Imagine you’re sitting on a warm beach with waves washing over your toes, sea breeze in your hair, and a cocktail-complete with a tiny umbrella in your hand.
Or maybe you’re breathing in the crisp mountain air, gazing over a horizon of snow-capped peaks as you pull yourself onto the summit you’ve always dreamed of reaching.
When we plan vacations, we think of those perfect moments first, and then we figure out the logistics. Your retirement should be the vacation of a lifetime after your working years-so why wouldn’t you plan it like one?
To enjoy your retirement years, you need to put the same amount of vision, effort and planning into them as you would your dream vacation. Here’s how to start shaping your plan so the “trip” of your life can go off without a hitch.
Envision Your Ideal Retirement
An important part of the planning process is to have a clear vision of what your retirement should look like before you begin. Your vision will shape your plan and determine what budget you’ll need when you retire.
It’s the foundation upon which all other steps in the plan are built. The more specific you are in setting this vision, the easier it will be to plan the vacation of your lifetime.
Close your eyes for a moment and try to visualize your life after retirement. What does it look like?
Do you see long days of vacationing, traveling the world, and speeding away on thrilling adventures? Or do you picture relaxation, afternoons gardening, and long hours spent reading?
Maybe you imagine starting a small business or turning a hobby into a part-time job? Many people like the idea of relaxing, while others prefer working in their retirement years in order to stay busy and pursue a passion. If this sounds like you, a word of caution: sometimes a hobby is best left as a hobby.
Not every retiree who follows their hobby ends up regretting it. However, before you decide to jump in and pursue your passion full-time, take a good, long look at what that work would entail and whether it would be a good fit for where you are in your life.
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Manage Your Expectations
As you’re piecing together your vision, it’s okay to dream big-after all, this is your retirement. You should enjoy it! But to avoid the disappointment of falling short, you also want to manage your expectations and aim for realistic goals.
Let’s say for your dream vacation, you want to go to Paris, where you will stay at the nicest hotels and eat at Michelin Star restaurants. Ideally, you’ll be setting out on that vacation sometime next year.
However, there’s just one problem: you only have $1,000 to get there.
In this scenario, the difference between what you want and what you’re capable of achieving is too great. The good news is you can determine your financial situation and adjust your plan accordingly.
Maybe you delay your trip, maybe you don’t put such an emphasis on expensive hotels and fine dining, or maybe you take on a second job for a while in order to align your reality closer to your dream.
The most important thing to know right now is this: if your vision of what you want is too far afield from what you can actually create, that’s important to know. It doesn’t mean your journey is over before it’s begun. It simply means that you’ll need to plan out carefully to find a reasonable path.
Once you have your vision in mind, you can move on to the practical side of planning: making your dream come true.
Start with the Retirement Basics
To make your dream retirement a reality, begin with the basics. Just as it’s not enough to say, “I want to take a trip” and leave it at that, it’s not enough to say, “I want to retire” either.
If you want to get the most out of your retirement, you need to take a systematic approach. This starts by asking yourself some basic questions:
- What’s the best route? You’ve decided on where you want to go (your vision), now you need to figure out how to get there. There are plenty of ways to get from point A to point B. First, that means understanding your point A-where you are right now. Next, you need to decide what’s important to you about the journey. Perhaps you want to take a slower, more scenic route; perhaps you want to get there as quickly as possible.
- How do you want to get there? Once you’ve answered the first two questions, you can start thinking about what vehicle might be best to get you there. How can you grow your money to provide for your needs in retirement? Too often, I’ll see people start with the vehicle rather than the destination. But while a Ferrari might be an awesome car, it’s the wrong vehicle if you’re going off-roading-just like a mutual fund might be the wrong vehicle, depending on your retirement plans.
- When do you want to arrive and how long do you plan to stay? Consider what age you’d like to be when you retire. How much time do you have between now and then? How much will you need to save per year to provide for yourself in retirement? On the other side of the equation, people are living longer than ever before. You could live into your 90s and want to have a plan in place for that possibility.
These questions are a great start to get you thinking about your retirement, but like planning a trip with a travel agent, you’ll likely want to work with a financial advisor.
Find one who will work with you to focus on what really matters most: your vision for your retirement. They will help you define the goals that are important to you, implement a plan, and monitor your progress and adjust as needed.
Living Your Dream Vacation
Retirement is feeling the ocean spray on your skin or reaching the mountain peak. It’s your big reward at the end of your working life, and you deserve to enjoy it!
By forming a clear vision of what you want to guide you through the planning process, you can ensure you achieve what you want when you want it-the true vacation of a lifetime.