Practical retirement planning really only has four components - your health, your finances, family & friends and your zest for living.
Sadly, the term "retirement planning" has come to refer to just one single component of the transition to a successful retirement i.e. financial considerations. This article takes a broader view, as precise calculations about the future ignore everyday life events such illness, death of a spouse, issues with mature aged children, loss of capital and natural ageing.
Use those four pillars as chapter headings for your checklist, however it’s best - when planning - to assume that you will live to age 90. This is true if you're thinking about early retirement or whether it will be when you're 70. Or if you're merely thinking about a mid-life career change.
For many of us the 1950s idea of an idle retirement - fishing and golfing - has now been replaced by the desire to do what we truly want to do, whatever and wherever that is. This particularly so if you are planning to retire abroad, but of course you can be remote from family and friends even if you retire within the United States.
Personally, that could be travelling, or mentoring micro business startups, and perhaps collecting the grandchildren from school. And I'm happy to share with you my own plan.
Obviously we're all going to need extra income, but that's not why I advocate working as long as you desire - such social activities have positive health impacts. We all need to plan for health care and other costs associated with ageing, and then we all should be open to a phased move into retirement (whatever that means today) which includes learning new skills and sharing time with an extended network of family and friends.
So looking forward into those years after age 65, the four pillars we need to focus on for any success with practical retirement planning are
By the way, a "profitable hobby" provides both financial and health benefits and if you retire to a college town, the young townsfolk will keep you active far longer. Even traditional hobbies - such as short story contests - will expand your mind and change your world.
And I fully endorse the approach of Professor Robert Reich, of the University of California at Berkeley. He says "most Americans believe that their retirement years with resemble Club Med with on-site health facilities. Snorkeling in the morning and extra oxygen in the afternoon. But no-one can afford it because they haven't saved enough".
I’m sure that you have searched the web for “retirement planning” with the result that you will have been offered introductions to hundreds of “financial planners”.
However the recommendations by financial planners are only for the wealthy, and in any event, they are seriously flawed (e.g. they focus only on your finances, they assume a straight line draw-down - which doesn't allow for major medical or accommodation expenses - and of course those recommendations ignore the devastating impact of inflation).
We have a different approach - given that most of us are not wealthy, we need to seek an alternative source of income in our retirement. And our proven solution to this issue is to focus on "profitable hobbies".
But this magazine has a broad view of practical retirement planning, and we address various non-financial issues associated with retirement - such as intrepid travel for seniors and retirement abroad (my favourite location would be a village in the south of France).
You can re-invent your life - or undertake a career change after 50.
Even if you're close to retirement, or already retired, it's not to late to use your career knowledge to become a consultant, to become a small business entrepreneur, or do something else that gives you the stimulation to jump out of bed each morning.
The reality is that unless we do something stimulating, we will be terribly bored for those 20-25 years of retirement. And as social security was never designed for a population that is living far longer than ever before, it is simple too expensive for the government to maintain. So we have to distance ourselves from any thought that "big brother" will continue to provide for us.
So let's focus on practical retirement planning, retirement lifestyle, extra income, profitable hobbies for Mr & Mrs Average.
My initial solution to practical retirement planning (I was in my 50s) was to acquire some investment property, and soon I started a property investment portfolio with a few negatively-geared investments.
Property is an excellent asset for your retirement, because the rents you receive continue to rise. So you have a defence against inflation.
Negatively geared investments work best when values are rising, but in times when capital appreciation is slow, the trick is to focus on “buy-to-rent” properties. But more of that later.
Along the way, as a property investment consultant (initially within a group and then in my own practice) I would invariably meet people who - for whatever reason - were unable to commence a portfolio. So I would say to them “as we’re all going to need additional income streams later on, let’s take whatever hobby you have, and convert it into a profitable hobby".
With the advice that I was giving about their home based businesses, I evolved into a (pro bono) small business consultant. And because I like helping people grow their own small businesses, this grew into an income stream for me, and I found it to be a very lucrative profitable hobby.
Now this - to me - was a solid contribution to the whole concept of practical retirement planning.
There are many other ways to make extra money for your retirement, and I can tell you some that stand out. Part-time jobs are an obvious option (provided you can find an employer who likes your skill set) as would be a genuine internet business that you can work from home.
Of course, if you are yet to retire, and are thinking of early retirement (whatever that is these days) you’ll find solid advice here. And of course my views on practical retirement planning include positive advice if you are thinking of a career change as you move into retirement.
However my principal focus here is to help you explore opportunities for an above average retirement income, so that you'll have options for 20-25 years of comfortable retirement.
My thoughts about practical retirement planning cover a variety of topics within the overall theme of Your Health, Your Finances, Family & Friends and Your Zest for Living.
Feel free to consider my thoughts in more detail. I have opinions how to build a genuine online business (such as this one - using Site Build It!), profitable hobbies, employment, investing for retirement, a career change, how to invest the cash from your 401k, my top ten travel destinations, stimulating retirement communities, etc etc.
And of course we welcome your comments in our forums.
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