Here's what I got when I Google'd the words Define Retirement, 1. The action or fact of leaving one's job and ceasing to work., 2. The period of one's life after leaving one's job and ceasing to work., The word Retirement is synonymous with Seclusion, Withdrawal, Retreat., Does this sound like a good idea?, Not to me.
Well, I guess it depends on the generation you ask., If you're on the cusp of retirement or in retirement, here is what I am seeing:, Lot's of volunteerism., For the most part, it is a pretty active lifestyle., A lot of attention is directed at Cash Flow Management because you realize that what you've got, is what you've got., If you over spend, or you experience a market set back, you don't have time on your side to recover so you are extra cautious., Is this group doing anything to supplement their income - not really. They just seem to adjust their lifestyle to fit their cash flow., Now, people who are below age 60 right now have a bit of a different perspective., They are in their peak earning years and they know it., They are aggressive in paying down debt and saving for retirement., Their level of want's are minimal., They are more focused on ensuring they have enough in their retirement plan to sustain a certain lifestyle., They don't have high aspirations to generate income during their retirement but are motivated to accumulate enough during these final critical accumulation years so that their lifestyle remains the same., And, for those 40 and below, there is a bit of a different spin on retirement., It doesn't seem like this group really wants to retire in the typical sense., This group is less concerned about finding that job that will provide them with that great retirement pension - often times it is this group who is not being offered a very robust pension plan - DC as opposed to DB., This group has a lot of hobbies outside of work - but often times work is one of their hobbies., They don't really hate their job and are more than happy to jump around from job to job to find that work happiness., There are a lot of consulting opportunities for this group and they have embraced technology to find these opportunities., Elance.com, ODesk.com, It does appear that this group is aware of the need for prudent financial planning and for the most part is participating in wealth accumulation plans.
It is less of a "Finally I can stop work" goal and more of a "This is the date I want to be able to stop work if I choose to - my financial freedom date".
When you look at retirement more as a financial freedom date as opposed to a stop work date, it changes your perspective.
Now be it because of the current economic environment or something else, people are being forced to consider other ideas about retirement., The one that is gaining traction is the Financial Freedom Date in place of the Retirement Date.
Having a financial freedom date is more of a desire until you determine what you need to be able to accomplish the goal., So, where do you start., 1. Develop a baseline comprehensive financial plan today to provide you with some clarity on what you are on track for., You will need to answer these questions:, 1. What is my attainable income based on a financial freedom date of X., 2. What is my attainable retirement age based on my current financial strategy., 3. What is my required rate of return for my investments to allow me to attain my financial freedom date., 4. Am I saving enough, too much or too little to accomplish my financial freedom goal., Answering these four questions will provide you with the knowledge you need to be able to make better decisions., Knowledge eliminates fear (False Evidence Appearing Real) so become much more knowledgeable about your situation now., 2. Now that you know more about what you are on track for, are you good with what you now know? If not, have a "what if" discussion with a CFP to get clear on what is required of you to get on track to accomplish what you would like., Here are a few things to remember when having this discussion:, Make sure the planning software that is being used to model your plan is Cash Flow Based and not Goals Based. If you don't know what this means, your planner should., This has a lot to do with the quality of the calculations that are being done for you., In the quick tip section of The Key To Retirement episode 14, I explain how to quickly determine if your planner is using the right software - you can check that out there., If you plan on working on a hobby for profit during retirement - ensure you incorporate this into your planning model., 3. Begin to get interested in what I am seeing as the next wave to help you with your retirement lifestyle., Passive Income
Passive Income, Well, what is this? I know you've heard the term before so how is this the next wave?, As defined by a Google Web Search: Passive income is an income received on a regular basis, with little effort required to maintain it.., Rental Income, Investment Income, Interest Income, Dividend Income, Capital Gains Income, Passive Business Income, Income generated from a hobby (technically it's not Passive Income but if you love doing it, how bad can it be to get paid to do something you love???), If you have a hobby or something that you are really good at, consider seeking out short term contracts from the following websites:, Elance.com, ODesk.com, There are others..., Internet Business, This truly is the next wave of passive income., Barriers to entry are extremely low., Technology is extremely easy to understand., Passion for a topic is what will drive this revenue stream., Affiliate income, Online product income, Expand on internet business ideas..., If you are a retiree and are not afraid of computers, you can document your journey in finding out everything there is to know about this topic., Other people in that generation would be quite interested to know how to do it so if you did it and documented your experience's, this would garner a lot of followers who would also be interested in doing what you are doing., You can show them and get paid to link them to the products you are using to make things work for you - Affiliate links., This may not make you rich but could provide you with a few thousand extra dollars each month - for doing what you love., Find your passion, the things that you do when you have time to yourself, and create a community around your experiences., Use a Blog format
If this is you, or even if this isn't, then take advantage of this free resource..., Go to The Key To Retirement Episode 4 (The Retirement Trick). Listen to the entire episode and download the free worksheet., Complete the worksheet and take a mini-retirement vacation to get you focused on what is really important to you.
Financial Planning is the key, it always has been and always will be., Commit to getting your plan today.
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