Who doesn’t love a vacation?!? An escape from reality that gives us the rejuvenation needed to go back to the daily grind of our career. You get to do what you want each day. Relax by the pool, hit the links, go to the outlet stores. The possibilities are endless.
One of the best parts about planning a vacation is to dream about it and list out all the things you WANT to do. It can be so much fun thinking about all the activities you could do, places you could visit and what kind of food you will eat. However, you may quickly realize that you may not do everything on your list because you don’t have enough money and a budget. Because of this, you settled on doing limited excursions and food options to minimal. Not having enough cash sucks; you tell yourself, “I want to upgrade my next vacation. I’ll not go on another vacation on a limited budget again.”
Retirement is the most prolonged vacation you will ever take, and it requires the same meticulous planning to ensure it goes how you wish. Here are a few tips to help you plan for “VACATION FOR LIFE.”
VISUALIZE AND CALULCATE
Picture what your first morning looks like when you retire.
What type of activities will you be looking forward to? Where will you be planning on going? Where will you be living? Think about all the things you want to do and visualize how your life will look in retirement.
Once you have a clear picture in your mind of what your retirement experience will be like, it’s time to figure out how much that will cost you.
Making this list should be both an exciting and labor-intensive process. You want to be as specific as you can when it comes to your needs and wants in retirement. Be sure to list all activities, frequency, travel goals, house upgrades, etc. Even things that seem ordinary, like going out to eat. You may do that more in retirement due to your free time. Anything you can think of in retirement with a price tag needs to be listed. This step aims to get a clear picture of what your retirement will cost you. – (You can create this list by downloading our free worksheet by clicking here)
If you were going to purchase a car, knowing the price is much easier because the dealership has a hefty price tag on the windshield.
There isn’t any ambiguity to what it takes to meet that goal of a car purchase. However, retirement is more brutal to calculate because it is unique to each person, and there are many different costs you will need to account for.
I remember seeing a commercial years ago where people were walking around with big numbers, and every person’s number was different. It was a silly commercial, but it got the point across. With a bit of leg work, you can figure out your number (what retirement will cost you).
INCORPORATE WHAT HAS BEEN DONE
Now that you know how much this VACATION FOR LIFE will cost you, look at what you have already done. For example, imagine you were planning a ski trip and already had some money set aside; you would need to figure out how to make up the difference. When dealing with simple examples like this, it’s easy to read and think, “of course I know that,” but planning for your retirement should be that simple conceptually. Of course, when you get into your specifics, it can get tricky, but let’s stay simple for this scenario.
Think of it this way using elementary math. If retirement was going to cost you $1,000,000 and you already had $600,000 saved, then you know you need to make up an additional $400,000. That’s when you can start figuring out how to accomplish that. The specific of how to do it is a topic for another article but knowing what steps you need to take is the first part.
Imagine going to the doctor, and she told you what your healthy weight should be. Knowing your current weight, you are at currently is imperative to understand what work needs to be done—the same scenario for your financial wellness. You need to know where you are presently and where you are heading before taking an efficient path to meet your destination.
The ultimate goal is obviously to live a long healthy life. That includes your mental health. Providing yourself with clarity about your retirement can pay dividends mentally. Today, people live longer in general, which has only increased the fear of outliving our money. You can take steps to alleviate that fear. First, find out how much retirement will cost you. Then, figure out what retirement would cost you per year, estimate how many years you will be around, account for inflation. It seems simple when you put it in one quick sentence like that. But, it could be simple if you put in the work.
You will thank yourself on day 1 of retirement (probably even before!)
If you are stuck and need some help, schedule a DISCOVERY CALL to find out how we help our clients to plan their VACATION FOR LIFE.