Most people may find it difficult to paint a detailed picture of how they want to live when they retire; therefore, they also find it difficult to determine how much money they’ll need to retire comfortably. In fact, most people have a hard time visualizing what their life will look like even 10 years from now.
It helps to think of activities in which you are currently involved that make you happiest. What do you like to do when you have some time off work? Where do you like to go and with whom do you like to spend time? What is it about the activity that makes you feel good?
Rather than trying to picture your retirement in your mind, why not try a dry run?
Retirement means something different to everyone—no two retirement dreams are the same. Ask yourself the following questions and consider the financial impact of each. This should help you create a clearer picture of how you might like to spend your retirement years and how much money you will need to achieve your retirement goals.
Will you stay in your current home?
You might prefer to move to a warm climate or be near your children and grandchildren if you are no longer tied to a geographic location because of your job. You may prefer to sell your current home and buy a smaller one that is easier to maintain and with less property. You may also want to move to a less expensive area to supplement your retirement income. Or, you may be thinking of purchasing a vacation property.
If you find it hard to know which way to go, use your vacation time to get to know what you like and don’t like about different housing options and locations. Do you yearn for quiet and seclusion? Or, do you like to be right in the middle of things, with as many conveniences close to home as possible?
What hobbies do you like to pursue, or would like to pursue, in your free time, and what are the costs associated with these activities?
If you feel you do not have time to do the things you love to do, use your vacation to take the opportunity. Maybe you love to golf, sail, or hang out at the beach. Maybe you would love to learn how to paint or travel. Some hobbies and interests cost more than others. Find out the costs of joining a golf club, purchasing equipment or tools, buying a boat or taking trips. You will want to ensure the money is available in your retirement budget when you need it.
Do you view retirement as a career change?
For some people, retirement can be stressful. Work plays an important role in defining who we are. You may view retirement as the beginning of a new career or a chance to change gears, not the end of your working life. Your favourite hobby can turn into your new career. If you like cooking, you may start your own small catering business. If you love meeting people, you can open a bed and breakfast. If you love woodworking, you can sell custom furniture. You could use your vacation time to research the possibility of creating a new career or business opportunity.
Regardless of what your retirement dream looks like (you may still be in the process of formulating one), or if you’ve got an entirely different vision of what your life will look like after retirement, you’re sure to have questions that need answering.
If you’re just starting in your career, you’re likely wondering whether or not you need to start investing for retirement, and how much you need to be putting away. What investment options do you have and how do I choose which one is right for me? Alternatively you may only be a few years away from retirement and wondering if you’ve saved up enough money to last as long as you do?
No matter where you are in life, whether you’re just starting out or well into retirement, Caldwell Advisory can help. Our no–pressure planning approach is custom fit to each one of our clients.