These are your days to party hard, make mistakes, and live life to the fullest. And I’m not trying to stop you from doing that (if you’re responsible about it), but the time to think about old age is when you’re young.
You can ignore your future and throw caution to the wind. But when the time comes for you to retire, you’ll realize you didn’t sufficiently plan for your future, and it will be too late to correct your mistakes.
Wouldn’t you rather plan for it now if it means retiring early (as a millionaire) while other people your age are still working? The choice is yours, but the second option looks pretty good to me.
So, if you agree, we’ll talk about retirement (and how you can plan for it) in this article.
What’s Retirement All About?
You’ve probably heard about retirement often. And you’ve probably seen or heard older people in your life retire and move away to some cool vacation spot. But what exactly does it mean to retire?
Do you just one day (randomly) decide to pack your suitcase and move to Hawaii? Can you just call it quits one day and decide to sit at home and do nothing?
Retirement refers to when you decide to stop working or leave a career permanently. This means you hand in your resignation and now might never work again in your life.
But if you’re not working, where will your money come from? How do you support yourself with no income? This is where your savings and planning come in.
When Can I Retire?
Retiring is something that has become associated with old age. Many people believe retirement is something you only do when you’re old.
That is true to some extent — but not necessarily. Many people (like athletes) choose to retire much earlier because they can no longer play as they get older.
Most people will retire at the senior citizen age their government has set for them. In the US, this is 67. So, most people will retire at this age. They also become eligible for certain government payouts and discounts (such as a senior citizen discount).
You will not be obligated to retire at this age. If you’ve planned well and have a good amount of money saved up, you can retire much earlier by living off your savings or investments that will act as your income. Why retire? Well, do you really want to be working for the rest of your life?
That actually may be an appealing thing for some people. Some of us just like to stay busy, and what better way to do that than doing something you’ve been doing for a while that also earns you some money?
Others start looking forward to their retirement much earlier on. Many people want to put their working days behind them and relax.
You’ll spend much of your adult life working, and while that may be fun, it will also be stressful and challenging at times. Retirement is something many people eagerly anticipate.
What Should I Do After Retirement?
So, what should you do once you’re retired? Retiring doesn’t necessarily mean that you can no longer work anywhere, in any capacity.
It just means you stop doing the work you’re doing at the moment. For many people, that means they don’t intend to ever work again — especially if they have enough funds that they won’t need to work again.
In that case, what do you do? Well, the short answer is — anything you want! Pick up that hobby you never had time for while you were working, or try all the new things you never got a chance to do before.
Go back to doing the simple things you enjoyed as a kid but never got around to again. Or just go out and party if that’s what you feel like doing. The sky is the limit.
What about people who like to keep busy with work but not so busy that it feels like they haven’t retired at all? Well, many people choose to go into alternate career paths.
A retired cop, for example, might go into private security. A Michelin-star chef might open a small cafe. These are ideas for people who can still work without returning to their old careers.
Many people who end up not saving enough for retirement also usually end up working past that age because they don’t have enough money to support themselves without working.
You don’t want to end up like that. Trying to work as a senior citizen and earning the same as younger people will be difficult. You might end up struggling a lot, and many jobs will become too physically, mentally, and emotionally taxing for you at that age.
Besides, you will be giving up time when you should be relaxing to work. Do you really want to do that? Or would you rather just golf with your buddies?
I think I know the answer to that question already. So, before you completely dismiss this article, consider how important planning for your retirement can be and how you can start planning for that right now.
I’m Young. Why Should I Think About Retirement Right Now?
You need to plan for your retirement, and if you do it earlier, you’re less likely to run into problems in the future. But why do you need to think about it right now?
Why not in, say, another 10 or 20 years, when you have a career and can start thinking further into the future? Why worry about your retirement right now when you don’t have a job or a college degree yet?
The answer is simple: if you don’t plan for it now, you won’t be able to align your goals with what you want your retirement to look like. But there’s more than one reason why the question of retirement is one that you should be asking yourself right now. Here are a few more:
Build Flexibility for Later Life
Let’s say you decide you don’t need to save up or plan for retirement right now. It won’t happen until way in the future. So, why think about it now? If you don’t, you will limit your options in the future.
When you finally decide to save up for retirement at 40, you won’t be able to do much else with your money because you will still need to save up enough cash to live on for the rest of your life.
What happens then? You’re stuck focusing on retirement instead of being able to put your money elsewhere. Not planning will crush your other dreams and ambitions.
You will be forced to focus on one central goal only: saving for retirement. If that dynamic is okay with you, perhaps you can move on from planning for your retirement years.
But I can tell you right now that it will be hectic and tiresome, and you will regret it later.
Learn to Save
The concept of saving has been woven throughout this article. Deciding to save isn’t nearly enough; you must be committed to doing it.
More importantly, you have to do it regularly and consistently for it to work out for you. That is a sort of discipline that takes time to cultivate.
If you only start saving for retirement much later in the future, you leave no room for mistakes or slip-ups. There won’t be space for you to mess up anymore.
Planning and saving now gives you that space. Maybe your desires will sometimes get the better of you, and you will go off-budget to buy something you really shouldn’t have.
You still have time to make up for those mistakes. Over time, you will build your discipline and learn to avoid impulse buying and being driven by your desires (until you can plan and budget for them, that is).
But that is only possible if you start thinking about your future now, while you still have time to change it.
Understanding the Value of Time
In the previous article, we talked about investing your money. It’s a great saving-and-income strategy. You get to keep your money safe from your impulse-buying habits while also doubling (or even tripling) it in the stock market.
Planning for your retirement means you also include an investment plan in your goals. It helps you create more income, especially at an age where you may not have any other ways to earn money.
When you make long-term investments today, they have a chance to mature or increase in value over time. The longer you hold these investments or keep your money in them instead of selling them, the greater the value they gain.
Investments made today and sold off only in your retirement years can exponentially increase in value. This is how you can create much more income than you initially started with.
Creating the Retirement You Want
If you really think about it, maybe you have an image of what you want your retirement days to look like. But if you haven’t thought about it, it’s about time you start thinking.
What do you want to do when you’re older? How would you want to spend your time? Maybe you’d like to retire to the countryside and grow vegetables.
Whatever you want, you probably won’t be able to just do it. That’s right, you guessed it: You need to plan for it.
The most significant factor in this planning is how much money you’ll need. Naturally, it would be hard to precisely calculate something so far in the future.
But you can start thinking about it now and develop an idea of what you would want and how you could get it. Why? To make sure you get the ending you want and not one dictated by a lack of options.
Building the life you want isn’t difficult, but it does require commitment from you.
On that topic, let’s discuss how you can plan for your retirement: What do you need to consider?
How Would You Like to Live Out Your Retirement?
What would having a good life when you get older look like to you? Do you want to travel? Do you want to live without financial worries? Do you want to be able to spoil your grandchildren?
There’s no shortage of the kinds of things you can do once you retire. As I said before, the sky is the limit. But what would be a worthwhile retirement for you?
What would you want to do that would be meaningful and enjoyable for you? More specifically, what do you want retirement to look like for you?
One of the fundamental benefits of retirement life should be to live without financial worry — to live without needing to worry about money. But what else would you like?
Travel
There aren’t many of us who haven’t made some type of travel plans that ended up never happening. Or maybe you did take that trip and have been longing to go back but never got around to it.
Traveling is just one of the things you can do once you’ve retired. It is also something you will need to plan for. You should have room in your retirement plan for things other than your regular expenses.
Once those are taken care of, the travel possibilities are endless!
Work Part-Time
If you’re one of those people who becomes restless with nothing to do, consider some type of part-time work. If you’re financially set for retirement, this work can just be to stay busy and gain a new experience.
At best, you will meet new people and make some money. At worst, you could try your hand at something, decide it’s not for you, and still make some money while you’re at it.
But either way, you can keep busy. And if it’s not for you, you can just move on to something else — a privilege you won’t have during your adult working life because you will have more responsibilities to consider.
Teach
There’s that old saying, “Those who can’t do, teach.” Since you’re done working, it’s time to help others. Mentoring can be a great way to give back to the community and help others get on their feet while also staying busy doing something you enjoy.
Teaching is also a great way to immerse yourself in something without dealing with the stress of it. Plus, you get to help people learn from your mistakes and avoid making the same ones!
Learn Something New
You could live a full life and still have room for something new. And what better time to learn something new than after retirement?
Maybe you always wanted to learn pottery, paint, sketch, ride a motorbike (be careful!), learn a new language, take up martial arts, or learn a host of other things that you didn’t get a chance to do before. Now’s the time! Take this opportunity to sign up for classes — and let the learning begin!
Volunteer
If you don’t want to be restricted by the hours of part-time work again, you can always volunteer. It’s another great way of giving back to your community, and you can help out in so many different ways.
Charities love volunteers who can lend an extra helping hand, and you can always volunteer at the nearest shelter.
There’s no shortage of things you can do once you retire. The problem? Your expenses will change and may even increase (or feel like they have) once you stop working.
You won’t have any active income coming in, and you will need to make do with passive income. Here are some of the expenses you would be looking at:
- Family expenses (your spouse, children, or grandchildren)
- Health and medical expenses (which are likely to increase)
- Travel and commuting expenses
You might also need more help around the house when it gets difficult for you to do things yourself. To accommodate this increase in expenses, you will need to plan for your retirement.
Otherwise, you will find yourself dealing with too many expenses and too little money to help you pay for it. That is not the kind of stress you will want to deal with during your retirement years.
Start Planning Your Retirement
The most important factor in planning for your retirement is to save. Once you do that, you will be prepared to retire (and you might even be able to retire early).
After all, why work until you’re almost 70 when you can retire at 60? And if it sounds a little unrealistic to be wondering how to save for retirement this early on, don’t worry. There are numerous resources that can help you save for your retirement.
To begin with, everything we’ve learned about personal finance and money management in this article will help you with the long-term goal of retirement in mind.
You should be able to budget and manage your finances for retirement with the same techniques we’ve already discussed in this article.
How else can you save up for retirement while you’re working? Well, you have a bunch of options, such as retirement accounts:
Contribute to a 401(k)
A 401(k) is a type of retirement account that comes with tax benefits (there is lower or no tax on the money in such an account). A 401(k) is sponsored by your employer, meaning that they contribute to your retirement account.
You put a portion of your salary into the account, and your employer puts in the same amount (so you get double that amount in your savings).
Put Money Into an Individual Retirement Account (IRA)
An Individual Retirement Account (IRA) is exactly what it sounds like: a personal account that you can put your retirement money in.
This is independent of your work, so your employer won’t make any contributions to it. It’s on you to put your money into this account to save.
Many people prefer having a 401(k) and an IRA so that they can have retirement savings outside of work.
These are just a few ways you can save for your retirement. Another way is to invest in long-term stocks that can gain value over time and pay out when you’re ready to get an income for retirement.
However, you should start planning for all these things well in advance.
What kind of planning would you need? This should be in terms of what your goal is and how much you would want to save.
What’s a comfortable amount of money for you to have so you won’t worry about money once you’re retired? I know that these things all seem a little overwhelming to think about just now.
But right now, you don’t have to concern yourself with the specifics. For now, you can start thinking of what retirement should look like for you and what broader, long-term goals you should set.
Talking about retirement right now feels like we’ve gotten ahead of ourselves a little. There’s a whole section of life we’ve skipped in the middle — the part where you make loads of money.
So, don’t worry; we won’t skip over that part. This next article will help you uncover ways that you can get rich — create a rags-to-riches story.
We’ll go over some millionaire habits that will help you develop the discipline and habits that will help you get rich in no time at all.
