A sound investing strategy is what gives you the means to turn your retirement dreams into reality. In my book 18 Common Sense Rules for Enjoying a Successful Retirement, I share my roadmap for folks being able to experience “proven, time-tested investment solutions” for their lives.
(This is the sixth article in the “7 Steps to Financial Security” series.)
What do you want to do in the second half of your life?
– Give back to the next generation some of what you have received?
– Help your kids as they negotiate adulthood themselves?
– Cheer on your grandkids as they attempt new things?
– Support your favorite charities as you give back to society?
– Experience some new adventures?
– Pass on what you have learned about investing?
The “Go-Go” Years
People over the course of their retirement seem to move through three phases – kind of like teenagers. First, there are the “go-go” years of their sixties and sometimes well into their seventies. In this period, travel and hobbies are really important. They spend money on motor homes, cruises, and home remodeling. They want to see their grandchildren as much as possible, so they attend a lot of ball games, plays, and other school events. It is a very social and active time of life.
The “Slow-Go” Years
Next, they transition into the “slow-go” retirement years. Life is still very enjoyable, but their desire to travel diminishes. Their minds are still active and sharp, but they just don’t get around like they used to. They spend less money on big-ticket items. They are more content with life’s simpler pleasures. They play bridge, read the books they’ve put off for years, go out to dinner with friends, and have their grandchildren visit them on the weekends.
The “No-Go” Years
Finally, they move into the “no-go” years. Their minds and bodies may be slowing down, so they need a little help. Perhaps they move into a retirement community or perhaps move in with their children. A lot of their friends are passing away, so they really begin to come to terms with their own mortality. They enjoy company, but find themselves spending a good deal of time in quiet reflection. Sometimes they may feel lonely, but most often they are simply happy for every day of life they have.
Life is a natural progression. With wise planning and with a focus on meaningful relationships, your faith, and the blessing of good health, it can be a beautiful journey.
Charles Schwab, in his book You’re Fifty – Now What?, recommends for people to make investing for retirement an automatic habit by:
– Using electronic funds transfer from your checking account or paycheck to your brokerage account
– Using dollar cost averaging, which is a systematic method of investing in which you invest a fixed amount of money at regular intervals
– Reassessing your plans every couple of years so that your plan reflects any major changes in your personal circumstances, as well as in the economy.
In the same book, Charles Schwab states that you will need 80 percent of your gross annual income per year in your second half of life to enjoy your current lifestyle. He brings a reality-based approach to retirement planning: don’t expect to ever see an “average” year, and don’t expect retirement to be a long string of “average” years.
Wise planning focuses on building a diversified portfolio for your financial safety net. Diversification means that you will have your money in a variety of investments – stocks, bonds, and mutual funds – rather than being concentrated in just one area.
The key to enjoying each phase of retirement as much as you can is to be sure you don’t run out of money before you run out of life. It’s a crime to save a large nest egg out of fear and not enjoy your go-go years. Why would you want to sacrifice so drastically just to have a bunch of money in the bank and never actually enjoy it?
Hence, you need to have a solid financial plan that includes the right combination of investments and insurances. You will know it’s the right combination when you are living within your means and you’re not constantly second-guessing yourself.
Life is too short not to enjoy it every day. Retirement is too long not to plan well for many years of success.