I am sure some, if not most of you have been through some retirement planning discussions with your financial planners and i am guessing the process went as follows:
FP: At what age would you like to retire?
You: XX age
FP: How much do you think you need per month to live the desired lifestyle you need?
*Both of you start to pen a list of what you need and want to have*
FP: $3000 is required per month x 12 x (life expectancy) – XX desired retirement age = some gigantic number.
FP: This is the amount you need to invest in such YY plan in order to achieve your retirement goal.
So you left the session bewildered, beginning to distrust your FP while your FP tries to convince you to sign up the plan. Sounds familiar?
Here is what it should be. Retirement is not actually about when you want to retire or what the government’s statutory retirement age is. It is about when you can afford to retire. Therefore, retirement planning is best done backwards and not forward. One can also explore a variety of tools(both public and private) in combination to plan for different stages for retirement.
My recommended retirement planning stages as follows:
- 65 to death(some of you might be able to guess what is the tool)
- 62 to 70(I will explain why in a separate post)
So its about planning for your later stages in life first and slowly moving it to your earlier stages. Different people will be able to retire at different age because of different financial capabilities and life choices. Two equal individuals dealt with the same life cards will retire differently simply because of the financial tools they use to plan for retirement.
I will start posting something new whenever i find time or earlier if i hit follower milestones like 100, 200, 500. To help yourself, help your friends, get them to follow my page.