This planning for retirement magazine responds to increasing life expectancy and the growing realization that, if you reach age 65, then your probability of reaching age 90 is a mind-blowing 53% for women and 41% for men.
This guide to Practical Retirement Planning is for anyone who has had a comfortable lifestyle (either as an employee or self-employed) and who now wants to research the four pillars of a successful retirement and having regard to the need for extra income - via profitable hobbies.
In passing, let me say that no one is really sure anymore what “retirement” actually is, but let’s say for now that it’s those 25+ years after age 65.
Planning for retirement often starts with a blank page, as in “where do I start?”. Well this magazine is here to help you explore your options with a few initial thoughts - such as the novel concept of saving money for retirement.
And then there is commentary: Baby Boomers Retirement News.
Perhaps the best retirement advice today is to (1) unlearn our expectations, and then (2) relearn about the future. Given that we are experiencing massive social and technological change, we must accept that the concept of retirement itself is undergoing massive change.
It's not just the upheavals in metropolitan taxi systems or drones doing work that helicopters did previously, change is all around us. And many retirees today expect to be able to make substantial contributions for the next 10-15 years. So let's keep an open mind.
So let's start with a retirement planning checklist and then develop a prudential retirement plan.
You'll need something like a spreadsheet as you progress with your plans - my suggestion is to use a ring bound school exercise book that you can buy at your local supermarket.
The four pillars to consider when planning for retirement - these are the chapter headings for your workbook - are your health, your finances, family & friends and your zest for living, and it’s best - when planning - to assume that you will live to age 90. This is true if you're thinking about retiree employment now, or whether it will be when you're 70.
For many of us the 1950s idea of an idle retirement - fishing and golfing - has now been replaced by the desire to do what we truly want to do, whatever and wherever that is.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 still 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 retirement plan.
Of course, if you if happen to have the resources, you may be interested in discussions about early retirement planning.
Let’s firstly focus on your health, because while medical science has enabled us to live much longer than previous generations, it hasn’t solved the issues surrounding our gradual physical deterioration. Of course, we should have tried a weight loss program years ago, but it's still not too late to start losing weight - just jot it down on your planning for retirement checklist.
Drugs can control our blood pressure, there are procedures to remove cancers and we can now readily have access to replacement hips and knees. However still our bodies gently age, and if you want to keep abreast of emerging trends in the field of better health and ageing, I would suggest that you read, regularly, The Atlantic Magazine.
The implications for this on our planning is that we need to make allowances for long stays in hospital and for recuperation, and for costly alterations to our homes. And later on, to have access to a nursing home of choice.
And make sure that if you move to another location later in life, make sure that you have close proximity to a major hospital.
Of course, if you do plan to retire abroad, France provides full medical and hospital cover for all residents. France has other attractions of course for retirees - low cost of living, it's not too far (the grandchildren can visit often) and the culture there will add zest to your living.
When we start realising that retirement is fast approaching, we frequently gasp "retirement financial planning" in one gulp and immediately phone for an appointment with a financial planner.
Those financial planning retirement planners do have detractors (including me) however it is fair to say that that industry has generated some quality academic studies, and there is general consensus that if you intend to stay in your family home, and you have eliminated the mortgage, then a nest egg of $800,000 should be enough for 20 years.
This $800,000 should be a minimum savings objective for your planning for retirement worksheet.
This conclusion is based on an investment return of 6% pa ($48,000 in the first year) coupled with a 4% draw-down of capital ($32,000 each year). After some taxes, your income should be around $65,000 pa. initially.
The problem is that most of us still have a mortgage, and secondly that this income is not protected against inflation. Remember the Rule of 72? In this instance, assuming inflation is 4% pa, then the purchasing power of you income will halve in 18 years. Now that’s a serious issue.
One possible solution is to take your money out of the stock market and put it into real estate. At least then your income is protected against inflation, as rents do continue to rise over time. This is one method to be in control when you are investing after retirement.
Then you can consider how to invest money and - as a separate exercise - where to invest that money.
At the level of on-going household expenditures, there are excellent discounts available for auto and household insurance from citizens' groups such as the American Seniors Association or the American Association of Retired Persons (aarp).
However, you can forget about getting a part-time job in your retirement - the reality is that there are very, very few available, and you will be disappointed even if you return to your previous career looking for some form of paid employment
Probably the best solution - if you are in late career or already retired - when formally planning for retirement is to establish a home based business. You will find some possibilities in the Home Business Magazine however possibly the best tool to create an on-line business is Sitesell.
One of the decisions you'll need to make when planning for retirement (I'm assuming that you'll always want to be close to family and grandchildren) is whether to retire in the US or overseas . Even with Skype it’s still much more fun to actually do things together.
Friends are a bit different, as friendships are based on common interests. The various friends that we had at college now live far away, and are often in a different profession. Unless we continue with a shared passion – for example camping holidays – we gradually see less of them.
But fortunately our human psyche allows us to substitute old friends with new friends, so this topic is not particularly important when planning for retirement.
However if you want the grandchildren to visit, you'll need to think carefully about the the best places to retire. And of course, all of this is covered in the series Retirement Plans for Dummies.
Here is the short version of the best place to retire:
If you plan to retire where the weather is warm, go there. However select a location close to a major regional airport so that family and friends can visit you easily.
And if you want the grandchildren to visit, retire close to a major tourist destination - such as the Grand Canyon or a theme park.
Of course if you want the sun, and visitors, and ensuring that you'll be able to maintain your zest for living, then a village in the south of France will tick all the boxes. But more importantly, health and hospitals are totally free for all residents in France.
When I was quite young, my mother had an uncle with a dairy farm. He was probably in his 70s, and I remember asking him why he hadn’t retired. “Son,” he said “if I ever stop working, that will be the end of me.” And sure enough, some years later he sold the farm and retired, and he was dead within six months.
So to ensure a long and healthy life – both mentally and physically – the evidence is in. You need something to encourage you to get out of bed each morning. Mine is this internet business - here is a review of the Sitesell methodology and system that I use.
When you sketch our your options when planning for retirement, if you can combine a zest for living with an income stream – such as a profitable hobby – you will be well on your way to being able to enjoy the last third of your life.
Many of us want to take a total new approach to our retirement direction particularly if we aren't totally comfortable with our current advisers. After all, it's our retirement, not theirs!
And of course, if you want to discuss issues with us in more detail and personally, feel free to contact us via our professional consultancy practice.
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