January 11, 2016 — It can be daunting to think about planning for retirement. There is so much to consider, where do you even start? But what if all you had to think about was boiled down to a 3 x 5 index card? That is what we have done in the part 1 of this article. In part 2 we are going to show how you how to write your retirement action plan on an index card, complete with a sample.
Our hope is that once you have seen retirement planning simplified to the bare essence, you will give planning a chance. So here goes!
Part 1: Retirement Planning in a Nutshell
1. Start early. As one example, you can’t make up for lost savings if you start too late.
2. Fit your expectations to your reality. Prepare a budget with expenses and revenues so you know where you stand.
3. Follow your dream. You can have almost any lifestyle in retirement — if you plan for it.
4. Check out a lot of places to retire. Start visiting places while you are still working. At least one will fit your dream.
5. Know what you are going to do all day. Don’t make the mistake of retiring without a direction.
Our index card advice is about 100 words. To flesh out these ideas we have provided a little more amplification below. You and other retirement experts might have other key points to consider; these ideas are just a starting place. If you have a significant other, talk about these issues regularly to see how close, or how far apart, you are to each others’ position. Then discuss how you can find a way for both of you to find retirement happiness.
A little more about these planning points.
Starting early. This means planning ahead for every aspect of retirement, from financial to what you will do every day. There are so many choices and so many lifestyles to consider. Where you will live, and in what type of community? Planning for how you will stay busy and productive after you lose the structure of your working world is worth planning for too.
Fitting expectations with reality. Review your checkbook and credit card bills to understand your current spending (your credit card statement might even list expenses by category). Then estimate your retirement income by reviewing your pension, 401k, Social Security, etc. Here is a link to the SS Administration’s Benefits Estimator to find out what you might expect from Social Security.
If money is going to be tight, cutting expenses earlier rather than later is key. Downsizing to a an easier to maintain and heat/cool home almost always makes sense. You’ll pay less taxes too. To supplement your income, turn a hobby into a business. Or consider what kinds of part time jobs you might find interesting. If you know where you stand before you retire, you have a chance to make adjustments in time.
Follow your dream. Retirement is a do-over on life. Seize the opportunity to follow your dreams, rather than being bogged down by inertia. Spend some time thinking about your ideal lifestyle, and how you can make that happen.
Check out places to retire. In your 50s or even earlier, think about what it would be like to retire in the places you visit for work, vacation, or other travel. While you are there, do a little exploring with your retirement mindset on. Visit friends who have retired and see what their lives are like. Rent a place and talk with real estate people and others in the community.
What you will do all day. Don’t be one of the people who retire one day with absolutely no idea what they will do the next. Start a hobby now or think about a part-time job – paid or volunteer. Dream about what you like to do.
Create your own index card retirement plan
Our suggestion is that you consider each of the 5 points above to develop your own 3 x 5 index card retirement plan. To help you even more, we have developed a prototype plan you can use as is or customize.
A Prototype Retirement Plan
We have written this plan as a series of goals with action points to be completed along with dates. If you create a 3 x 5 card like this and work on it, before the ball falls in Times Square again you could have a real retirement plan in place. Feel free to customize the plan so it reflects your retirement dreams and hopes!
My Retirement Plan
Goal – Develop draft plan and discuss with spouse by Dec. 1, 2016
2. Expectations vs. Reality.
Goal: Review expenses and expected retirement income by Jul.1, 2016
3. Discovering your dream lifestyle.
Goal: 5 key things I want to do in retirement by Oct. 1, 2016
4. Where to live.
Goal: List 5 places I think might be good for retirement. Visit one by Dec 31, 2016.
5. What I will do.
Goal: List your hobbies and interests by May. 1, 2016
Keep a file card retirement plan in a visible place. You might also have a card with each aspect of your retirement plan – for example one on financial, another on location, another on what will keep you busy. These will help keep you thinking about it the key issues, and perhaps spur you to make revisions as your experience grows and changes.
Comments? Have you written out you retirement plan – on an index card or whatever? If not, what is holding you back? What do you think is the most important aspect in retirement planning? How would you change this prototype plan? Please share your thoughts in the Comments section below.
For further reading:
Ron Lieber of the New York Times wrote a recent article, “A 4 x 6 Financial Blueprint“, on index card advice. He asked various financial experts to boil down their financial advice to what can be written on an index card. It makes for interesting reading, even if it obviously more about financial stuff than strictly on retirement.
What Is in Your Retirement Plan
12 Lies We Tell Ourselves About Retirement
This Is Rocket Science: How a Space Engineer Found His Perfect Place to Retire