The average person spends more time working than doing any other activity, unless you count sleeping. Working is important; it gives us the money we need to meet our basic needs and support our families. However, we can get so focused on climbing the corporate ladder, earning a paycheque, and socking money away for retirement that time for family, friends, and the things we enjoy doing can take a backseat.
Time is a valuable resource. How we spend it matters.
The relationship between time and money changes once you enter retirement. Earning money no longer takes up 40+ hours of your time each week. So what are you going to do with that huge hole in your schedule?
Listeners of the show often call in to ask, ‘How much do I need to save for retirement?’ But we believe you should start with the question, ‘What am I going to do with my time?’
At the top of most people’s retirement bucket list is travel. However, you could be retired for 30 years. Chances are you are not going to spend all of that time traveling.
Retirement is not an extended vacation; it is not a break from your daily life. It is your new reality. What is your day-to-day going to look like?
It all boils down to what is going to give you purpose in retirement? What will give you a reason to get up in the morning?
Once you have a vision of what you want your retirement to look like, you can sit down with your advisor and work backwards to figure out how to make it happen financially.
Putting dollar figures to the dreams you have for your retirement will give you an idea of what you need to save during your working years.
Some of your day-to-day expenses may change when you retire. Without going into the office every day, you may be saving money on gas or going out for lunch. Other expenses may go up.
There may be some big ticket items like that dream trip or experience.
There may be some areas where you want to help your family. Perhaps you want to help your kids with the down payments on their first homes or pay for your grandchildren’s education.
There should always be funds set aside for emergencies. What if you have an unexpected health issue? What if you need to retrofit your home or move into a long-term care facility?
A good retirement plan will start with your family’s goals and objectives, consider your financial situation, and apply the strategy you need to make your vision achievable.
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