I am not ready for Christmas, so why am I thinking and writing about retirement? Our parents are both retired, and it came fast. I remember when my parents were my age. Even though it’s Christmastime, I’ve been thinking about retirement.
Over the years, I’ve tried every retirement calculator tool available. I’ve estimated my family’s expenses. We have met with financial planners. I have concluded that there are a lot of unknown factors about retirement and have accepted this.
When is retirement?
According to the Social Security website, currently full retirement age is 67, which is close to the age of our parents. I’m fascinated with young retirees I’ve heard about. Retirement doesn’t have to mean “age 67.” I understand it to mean the time when we are not actively earning money and living off passive or saved income. This could be any age.
What kinds of income will you have?
My husband plans to work as long as he physically can. He loves to work so he will probably work during retirement, but it will be a different kind of work. He worked construction for his first job, which was very physical. His current production job requires physical labor, but not at much as construction required. I assume that he will do less physical labor but still work as much as he does now.
During retirement, some passive income will come from investments that you made earlier. So, we need to decide what type of investments we will make.
What kinds of expenses will you have? The best way I know to estimate retirement expenses and income is to look at those who are retired. My parents and inlaws have these expenses:
- Medical expenses
I realized that our parent's expenses are pretty similar to ours but the amounts are different. These amounts can range from a little to a lot, which is why it’s important to think about your personal plans.
This Wasatch Peaks Retirement Calculator was a great tool to use after I figured out what I think our expenses will be. The calculator said our investments need to be $300,000 to $400,000. This number depends on interest rates. Also, I didn’t calculate in social security benefits. So, it might not be an accurate number, but that is ok. Just figuring an estimate helps our family prioritize saving now. We are relatively young and there are a lot of urgent expenses we have in raising our family like clothes, braces, and Christmas to name a few. Retirement savings can easily be put on the back burner, which I have done plenty of times. Knowing this number helps me prioritize saving now in order to build to the necessary nest egg we need for the time when we don’t actively work and earn money.
A financial planner once told me that planning for retirement at my age will open up options. I want you to have a lot of options in retirement. Please join me in spending a few minutes planning for retirement.