Are you planning to spend your retirement living a life of leisure, or will you use your spare time and financial independence to help raise your grandchildren or volunteer in your local community?
The things you choose to do after you stop working play a big part in your retirement age and the amount of capital you’ll need – let’s explore your vision for retirement and find out how it will impact your financial planning.
What are you going to do all day when you retire?
There’s no doubt that hard work, smart budgeting and wise investing should be the main priorities of anyone who plans to retire comfortably, but there are two important questions that every working person should ask:
- At what age do I want to retire?
- How much money do I need in the bank by then?
The way you plan to spend your retirement will determine the answer to these two questions. To understand why, let’s take a look at a few retirement scenarios and the different financial requirements they might place on you.
A life of leisure
After working hard for decades, don’t you think that retirement is the time to enjoy your time and leisure? If you’re nodding and smiling right now, you probably fit the category of ‘retiree who plans to enjoy themselves to the full’.
You might want to cruise around the world, play golf every day, or dine at the finest restaurants in your city (or in any other city for that matter!). Maybe you’d like to travel the world and see people and places you’ve only seen on TV or read about in books. If this is your idea of the perfect requirement, you should bear the following in mind:
- You’ll need to retire while you’re still in good health – probably at 65 or younger.
- You’ll need a sizeable retirement portfolio with a generous stream of income
- Your beneficiaries probably won’t be able to rely on any inheritance for many years to come.
If you’re planning to retire overseas, and especially if you have children and grandchildren living abroad, you’ll need to plan your retirement carefully. You should choose your country of residence carefully, find out what the legal and financial requirements are for retired migrants, and ensure that you have medical insurance and a high income from your retirement portfolio.
Giving back and self-improvement
These days, many retired people enjoy giving back to their local communities through volunteering, while others cherish the time they are able to spend with friends and family. Some retired people go back to university to study a subject or degree they were always interested in but didn’t have the time to pursue during their working lives.
- This retirement scenario is more affordable than the first two we covered, but monthly expenses and the cost of healthcare still have to be covered.
- As with the first scenario, you’ll need to be in good health and young enough to enjoy volunteer activities and further studies.
Starting a business or consulting
If you’d like to retire and become an entrepreneur or self-employed professional, you’ll be entering the market with decades of experience and a strong network of contacts. However, the risks involved in business mean that your company’s start-up capital needs to be totally separate from your retirement portfolio – if things don’t work out, you should still be able to retire comfortably.
You may want to consider this option if you’re taking early retirement – starting a business is hard work, and you’ll need to be in good shape.
If you’d like some expert assistance in planning your retirement, read about our Financial Services today. Our team is ready to guide you through the process.