Retirement seems like a distant step? But it is smart to plan early and know how to get off to a good start. Many people dream confusedly of a retreat under the sun, spent in a cottage at the edge of a lake, or even dotted with trips. If the time of the rest seems far for the moment, these plans could remain mirages if you do not act now.
It’s hard to motivate yourself to save when you do not know how much you will need and the task seems insurmountable. One solution: take the bull by the horns!
Here are some tips to make your dreams come true.
1. Clarify your vision
Before estimating how much money you will need in retirement, ask yourself first what you want to do with it. The arrival of retirement will bring a lot of potential changes to your lifestyle. Will you stay in your current home or do you want to move? What will you do with all your days? Sometimes, future retirees fail to make a realistic examination of conscience and ask themselves the following questions: What will my interests and hobbies really be? What will be my energy level to perform certain tasks? What will motivate me on a daily basis? Will it be realistic to live in the countryside? Will the downtown condo still meet my needs when I will not have to go through the rush hour anymore? Be realistic and honest about your expectations and your personality. In retirement, the same criteria are not suitable for everyone.
2. Consider the imponderable
Retirement can take a long time, especially because of the ever-increasing life expectancy. It can be divided into 3 phases:
The active phase: You will be able to keep your family home and take part in various activities that will incur expenses.
The slowdown phase: Your health will further dictate your level of activity and outings and you may need to move.
The advanced phase: Your activities will be more limited and you may need help every day.
These phases involve different expenses, but they can be significant. Find out, among other things, about the costs of rent in retirement homes, which vary greatly depending on the options you are considering and your degree of autonomy. Remember that you may have to deal with some unexpected expenses, such as a serious illness or loss of independence. If you intend to give a financial boost to your children or your grandchildren, it is also time to plan it in your calculations.
3. Build your retirement budget
Once you have a clearer vision of what you want to do in retirement, you can estimate the budget you will need. A popular belief is that the goal for retirement is to be able to live with 70% of income from working life. Of course, this goal will vary according to your expectations and your projects. This step requires research and questions that are worthwhile, as is the case for any budget year.
4. Check with your advisor
Based on your current savings and the ones you plan to do regularly, and the public and private plans you have, you can make a fairly accurate estimate of how much you will have in retirement. Do you get the full potential of your investments? Will you reach your goals? Various calculations can help you. Your advisor can also accompany you. If there is a big gap between your projected savings and your retirement dreams, you need to make changes: either you have to save more or you have to review your expectations or the age at which you will be withdrawing from the labor market.
Several professionals look forward to retirement which often involves world travel, golf tournaments or grandchildren. But reality often looks different. The need for counseling is enormous, as most aspiring retirees prepare themselves incorrectly or not at all for the new life situation. Whether active or relaxed, being a retiree is a real challenge. Those who can’t compensate for the loss of recognition suffer quickly from declining self-esteem.
The new situation also offers many opportunities: to reinvent themselves, to build up other life content, to revitalize the partnership, to pursue idle interests, to pamper the grandchildren. The best cards to get started are those who deal early with life as a senior – even at the age of 30 or 40 years. If you already have interests and passions in addition to the job, you will come even stronger in retirement. However, those who only sit in front of the television after work each day will probably roll this out in the pension. Retirement may seem like a long way off, but it may last more than 20 years. You will be glad to be prepared to enjoy it to the fullest without financial worries!