I've written before why planning for our retirement is prudent. So now I want to dwell on things we should be thinking about once we already have a plan in place. But if you still haven’t got one, you can go back to my article here. It's never too early to have a retirement plan.
Most of us will have to stop working at some point in our lives. It could be voluntary or not, but it's something we know will likely happen. That's why retirement planning is so important. We can't take it lightly because it's our lives we're dealing with. We want to make it right as much as we can.
After Planning, Then What?But once you've got a plan in place, the obvious apprehension next would be whether the plan will work or not. It's not an easy thing to predict (success or failure) but one which we would be best served if we can.
When I think about my own future retirement, I see two criteria to tell me whether my plan worked or not. If I can say with honesty that these two things are met, my retirement plan would have served its purpose well.
- If I enjoy my retirement with all the activities I planned for
- If I find that my plan is financially sustainable
Of course, what you plan to do during retirement will impact how much it would cost. So what usually happens is that we estimate how much those activities will cost us in the future adjusting for inflation.
Retirement CostI think there’s only so much planning you can do on this end. Ultimately what’s going to dictate the financial viability of your retirement plan is the funds available to you when you retire. Sure you’d like it to be as high as possible. But there’s a limit to what you can save depending on how much you earn and how much you spend.
After all your needs have been met, you can invest what remains or you can spend it for your enjoyment. If you save it, you can use it for your retirement later. So it ultimately boils down to whether you’d prefer spending now or later. I believe we should strive for a balance. We could enjoy some of the fruits of our labor while we also save and invest some of them for later use.
How to Enjoy RetirementI think the more important question that should be dealt with regarding our retirement is whether or not we will enjoy it. Although there are many factors that can affect our enjoyment (some of which are beyond our control), one thing that we shouldn’t get wrong is the set of activities we will pursue.
Not only is this important because it affects our cost estimate for our retirement, but more so because it may ruin our retirement altogether if we get it wrong. Imagine planning to travel the world, pursuing a business venture, painting, reading, gardening or whatever we might have thought of doing upon retirement only to find out that these activities don’t make us happy. Sure we can still search for other activities if it happens, but it would potentially waste more of our time which we won’t have plenty to spare.
Testing Your RetirementSo to avoid these mistakes, a good option would be to actually try living your retirement plan. Some people actually take what they call “mini-retirements” to do this. It could mean going for prolonged vacations (one month or more if possible) doing the things you planned to do during your retirement. This will test if your plan will work or if it needs revising.
I understand prolonged vacations are not always possible. If that is the case, take the longest vacation that you can have and use that. The idea is to simulate your retirement life before you actually retire. With this, you’d be in a better position to know whether or not your plan is financially viable and also help you determine if you’ll be happy doing what you planned to do when you retire.
*Photo Credit: Roger Smith (Creative Commons)