Almost every week in my line of business, I hear someone talking about 'retirement'. They have hopes, dreams, and ideas about the day that they just don't have to work anymore. I firmly believe that anything you do well in life is going to take practice. That's right Allen Iverson, I said practice. But how in the world will you practice for retirement? Here are three smart money moves ideas to help you think about getting ready for the day you say 'no mas' to letting the alarm clock get you up for work.
- Practice Your Money Habits- Having built well over a 1,000 budgets for families over the years, there may be no tougher budget than planning the one for retirement. You'll never really know how much you need in terms of withdrawals from your portfolio until you actually spend three to six months trying to live on that budget. As one would imagine, this is difficult if the children are still in the house, but if you tell yourself all you need is $7,000 a month in retirement then try to actually budget that amount for six months to see what the over / under line is for your family.
- Practice Your Lifestyle- This may mean using your PTO in bunches so you can take three weeks in a row to see what life would be like with no work and lots of free time. If you are determined to play golf or go fishing every day, then actually do it every single day. If you tell yourself that you are going to start building custom furniture in your garage, then do that activity for two weeks in a row and see how it feels. If traveling in an RV around the country is always what you dreamed about, then plan a three week trip to see if you actually like it. The big question is do you need a sabbatical type break or are you fully prepared to put in the pink slip and stop working?
- Practice Where You Want To Live- Some people will tell me that they want to pick up and buy a house in the mountains or move to the beach or relocate to another state. Recently, I had a client tell me they wanted to move to New Mexico in retirement just because they liked it when they visited the state. It is highly recommended that you go rent a place for a month in an area and live there every day to truly determine if you enjoy it all the time. You should be very hesitant to make a big move without spending time in a given area. Maybe you were there at a time of year where the weather was better? Or there were more people? Either way, practice where you want to live before you settle down. The older you get, the harder it is to move.
Most importantly, I wouldn't tell the boss you are ready to exit stage left until you are 100% comfortable you won't want to return to work anymore. It can be hard to re-enter the workforce especially if you are at a higher end salary. Carefully consider what will happen to your pension plans, investment portfolio, and overall cash reserves if you make this move. Practice makes perfect, so it only makes sense to practice retirement if you are within striking distance of your goal.
Written by: Ted Jenkin
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