Thursday, September 10, 2009

Visualize Your Retired Life

So far my blogs about retirement planning have covered the foundation of the process…examining your current spending habits, aligning spending with your priorities, and options for saving. Next, we’ll explore how to project what your expenses will be over the years AFTER retirement, calculating how much money you need to amass in preparation to retire, and gaining confidence that your plan is viable.

But before we can move on with financial planning, I need to encourage you to dream. Yes, DREAM! If you develop a vision of the life you want to leave after your work years, you can more easily create a plan focused to achieve your goals. So dream, think, and talk about your future – with your spouse, family, and friends. The more you do so, the more real and specific the ideas will become.

Some decisions will directly drive your planning, including where you will live, and in what type of home. This will drive your housing costs, which are often a large percentage of monthly expenses. Health insurance may also be a major expense, especially if you have chronic health issues. Your retirement budget will need to account for your appetite for travel, entertainment, hobbies, personal grooming, insurance, taxes, a new car every however many years, moving expenses, etc.

Don’t forget that your activities and lifestyle (and therefore your expenses) will change as you age. Eventually you may need to sell a home and arrange for assisted living. Thinking about this stage of your life may be a little hard to face, but is necessary. Know state laws where you will live. Consult a lawyer. Obtain a living will and a last will. Make your own decisions for your life, while you’re in a position to consider them objectively.

Recognize that your vision for your retired life may change over time. I’ve read that some retirees move to their dream location, and then discover that they miss their friends and the familiarity of an area in which they lived for years. It’s easy to romanticize a vacation destination, only to find that it’s another thing entirely to live there year round. Ideally, there will be enough flexibility in your plan to allow for a change of heart.

Sit down and relax and let your mind wander. How do you see yourself living happily 10, 20, 30 years from now? Now add a dose of practicality (OK-maybe you can’t live in a mansion in the Hamptons). Next week, we’ll look at a methodology for modeling a plan to make the vision a reality.

No comments:

Post a Comment