Two things to do for your Retirement Plan
There are too many moving parts that you need to think about if you are planning to retire. But don’t overwhelm yourself. Just focus on the main items. After all, retirement is just carrying on with your life. So, don’t make it complicated and don’t make the retirement to-do list too long to manage.
My advice would be to focus on the near term for your retirement plan, and adjust your plans as you go.
And therefore, the two main questions that you need to ask yourself for your retirement plan are:
1- Where is the money going to come from?
2- What are you going to do the next morning?
Let’s deal with the first question:
1- Where is the money going to come from?
For your retirement plan, the first thing you would want to do is to look at your finances. And then you need to develop a Retirement Budget. Don’t skip this step and don’t wing it.
Murphy’s law always applies when it comes to finances. Anything that can go wrong, will go wrong. And without money, you can’t plan for your retirement and potentially you will be miserable. Plus, who wants to be miserable while in retirement?
My advice would be for you to sit down and do your Retirement Budget. However, most of us don’t like to work with numbers. And if you don’t know how to do the retirement budget, or where to start, then ask someone you know to help you.
You also may need to make some near term financial decisions and alter some financial habits you may have. This is so that your retirement plan will work more effectively for you. Here are some of these items:
1- Children and family dependency:
Let’s say that you have children that are still dependent on you for financial support, or perhaps you are supporting other family members, other than your children. In these cases, you need to make some hard decisions.
This should be on whether you can continue your financial support, or not. And based on this, you need to decide if you should stop it slowly or all together.
You may not be able to afford this financial support much longer while in retirement. And this can screw up your retirement plan.
I know it is hard to make tough decisions when it comes to family. And there are no easy answers here.
Nonetheless, make these decisions while you can, and you are in control. Otherwise, this financial support you are providing, could burden your finances and hinder your retirement plan.
2- Separation and divorce:
Some of you can be separated and/or going through a divorce. And these situations are definitely not fun and very stressful to deal with. Plus, they are always financially unpredictable.
These situations are sensitive, emotional and can cloud your thinking.
My advice would be for you to move very quickly through whatever process you need to go through. And get things settled so that you can have some financial predictability.
You don’t want this situation to linger into your retirement, if you can help it. And in case it lingers, it is surely going to affect your retirement plan negatively.
This can be a bank loan, a loan from family or friends, or it could be a line of credit. It is highly advisable to get rid of all types of loans before you retire.
Debt burdens can negatively impact your finances and your retirement plan in a big way.
4- Credit card debt:
Credit card debt can be deadly at any time and even worse in retirement. We all developed certain buying habits and we are always quick to reach for the credit card to pay.
It is OK to do that. This is as long as you pay the full balance every time you get the credit card bill. And don’t keep any balance owing on your credit card.
Because, as you know, the interest rate on these cards are deadly. And try to get rid of all the credit cards that have annual fees. You don’t need them!
Your retirement plan will be more predictable if you control your credit card usage.
You may have a mortgage on your home or other properties. Therefore, you would want to make sure that the mortgage payments are not overwhelming your retirement plan.
Furthermore, if these payments are burdensome then start thinking about downsizing.
6- Car loans
Try not to have a car loan in your retirement plan. The monthly payment can screw up your finances. Also, some of you may lease their vehicles. And if this is the case, then you need to start thinking about owning your car for longer than 7 years.
Owning your car for that long reduces the financial burden, over time, and you will get your money’s worth.
You see, a car is not an investment. It is an expense regardless if you have paid for it, you have a loan on it, or if you have leased it.
The price of a car will always go down even on the day of purchase. And of course you may need a car. So, my recommendation would be for you to buy the car and own it as long as you can. Then, reduce and eliminate the money owed on the car.
And, if money is an issue most certainly don’t lease one.
7- Living within your means:
Depending on what Retirement Budget you came up with for your retirement plan, you need to be very realistic about the amount of money you can spend.
And in most cases, you may need to cut off many of the luxuries that you have had while working.
Most of us live with hope, which is a great thing. But don’t live with wishful thinking, because we tend to always think; let’s just do this activity or let’s just buy this item and things will work out in the end.
You see, things may not work out in the end. While you are in retirement because your income is very limited. Therefore, the sooner you start thinking about becoming realistic about your spending the better off you will be.
Make sure your financials are as clean as possible in your retirement plan. Most of us think that when we hit 50’s, 60’s or even 70’s, we somehow become financially wise.
It is not true; old habits die hard.
Let me sum it up this way. If you value your happiness and your independence in your golden years then make sure your finances add up in your retirement plan.
And now let’s deal with the second question:
2- What are you going to do the next morning?
Well sleep-in, if you want to. Do nothing for a while, and just chill out and stare at the ceiling for a bit.
Remember this however, our average life expectancy as of now is 85 years. And this number is improving. So, if you are 55, 60 or 65, you will have on average 20 to 30 years of retirement. This is a very long time.
So, I say think about what you want to do the next morning when you are doing your retirement plan. We are all very different in terms of choosing our activities, likes and dislikes and so on.
Nonetheless, retirement can be lots of fun and exciting. So, here are a few things that you may want to think about:
1- Your living situation:
This is an important decision to make when you are doing your retirement plan. Do you want to live where you are, or do you want to relocate?
In fact, this is a long term decision that would affect you personally and financially and you need to deal with it, for your retirement plan to be effective.
Try to make this decision as soon as you can. And once this decision is made, almost everything else will fall in place. Because your living situation affects all of your retirement plans.
Make sure that you are in charge of this decision, because your happiness will depend on it. Of course, you will need to consult with professionals and family members to bring in clarity to your decision making process.
Nonetheless, this is your decision to make and don’t let anyone else make it for you.
2- Be an entrepreneur:
Many of us always wanted to be entrepreneurs. Perhaps this is the time to do it. Choose carefully and don’t risk too much. Money will be tight in retirement. But I believe, if you have a dream, why not make it a reality even in retirement.
I say, go for it!
Same goes for hobbies, most of us had this thing in the corner of our heads that we wanted to do but never had the time to do it. Well, guess what it is time now.
Just decide on the hobby you want to enjoy and just do it!
Not to mention, volunteering is a very fulfilling community activity, and most of us have a lot to offer, in knowledge, experience and energy.
So, let’s give back to our communities when we retire.
5- Stay Healthy:
Eat well, eat less and exercise often. I am not saying become an Olympic athlete. But I am saying exercise within your level of abilities. I guarantee you that you will feel great and positive.
And, I assure you that you will be able to do more, in every aspect of your life.
6- Divorced or single:
If you are either divorced or single, you now have the time to change that situation. And find yourself that special someone.
Statistically speaking, we live happier and longer when we have companionship.
7- Family and friends:
Now is the time to catch up on lost time with family and friends. Don’t hold back, have the dinners, enjoy the BBQ’s, the grand kids sports events and birthdays.
Visit often, stay busy and laugh hard.
Making your decision to retire can be overwhelming and scary. So, keeping things simple would be a very good idea when you are doing your retirement plan.
The two most important things that you have to determine are:
- Where is the money going to come from after retirement?
- And what are you going to do the next morning?
You see, retirement is a continuation of life, it is not a gateway to a different place. And as long as you have your finances figured out in your retirement plan, and you have planned your activities, you are good to go.
Just don’t make it complicated. Keep it simple, think near term and live your life. You worked hard for it.
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