For many, financial planning boils down to their investments and how they are allocated. Of even bigger concern seems to be “the number.” That magic dollar figure that says to a person, yes, you are safe, you can retire. But in reality, it’s much more than that. And that number; it too could use a little attention.
I’m not advocating in any way that people shouldn’t save and invest. Nor am I saying that you shouldn’t do so with a target retirement date and a target goal in mind. What I am saying is that you need to realize that your financial health and wellbeing are much more than the numbers you strive for in a plan. Your plan should be customized for you.
It’s said that time is our most valuable asset. I would say our health is second. The combination of time and health will either work in your favor, or against you. Too often we continue to strive and save trying to hit that magic number that will replace 80%, or 90% or even 100% of our current income going into retirement. What we fail to realize is that we most likely won’t actually need that amount in the end.
When we’re young, we have lots of time and usually good health, but not so much money. This makes traveling the world and enjoying memorable experiences very challenging. After all, life is about the memorable experiences. When we are older, we’re focused on accumulating money for retirement so we can travel and make new experiences. Therein lies the crux of the problem. Once we are older and have the money, we may no longer have our health and be able to enjoy those planned activities. Ziplining at age 35 is very different from ziplining at age 65.
If one waits, and waits, and waits in an effort to work more years, and save and invest even more, you’re actually experiencing a diminishing enjoyment return on your life. The older you get, the less time you have to enjoy activities. It’s been said that our best, most enjoyable years to have memorable experiences is somewhere in the range of age 45 to age 60. Yet most Americans target age 62 as their preferred retirement age. Most likely this is due to the availability of Social Security and then Medicare soon after at age 65.
When planning for your retirement, you might wish to consider a customized approach to how much you save, and when you actually retire. You may also wish to consider cutting back on the work hours much earlier, like in your mid-50s. It sounds blasphemous, but you may want to have retirement or investment accounts that you can tap into prior to retirement age. Yep, spend a little money early if it’s for a memorable experience that will bring you great joy and lifelong happiness.
Consider working with a planner to calculate your survival number. That’s the annual amount you actually need to live on. This, adjusted for inflation, and taking into consideration the growth on your investments may be less than you realize. At some point, the mortgage will be paid off. You likely won’t need or have two cars and two car payments if you’re a couple. Maybe you sell a vacation property no longer in use. There are various ways to make sure you have your survival money. This could free-up money to spend sooner rather than when you are in your eighties or nineties. It could also allow you to cut back on working, or even retire early. Do you really see yourself flying for twelve plus hours and dealing with luggage and transit in a foreign country when you are, oh, say 87? Most likely not. You need to move that money (and experience) forward in your timeline. You need the time to take that trip, the health to take that trip, and the money.
I can help you with crafting your work exit plan. As an independent CERTIFIED FINANCIAL PLANNER™, I can help you with your personal financial plan. Contact me and let’s get started on a savings, investing, or early retirement plan. #talktometuesday #education #Hireaplanner #stressfree #savings #retirement #CFPPro #RetireEarly #spend #health