How Much Will You Need to Retire?

There are levels of preparedness when it comes to looking down the road at your retirement and how much you will need when you get there. The basic level of retirement planning is to sign up for your 401k at work, support legislation to keep Social Security intact, buy some life insurance and let it go at that. This system will work so there is reason to call this bad retirement planning. After all, if you began preparing for retirement in your early adult life and stayed with it, you will have a resource to retire on and that’s a good thing.

But there is a way to take it to the next level and that is to actually start putting some flesh and bones on your vision of your retirement and get a feel not only for the fact that you will retire but how you expect to live in retirement. Very often, we have idealistic visions of retirement life based on media images or the fantasy life of living in luxury and having little to do but golf in the morning and drink campaign and eat caviar all afternoon. So if you can get a realistic view of what you have as your expectations for retirement, you can start making adjustments to your retirement planning package right now.

Start with how you see your retirement lifestyle working. If you want little more than a manageable retirement apartment, a cat and the chance to knit or watch ESPN without interruption, that is a fairly modest retirement lifestyle to prepare for. But other people have adventure and high living in their retirement dreams. So if world travel or living in a luxury setting is part of that dream, only one person is going to make that dream a reality and that is you.

An exercise that is fun and eye opening is to detail every aspect of your dream life in retirement. Start by picturing your living conditions. Include your diet needs and wants as well as any entertainment and recreational needs you expect to be a part of retirement. For example, if you know you will want to go on long fishing adventures several times a year, you will need a RV and the finances to support taking off for the most scenic spots within driving distance to kick back and enjoy the fishing. So include the physical and financial needs for that lifestyle in this “detail” step of retirement planning.

You can complete the exercise by getting to such a level of detail that you could go out and price the dream in today’s dollars. Then when you take your “dream retirement shopping list” out into the open markets and use retail locations, catalogs and internet sites to actually find out how much it would cost to have that retirement today, that will shed a lot of light on your retirement preparations that you are doing.

Now, the actual cost of those different components will be much higher when you actually get to the point of retirement. You could try to factor in inflation and make those kinds of adjustments but don’t play with the formula so much that you get the idea that it’s impossible and give up. However, another factor that offsets the inflation factor is that your retirement life will be less expensive then your current lifestyle. Your daily needs may not be as demanding. If you sell your house after paying off the mortgage, your monthly expenses will go way down and you will have a significant surge of retirement capital that will come from the sale of the house. And you are not raising kids, putting them through college or having to support the lifestyle and wardrobe of a working person. All of these things offset the inflation issue.

Getting a Professional into the Act

Do you see planning for your retirement as your responsibility or something someone else should do for you? That is a pretty shocking question isn’t it? It is the kind of question that makes it sound like if your retirement funds are under the care of your employer, that you are not being a responsible person.

Of course that is not the purpose of the question. If you have taken the step of participating in your employer’s retirement program or 401K, then you are definitely showing plenty of personal reasonability for your retirement planning. But when you think about it, what happens to your 401K funds once they are given to your employer? Most of us don’t know. We know that we get statements that show that what we invest is gaining in value and that the principle is safe and for us, that is often enough.

But it is easy to trust your employer that the funds are being managed well and that it all will be there when the time comes for you to use that 401K for retirement. The truth is that your employer probably has nothing to do with how well your retirement portfolio performs once the funds are taken out of your paycheck. In most cases, your employer hires a professional retirement planner who invests those funds to give you at least a modest return on investment. And that service is also taking a fee from your funds which is something that is done without giving you the chance to evaluate if they deserve the money they are making.

You have some rights when it comes to your retirement funds. So part of your rights is to see that people that work for you, such as a retirement planner, know what they are doing and are held accountable on a regular basis for the outcome of their financial management of your retirement funds. At the employer level, you probably won’t fire the financial planner. But you can demand to meet with them and communicate your financial plans. You can get a name of is responsible for what happens with your money. And if you find out who they really are, you will have more success in getting them to be accountable to you.

But you may also find yourself engaging a financial planner for funds that fall outside of employer 401K plans. For example if you leave a job, you can roll your 401K into a private IRA account and engage a financial planner to invest that money so it continues to grow steadily until you need it at the time of retirement.

Develop some standards by which any retirement planner you engage must be judged. A good way to pick a good financial planner is to use people you know and trust to give you guidance. If family members or close associates already are using a good financial planner, get that person’s name and phone number and schedule an interview. You can also find out if your bank, insurance company or credit union provides this service. They already work for you the good reputation of these trusted financial services people can pay off when you use them for financial planning for retirement.

Put some time and effort into researching if the retirement planner you are considering is capable and has a good reputation. They should have no trouble giving you references and documenting their success to show you that they can be trusted to take good care of your retirement funds. And if you do some up front due diligence, in the end you will be able to entrust this important resource to them knowing they are good stewards of the money that is going to give you a happy and peaceful retirement life.

A New Life – A New Career

For many the idea of retirement comes with the automatic translation that it means that you will stop working is just not acceptable. For many, retirement from work is equivalent with no longer living. If you have been a productive worker all of your life and someone asked you what your dream retirement might look like, you might respond “to work” because you may be one of those people for whom work is what gives meaning and purpose to life.

It isn’t fair for us to impose the same standards of retirement on everyone. To say that to enjoy your golden years, you must take up fishing, start sleeping until noon, sit in a rocker and watch the day go by and gradually turn into a senior citizen would to many be the same as sentencing them to life in prison without parole. So for many it’s very possible that working would be the thing that would make your retirement meaningful.

Still others must continue to work into their retirement years because they did not or could not prepare for retirement. Whatever the situation, there are some adjustments that should be made to shift to a retirement career that you can continue to do well into your senior years.

You can get a running start on your retirement planning if you find that a career change is appropriate later in life. Many times we do find that the career we are in may either be changing so fast that it’s hard to keep up, it’s too physically demanding when you are older or in some other way that job has become a “young man’s game”. If that has happened to you, you can get a jump start on finding a career that you can stick with well into your retirement years, that career can be an income generator that might never go away.

It is not at all uncommon for men in their later years to start a new career. Perhaps you just want a career where you can use the creative side of you and one that can be a natural transition into retirement. Perhaps you reached the maximum vesting of your retirement account with a job you held for decades so you can “retire” from that job with full benefits and funding and still start another career that you can take on into retirement and keep doing as you enjoy the fruits of retirement as well.

Many times the skills and knowledge you learned in the business world during your first career can transition you into a lucrative consulting career late in life. One way to explore this option is to think of the venders who sold goods and services to you when you were in your previous career and contact them to see if you might now represent their services as a former satisfied customer. If you had specialized knowledge and training in how to use their software or a technical product, that training which your former employer paid for can now transition into an exciting career as a sales representative or sale support for the very companies who once had you as a customer.

The internet can also open up worlds of money making opportunities that you can use to land work or sell something you may have made by setting up your own web site and learning how to promote yourself online. Many cottage industries have taken off and been hugely successful just getting what you do out into cyberspace. For example, if you are talented at making beautiful artistic pottery, you can create a line of pots that is perfect for sale over the internet. You can work with a skilled internet web developer and marketer to get your product out on the internet and before long, you might have more orders than you know what to do with all flying out through your web site which is collecting the money and filling your back account up with all the profits.

The ways you can create a new business in your retirement years are only limited by your imagination. And once you have a good new career going that you can continue well into your retirement years, you won’t have many of the worries other retired people have. You can enjoy the freedoms of a retirement lifestyle and made plenty of money at the same time. And that’s a great combination.