What is the Most Important Step in Retirement Planning?

The Most Important Step for Retirement Planning - You can't start your retirement planning unless you have an end goal.There are a ton of articles highlighting the financial reasons behind retirement savings. In fact, I read an excellent one this morning entitled “The 3 Money Magic Tricks”, which highlighted the importance of the time value of money, compounding interest and dollar cost averaging. All financial terms you hear regularly when it comes to retirement planning.

Are they important – definitely!

This article isn’t about any of that stuff.

This article is about the personal aspect of saving for retirement – I still recommend reading the article above – it is really good.

I’m 38 years old. In theory, this means I have 25-30 years before I retire. Life isn’t about theory though and I want to retire early.

I want to be able to tour the US in an RV and see all the national parks and historical sites (I’m a history nerd). I want to spend time with my kids and grandkids and be around to help them as they transition into adulthood.

I want to be able to help my parents as they age. I want to visit New Zealand, Thailand, and Russia. I want to help my neighbors and be more involved with my community and schools.

I want to do volunteer work and be more involved with my church. I want to spend more time writing and publish a book on personal finance. I want to take thousands of pictures and share my experiences.

You get the idea – I want to live my retirement.

I want to be young enough to enjoy my time and be able to do all the things I don’t have time to do now.

For me, retirement is about time, not about money.

Money is just the tool I use to give myself time.

When I think of retirement as time rather than money it takes a lot of the fear away.

I’m not saying I ignore the numbers.  Everyone needs to know their retirement IQ number.  Having enough cash is critical.

What I do is base my current planning on my future dreams.

It is really hard to put away 10-15% of my income each month for retirement. It is a big sacrifice for something that is years away. There is always something I want in the here and now.

Saving for retirement takes a lot of discipline. Saving for retirement is hard work. It means living on a budget, setting aside money and delaying instant gratification by choosing needs over wants.

What I’m trying to do is create a vision of my future that is stronger than my current desires.

What will you do during your retirement?

Until you can answer this simple question you aren’t truly going to be motivated to save for your future.

When most people are asked this questions, they give you a list of what they don’t want to do during retirement.

They don’t want to work!

They may give you a few hobbies they want to pursue, but rarely do they have specific goals and dreams.

You will never retire in style by working towards a goal of “not working”.

I’m not discounting the importance of not wanting to work. What I’m trying to highlight is the fact that for most people it isn’t enough of an incentive to take the difficult steps you need to make today to begin your retirement savings.

So rather than focusing on what you don’t want to be doing in retirement, start focusing on your perfect image of retirement.

For many people, this means focusing on their hobbies. How many times have you heard people say they will golf every day when they retire? This sounds great in theory, personally, I love my hobbies, but honestly, they aren’t enough to give me purpose and direction.

Without a purpose, life is going to get really boring.

To retire successfully you need to find a balance between not working, pursuing your hobbies and incorporating meaningful living.

You need to have a firm unshakeable image of your retirement lifestyle in your head.

Don’t be afraid to dream big. The bigger the better in my opinion.

Dream big and then write out your vision.

Don’t stress about how you are going to accomplish your vision – that step will come later.

The only way you will consistently save for retirement each and every month is if you have an unshakeable vision of what you want your future life to be.

I know it sounds incredibly simple, but I firmly believe that this step is the most important part of your future plans. You will never do more than basic retirement planning unless you have a purpose and a mission for your retirement lifestyle.

So what do you want out of your retirement?


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