Retirement goals are as diverse as the individuals who set them. However, retirement goals will generally fall into several categories:
Family goals for retirement may include more time with the family, helping to raise grandchildren, or more time for leisure activities with the family.
The remainder of our retirement goals will be impacted by the reality of our finances - how much income is available to allow us to participate in these activities.
It’s important to set goals for retirement. As you get closer to your retirement date, your goals and action-steps should become more detailed and realistic.
- What lifestyle would you like? Housing, location, vehicles, travel, activities, etc.
- Make an estimate of what it will cost to maintain that lifestyle. Include:
- Housing and location.
- Fixed expenses such as food, clothing, utilities…
- Travel frequency and expense level.
- Family activities and gifts.
- Recreational, hobbies.
- What sources of income will you have in retirement:
- Social Security.
- Employer retirement plan.
- Personal savings & investments.
- Other sources?
- What new/different activities do you want to pursue?
- Compared to current expenses, what adjustments are needed?
The bottom line is obviously, “Can you attain the retirement goals you have set, with the estimated level of income you will have in retirement?" Although this seems to be an emotional or personal preference question, the answer is really mathematical. Can you afford the retirement goals you have set?
- Set your retirement goals:
- Prepare a current Cash Flow Analysis.
- Set your current spending goals.
- Prepare a Budget.
- Set savings and investment goals.
- Make an estimate for the date of your retirement.
- Review annually your progress toward achieving your goals; maintain a budget.
- Prepare a Balance Sheet.
Also, review Chapters 3 and 15 in Investing for Retirement - Surviving a Financial Tsunami.