Thursday, March 19, 2009

Planting the Seeds

We took specific steps that lead us to early retirement. Before getting serious about it, we had both been saving some early in our careers (IRA’s and 401K programs through work), but really started to focus financially after we were married in 1991. My husband, Ron, is very fiscally responsible – thank goodness. He even followed his marriage proposal with a caveat that I had to pay off my credit cards before we set the date. That was a lesson in motivation right there! I didn’t owe much (about $3K), but he held firm and I got them paid off pronto.

After starting our married life, the only long term debts we ever incurred were car payments (2 to 3 year terms only) and home mortgages. When we used credit cards, we paid them off right away. Mostly we used, and still use, American Express. Knowing that you have to pay the card off every month tends to curb your spending. In the mid-90’s, we started working with a financial advisor, adding investing to our portfolio. It was during this period that we started talking about when we might want to be in a position to retire, and the manner in which we wanted to be able to live after retiring. These decisions made it possible for us to set a goal for our savings and a timeline. We hoped to retire in our early 50’s. Our financial advisor assured us that this was an obtainable goal. Investments were tailored to our goals and our tolerance for risk.

Soul searching, detailed planning, and financial modeling was required on our part to convince ourselves of the viability of our plan. There was no room for a big “oops” twenty years down the road. Ron and I talked about retirement a lot. Where we might want to live, how we wanted to spend our time, and what other things were important us in our life together. My mother cautioned me, “Don’t wish your life away”. But with stressful careers (rewarding, but exhausting and intense), we found planning for our future freedom and leisure pleasing to ponder. Over time, a real plan emerged. More and more, we looked forward to making it real. We worked toward a common goal.

Some of my contemporaries have told me they don’t really think about their retirement. They don’t have a picture in their head about life after work, or a date to work toward. As a person who craves security in my life, I have trouble understanding that. I need a vision of where my life is headed. That gives me comfort.

If you haven’t really thought about retirement…consider the following discussion questions as a place to start. They could be a basis for some interesting conversations with your life partner – or work through them yourself if you are plotting your own course through life.

· How much money do you think you need to live comfortably for the rest of your life?
· Where do you want to live?
· What type of home do you want?
· Do you want to travel? How much?
· What types of leisure activities are important to you?
· How will your life change/not change after retirement?
· Do you have health problems that could affect your plans?
· What are you willing/anxious to give up in your new life, if anything?
· Would you be interested in continuing to do some sort of work to supplement your retirement income?

· Might you want to embark on any continuing education?
· Are you interested in volunteer work?
· What have you not been able to do while working that you look forward to doing in retirement?

Become comfortable with thinking and talking about these topics. The answers will be the foundation for your plan. Have fun!

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