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How to plan your retirement: That’s the #1 question I got asked when I was a financial advisor. This is a daunting task for many, but fortunately, it’s also the perfect DIY project! You can do this. Whether you lean FIRE, fat FIRE, or something in-between; it’s better to get started now than to wait.
This article will explore many of the most important aspects that you need to consider when creating your retirement plan. We’ll discuss how much money you should save and what type of investments are best for your situation. Remember: don’t wait any longer— get started today on designing your perfect retirement.
Plan Your Retirement
How Much Should You Save for Retirement?
Many different factors go into determining how much money you should be saving for retirement. For example, the average person these days lives until age 82. This means they will need to have enough saved up to support themselves for at least 20 years of their post-retirement life.
A good rule of thumb is to withdraw approximately 4% of every year in retirement — this is a relatively safe amount. So how much do you save, then? First, you need to know approximately how much you spend every year; essentials, shopping, entertainment, etc.
Take this number and multiply it by 25. Here are some examples.
| If you spend… | You need this much at retirement |
| $25,000 | $625,000 |
| $30,000 | $750,000 |
| $50,000 | $1,250,000 |
| $75,000 | $1,875,000 |
| $90,000 | $2,250,000 |
Once you have all numbers in place, it should be much easier to figure out how much money is the right amount that needs to be saved for your golden years!
What Should You Invest In?
There are many different options that you have when it comes to your retirement investments. The most common investment methods include:
- Mutual funds
- Cash
- Commodities
- Cryptocurrency
- Stock market participation
- Individual stocks (get free stocks)
- Bonds
- ETFs
Unfortunately, there is no right answer for which method will be best suited for your needs. It all depends on how much risk you’re willing to take to gain the highest returns possible.
Where Do You Want to Retire?
For most people, it’s essential to choose where you will retire. For example, suppose your ideal retirement involves a senior independent living home or spending time in the mountains of Colorado. In that case, you’ll want to make sure that your investment portfolio is diversified enough so that the earnings will cover living costs in both of these scenarios.
Or, you can do what my best friend does: she’s a nomad, and goes where the wind takes her. She’s originally from New Orleans and is married to a Frenchman. Most recently, they were living in Puerto Vallarta. Before that, Thailand, and Vietnam. They spent most of their years in Hong Kong while they raised their son.
State Your Goals
When you’re creating your retirement plan, it’s important to write down and state your goals. For example, if one of the main things motivating you to save for retirement is to travel around Europe when you retire, make sure this goal is at the forefront of all of your decisions! Not sure what you want to do, or where you want to go? Check out my bucket list ideas.
By stating your goals, it will be much easier for you to stick with a budget and stick with saving money because everything will be in line with reaching these milestones.
Update Your Plan Regularly
You will want to make sure that you update your plan regularly. For example, if you have a friend or family member who is thinking of retiring in the same place as you — maybe it would be a good idea for both of you to buy property there so that this area becomes more affordable and accessible! Don’t forget: no matter what financial decisions are made along the way, updating your retirement plans every year can potentially save hundreds (maybe even thousands) of dollars on travel costs alone.
Bottom Line: Plan Your Retirement
In conclusion, creating your retirement plan doesn’t have to be daunting. However, it’s also one that takes time and careful consideration. Remember: if you start now, you’ll thank yourself later on when all of your hard work pays off in spades!
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