Many of us have dreams of volunteering, travel, or just sitting on the porch surrounded by family. Retirement goals vary from person to person. If you want to meet your own retirement objectives, though, you need to take a personalized approach, based on your specific priorities and interests. Here are four steps you can use as you strive to reach your retirement goals:
[See the 10 Most Difficult Retirement Decisions.]
1. Decide what you want your retirement to look like. The first thing you need to do is determine how you want your retirement to look. Prioritize your financial goals and figure out what is most important to you as plan your future. This is about more than just saying that you want $1 million in your nest egg; it’s also about non-monetary things like spending more time with your family, learning a new skill, doing volunteer work, or participating in a hobby. Figure out what you want you want to do–know how you will fill your time.
2. Estimate the monthly income you will need. Next, figure out how much your monthly income needs will be to live the life you want during retirement. If you want to be able to travel, you will need to figure out how often you travel, and what it will cost to go to places of interest. Consider where you will live, and estimate the cost of living. In many cases, you can use your current expenses as a starting point. Break it down by monthly or yearly. You can also figure out how big your nest egg will need to be to provide the monthly income necessary to help you meet your retirement objectives.
3. Examine your current situation. Honestly evaluate your current situation. You will need to look at how close you are to reaching your monthly income/nest-egg goals. Look at your spending and decide whether you could make some changes to set aside more money for your retirement goals. Be honest about where you’re at, and how it relates to where you want to be–and the time frame you have for reaching your goals.
4. Create a plan to help you reach your goals. Once you know where you want to be and where you are right now, you can make a plan to close the gap. If you are taking a more income-based approach, you can start cultivating income sources right now that can provide you with cash flow during retirement. If your goal involves having a large nest egg, you can use a retirement calculator to see how much you need to invest each month to grow your retirement accounts. If you are falling short, look for ways to cut your spending or earn more money. This might mean paying down debt or selling some of your belongings over time if you plan to downsize. If you really want to have the retirement of your dreams, you need to have a plan, and you need to put it into practice as soon as possible.