Retiring at 47Learning from experience |
LEARNING FROM EXPERIENCE The experiences of recent retirees can teach us an enormous amount. Their experiences aren't necessarily going to be a blueprint for your own retirement, but they can serve as a guide to your decision-making process. The conditions which affect retirement life are constantly changing, though, and if you are ten or fifteen years away from retirement now, the economic and social sene when you stop working full-time will undoubtedly differ substantially f rom present conditions. When you retire, you can plan to feel good, plan to take advantage of the burgeoning opportunities available to you, plan to make the most of what is essentially a new development in the social structure of american life. Our forefathers could not even contemplate a phase of life after their working lives ended, nor the freedom from physical or finacial handicap which can be yours in retirement. Those of us in our middle years today are at the cutting edge of an entirely new social phenomenon, a class of older individuals who bring talent, energy and experience to their later years and demand a meaningful, enjoyable, rewarding lifestyle. By understanding the pleasures of aging, perceiving the advantages that await you as well as the potential pitfalls, you can make decisions today which will build a promising future for yourself. You are living at a point in history when the rules for growing older are changing. By actively involving yourself in the trends of our times, you can prepare to make this stage of your life the best you've ever known. FINANCIAL SECURITY understand the different sources of income available to you after you retire and how you can maximize them; learn how to get all you can out of your income and assets from now until you retire; estimate your retirement budget; develop a good, practical financial plan from which to operate, which will leave you with a greater sense of clarity and peace of mind about your financial future. ------------------------------------------------------------- The process of developing your plan boils down to four basic steps: decide at what age you will want to stop working and what standard of living you would like to have as compared to now estimate the monthly expenses you will have after reti- rement, using today's expenses as a basis for comparaison. determine what you approximate monthly income will be based upon currently expeted sources of income. figure out how large a gap there is between this income and your projected monthly expenses in retirement, and develop a plan of action using a variety of potential sources to fill the gap. ------------------------------------------------------------- As a general rule, a retired individual or couple can live on about 50% of gross preretirement pay or about 70% of the take-home pay they needed before retirement. How many years will your retirement cash reserves last? Annual Interest Rate or Return on Investments 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% Annual Rate of Withdrawal DURATION IN YEARS 6% 36 7% 25 33 8% 20 23 30 9% 16 18 22 28 10% 14 15 17 20 26 11% 12 13 14 16 19 25 12% 11 11 12 14 15 18 23 13% 9 10 11 12 13 15 17 21 14% 9 9 10 11 11 13 14 17 21 15% 8 8 9 9 10 11 12 14 16 20 BEATING INFLATION Your goal is to achieve a balance of investments that preserves the real purchasing power of your capital without robbing you of your peace of mind. POINTS TO THINK ABOUT. PERSONAL Decide when you would like to retire - discuss tentative plans, expectations, and hopes for retirement with spouse. list location of all important documents (will, insurance policies, birth certificates and assets (savings account passbooks, stock certificates etc) and go over the list with spouse. FINANCIAL AND LEGAL AFFAIRS estimate amount of money you will need in retirement determine how much of this amount will be provided by incoming pension etc compute your present net worth and how much your assets will be worth when you retire. explore your investment options. explore ways you can make money by working in retirement evaluate life insurance coverage in light of current and future family needs. check into provision of your medical coverage and the possibility of continuing a company-sposored policy after retirement. HOUSING decide on some possible retirement location research these areas in detail, visit them whenever possible explore possiblility of living in a retirement community, examine present community to determine how suitable it would be as a retirement location. explore different forms of housing available such as cooperatives, condominiums, manufactured homes, single- family dwelling etc. HEALTH & FITNESS have a physical checkup, improve your eating habits to minimize health risks, incorporate a regular program of exercise in your schedule, - assess your personal habits and their effect on your health, and make efforts to improve them where necessary. LEISURE TIME consider how much additional time you will have to use as you please after you retire. think about which of your present activities you would like to continue in retirement, and how much time you will devote to them. explore other possible activities which you might be interested in pursuing, and begin whatever classes or training would help you get more enjoyment from these activities. consider the possibility of finding a new, more attractive position, as a paid worker or a volunteer, or starting your own business, and take steps toward fulfilling any of your ambitions in this area LEISURE TIME - THE WINDFALL There is a windfall in store for you when you retire and now is the time to start dreaming about ways to spend it. I'm not talking about money, bu t about time: thousands of hours of precious, irreplaceable time, which will be yours to invest in the most exciting, rewarding activities you can find. Nearly 3/4 of your weekday waking hours are now controlled by your job, counting travel time. Your 'free time' on evenings and weekends is often s pent recuparating from the strains of a full week's work. Then suddenly you reach retirement and the rules change dramatically. Pensions and returns on investments provide a flow of income, your financial responsibilities are considerably smaller with children on their own and the mortgage paid off. For the f irst time iin forty years or so, the focus of your daily activities can shift from what you have to do to what you want to do. This brings up a very difficult question, however - what do you want to do? OH, TO SIT BACK AND WATCH THE GRASS GROW! WHAT WILL I/WE DO? There is a great deal to do but, as with any thing worth its while, you have to go hunt for them and not expect that opportunities will always come knocking at your door. As mentioned previously, this onslaught of free time may at first shock you into numbness. If unprepared for its arrival, you may feel totally at a loss about what to do with such a wealth of free time. However, it is a pleasant challenge to tackle especially if you have stacked the deck in your favor beforehand by choosing some leisure activities that you could both afford and enjoy continually. What is meant by stacking the deck in your favor is the fact that if you can start today expanding those interests that you could pursue once retired, you will be that much more ready when the time comes. However, you should not put all your eggs in the same basket nor should you adhere strictly to any one given plan as the best of plans have been known to founder through unforeseen changes either in your desires, abilities or just plain circumstances. In any case, for years your time has been structu red by exterior forces outside of your control, therefore, why cling to an over-structured plan now that you call the shots? This is not to say however tha t you should not plan at all. (put in quote about ending up in the wrong harbour in here). If in the past you have been able to do several different things at once or have had no qualms about entering in a new venture or a new activity, then you should have no problem coping with all that extra free time now confronting you.