have to collect social security in order to be retired. You can retire now and collect social security later. A reason to postpone receiving social security is that the longer you wait the larger your monthly benefits will be. On the other hand some people are willing to take a smaller monthly benefit and (possibly) receive it for more months.

Most people are entitled to social security. Once you are eligible for it, taking it sooner or later depends of your outlook and circumstances. Check with a retirement specialist if you need advice.

Usually people don’t think about social security until it’s time to collect it, but it should be considered to be an important part of your retirement planning . 

Step 7: Networking

Networking isn’t just for upwardly mobile young people who are trying to improve their financial position. Hobnobbing or socializing with the purpose of gaining knowledge or favor is a good way to learn from others. We’ve all heard “war stories” from others about mistakes and pitfalls in a variety of arenas. (In this case the topic would be retirement.) By comparing notes we may see ways to both avoid problems and ease our way through tricky situations. When others share about their challenges and successes, we can learn a lot. Essentially, we can learn to make better decisions…

Here’s an example from my own experience:

I’m in touch with an expat group in Thailand. This group is very familiar with the procedures for of receiving medical care, the more affordable neighborhoods, and how to lease or purchase a property in Thailand. Since, I’m seriously considering a move in that direction, I’m very interested in the information they make available.

Yes i consider this kind of information to be a very important part of retirement planning. 

Step 8: How much do you want to work after you’re retired (This includes volunteer work)

I can’t imagine doing nothing day in and day out for the rest of my life. I want to travel, see new things, and meet new people. When I retire I’m pretty sure I want to live in Thailand—at least for a while. While I’m there I don’t just want to hang around other Americans, I want to get to know some Thais. I think I’ll have a better chance to do that if I’m working, so I’ll get a job (even if it’s a volunteer job). I think I would like to teach English as a second language, but I’m willing to do what is needed.

WORK!! I’m planning to retire! What does work have to do with that?

Here’s a thought: You may be having a romance with the idea of not working, but most of us have 40 plus years of in the workforce, so when we get to the place we don’t have to work anymore, we find it’s a hard habit to break. I know plenty of people who have retired and continue to work (sometimes at the same type of job, sometimes at something new). They don’t work because they have to, rather because they want to.

Some retirees don’t keep up at the same pace they had before they retired. They may slow down some, but many others find they are busier than ever.

Personally, I don’t want is to become that guy who does nothing all day.

You need to keep work as an option.

Step 9: Establish a retirement fund in your budget.

I know a lot people who have retirement accounts. They contribute to them every payday via recurring electronic deposits. For many years, some of those people also have had a fund within their budgets (usually in the form of a savings account) to which they made designated payments. They were saving to help cover their living expenses during the last few years before they started to collect Social Security. They’re now semi-retired. It’s very likely they continued working, part time or full time, but not with the intensity of their early years in the workforce. They may take more vacations than before or devote some time to a purpose they’re passionate about. These are people who have planned to ease into retirement, and yes there was a great deal of retirement planning, but it will pay off in the long run. 

Step 10: Prepare for the unexpected

You can never have too much money. Save money to provide the means to get through unexpected events. An Emergency Account is for both the here-and-now and for your future.  A good retirement is all about good retirement planning.  I know it’s a little obvious, but some people don’t think about retirement until late in life.  

A bonus step:

Since you know how to plan your retirement and know how to achieve it, include commitments of determination and perseverance: Stick to your plan.

BUT…

Also include flexibility—not so you can waffle on your commitment, but so you can recover when life doesn’t go as planned.

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