The Money, Honey: Taking The Right Steps on The Long Road to Retirement
Okay, I’m going to ask you a tough question this week: Do you have a retirement account? Do you have a retirement plan? Do you know how old you’d like to be when you retire? (Okay, that’s three questions, but they’re all related, so consider them as one.)
Unfortunately, many people haven’t spent much as much time thinking about their future, including retirement from an active career, as they have about which pair of shoes to wear tomorrow. It’s as if magical thinking will fall into place and a room full of money will be available the day you put your retirement gift watch on and pack up your desk. (I have a friend who always refers to my husband’s and my “room full of money,” as if there really is a closed door in my home behind which the greenbacks are just stacked, waiting for me to come in and grab a fistful. Come to think of it, my kids think the same thing!)
But in reality money rooms are just not there. You can dream all you want, but when the time comes in 40 or 30 or 10 or 5 years to think about retirement, the reality might not be as pleasant as the dream. That’s because retirement takes planning. I know some of you are not planners; you like the concept of flying by the seat of your pants, taking one day at a time, being impulsive and spontaneous. Again, sorry to burst the bubble, but that just won’t cut it with retirement. Because the same truth applies here as to your money: in the same way no one cares more about your money than you do, no one should care more about your retirement and its planning than you.
Of course, lots of books have been written about retirement, so we’re not even going to be able to go beneath the surface here. (If you’d like, we can do some future articles on retirement planning; feel free to send questions.) Today we’re just going to give you some broad things to think about relating to retirement.
1. Think about the age at which you’d like to retire and plan from there back to the present.
If, for example, you’re 35 now, you’d like to get out of the, say, pharmaceutical business by the time you’re 60 because the travel is grueling, you have about 25 years to plan and save. Having a number translate to years is helpful to give you some boundaries and parameters.
2. Think about the amount of money you think you can live on when you retire.
People who figure these things out for a living usually give you a percentage of your full-time income as a figure for the retirement years, but I’m not going to do that here. Why not? Because I believe that figure is subject to so many variables, it’s impossible to nail it down. Instead, I want you to do some thinking, some soul-searching, some question and answer time with friends and family. Think about your lifestyle now and what you would like it to be when you’re no longer working full time. Be realistic: if you can’t live in a villa in Italy now, chances are you won’t be able to afford it when you retire.(Sorry.)
Will you stay in the same state you’re in now or move somewhere where the cost of living is cheaper? Do you want to live close to children and grandchildren because you’ll have the time to be with them more? Do some dreaming; challenge yourself and the people who actually will be involved in your retirement life.
3. Think about what’s in place right now toward your retirement plan.
Perhaps your company has a great matching tax-sheltered account and puts in whatever you put in or some kind of match. If this is the case, you’d want to continue to fund it as much as you can to the maximum allowed yearly. Maybe your inheritance from Aunt Betsy who died last month is something you can put away for retirement because, after all, you were living fine without it before. Take stock of your retirement vehicles, laying them out on a table as you would last year’s shoes. If you give care and attention to your wardrobe, shouldn’t you also give care and attention to your retirement plan?
4. Now comes the challenging part:
How can you put more money into your existent retirement accounts or how can you start a new one? Where can you cut back? How can you put aside dollars to work for you for your sunshine years? You want to really think about these questions to find solutions that work for you. It’s important and it’s a start. And a start is better than nothing.
Now go enjoy the day!