Plan For Your Permanent Vacation, Too
It doesn’t matter which report or studies you review, the conclusion is always the same: People spend more time planning for their next vacation than planning for retirement. And why wouldn’t they? Planning for a vacation is fun. Vacation conjures up images of traveling, relaxation, adventure, and feelings of euphoria. Retirement planning, however, just feels a lot like work. And because retirement isn’t necessarily an immediate concern, it tends to be lower down on the list of priorities – always second to what’s happening in the “here and now.”
Although people spend their entire lives working toward retirement when the day finally comes, they, unfortunately, may realize their ideal retirement is significantly different from reality. This scenario could have turned out differently with a little more planning early on.
How Much Will It Cost To Retire?
The first step toward planning for retirement is to simply imagine what your ideal retirement scenario looks like. Consider your answers to the following questions:
- Do you plan to travel?
- Will you move to a smaller home or to be closer to the family?
- How often do you plan to eat out?
- If you’re leaving the workforce, how will you fill your days?
- What activities and hobbies do you plan to enjoy?
- What will you do to maintain your health and, based on your lifestyle and genetic predisposition, what types of health concerns might come up in your later years?
Your answers to these questions might be vague and they might even change as the years go on, but it’s important to consider every scenario. This will help you assess what resources you’ll need to accommodate your desired retirement lifestyle.
Beyond The Finances
When you hear people talk about retirement planning, the focus is often solely financial. Yes, your financial situation is paramount to the retirement planning process, but it’s really only part of the equation. In fact, I’ve found that retirement planning is most successful when we take a holistic approach. It’s important that all of your advisors (financial, legal, insurance, investment, medical) are on the same page. They need to be aware of your retirement plan and should understand how each piece fits into your overall strategy. And be sure to consider how decisions in one area can impact the others.
When To Get Started
While there’s not a universal rule or age threshold for when you should begin planning for retirement, the moment you begin allocating financial resources toward retirement (i.e. Enroll in your company’s retirement plan) is also the moment the retirement planning process begins. While this may seem early, remember that the closer you actually get to retirement, the harder it is to make necessary financial adjustments if you find out that you’re actually not on track to achieve your anticipated retirement lifestyle.
As with most things, the most difficult part of retirement planning is getting started. However, once you’ve adopted a retirement planning mindset, you can begin to approach this exercise holistically. Our lives are in a constant state of change and these changes, along with changes from external forces, are likely to impact your overall retirement planning strategy. Therefore, be sure to review your plan annually to ensure that you’re still on track to reach your goal.
By Darlene Finzer, CPA, CSA, QKA (New Philadelphia office)
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