The dream of most people is to one day save enough money so that they can retire. Whatever your retirement dream is, you need to start thinking about it now to make it a reality. Here are a few things that are on my retirement checklist.
Retirement Checklist #1 – What age will you retire?
The first step towards planning for retirement is determining the age that you are aiming to retire. This way you will know how many more years you have to save for retirement. A person retiring in 5 years or less will have a different plan than someone seeking to retire in 30 years.
We want to retire at age 52, so we have 24 more years to save. Since we may live into our 90’s, we know we have to save a lot in those 24 years to ensure we will have enough for the 40 years after that. We are currently socking away 40% or more of our income every month towards two Roth IRA’s, stocks, a pension, and pure cash savings. I also am leaving my 401k contribution from my old day job alone to accumulate interest for the next 30 years.
Retirement Checklist #2 – What will your lifestyle be like in retirement?
If you plan on living a frugal minimalist lifestyle, you might find retirement living really easy. If you plan on taking a lot of trips and vacations, then you may find that you need more money to enjoy retirement. Your standard of living will go a long way towards determining how aggressively you need to prepare for retirement.
My husband and I want to continue attending out-of-state Curling tournaments (the ice sport) and travelling for fun when we retire, so we know we will need to save enough to continue with our current standard of living. We are aiming to save at least $2 million so we can live off of the interest. We live on about $38,000 a year right now and are 6 years from paying off our house, so even if we only make 4% on our $2 million in retirement, that $80,000 should be sufficient.
Retirement Checklist #3 – Are you going into complete retirement?
Knowing your plan for retirement will help you determine exactly how much you need to be saving for retirement. If you plan on retiring fully from the work force then you will need more money then a retiree that has a side job. You will want to allocate enough money to last your entire life so that you will not have to return to the work force when you are ultimately too old to do so.
My husband is planning to continue sports officiating until he isn’t physically able to do it anymore. I also plan on blogging, or doing the future’s equivalent to blogging, into my golden years. This means we technically do not need to save as much as we would if we weren’t going to work at all. But in case our best laid plans are turned to crud thanks to illness, we are saving like we won’t have those side incomes.
What are your plans for retirement? What’s on your retirement checklist?
Crystal Stemberger uses Budgeting in the Fun Stuff to write about finding the balance between paying your bills, saving for your future, and budgeting in the fun stuff along the way.