{"id":2499,"date":"2018-04-02T17:33:06","date_gmt":"2018-04-02T21:33:06","guid":{"rendered":"https:\/\/kneedeepinit.com\/?p=2499"},"modified":"2019-09-01T09:36:59","modified_gmt":"2019-09-01T13:36:59","slug":"how-much-is-enough-a-foundation-for-retirement-planning","status":"publish","type":"post","link":"https:\/\/kneedeepinit.com\/how-much-is-enough-a-foundation-for-retirement-planning\/","title":{"rendered":"How Much is Enough? – A Foundation for Retirement Planning"},"content":{"rendered":"\n
NOTE: We know people like to hear about beaches and travel and dogs etc. but we have to pay for all that somehow. This is a series of posts on the financial side of retirement. Like many bloggers and most people, I’m not going to share our actual numbers because it’s pretty personal, and it may not be safe in the modern world. But I will give you what I think are important foundational points. I also want to say I’m not your financial advisor! I’m our financial advisor, and I’m only that until I tire of it and hire a professional. So if you’re taking financial advice from me, <\/b>well I really urge you to hire a professional!<\/p>\n\t
In order to retire “early”, or “on time”, or even “at all”, the question is always the same: “how much is enough”? And the answer is always the same: “it depends”. It really is almost as varied as our fingerprints, because everyone’s situation is just so different. Dreams, income sources, attitudes on spending, asset allocation, health\/longevity, family situations, they’re all different. Can we really know the answer? I’d say to a firm number, it isn’t answerable, but since this is a retirement adventure blog I will try to fill in some gaps, and lay out a bit of a foundation.<\/p>\n\t\t\t\t\n\t\t\t\t\t\tIs this enough?\n\t
Before we dig too deeply though, I don’t plan to discuss retiring later, in your 70s for example, because I don’t have any experience with it and haven’t done any research in this area. I’m focusing on people who either want to retire \u201con time\u201d, I use that very roughly to mean \u201csometime in their 60s\u201d, or early, in their 50s or younger. These are people who want to live their lives \u201con purpose\u201d, who want to drive the boat, not just be a passenger. But in order to get there on time or early, you really need a plan. And to make a good plan, there are some important preliminary steps, some foundational pillars that are in my opinion, required for success.<\/p>\n
Because retirement, especially early retirement, is such an emotional journey, I think you really need to start with the feeling that you really know yourself and your spouse. You definitely need to educate yourself, that’s another foundational pillar. And you will also need to embrace some modern realities (pensions are rare, social security gets riskier every year, the world is a chaotic place). These are foundational pieces of the mental and emotional parts, and they lead into the actual planning process.<\/p>\n
I will also say that this series isn’t a nuts and bolts spreadsheet and statistics class. I’m going to be discussing the strategies we used, and only briefly touching on the tactical parts of using this tool or that method. I may get into those later as it makes sense and if there is interest.<\/p>\n
Know Yourself<\/p>\n
Knowing yourself is an important part of planning anything. If you want to get somewhere, and this whole thing is a journey, you need to know where you are starting from, mentally and emotionally. Note I haven’t yet mentioned where you are financially – that will come later. So, do you enjoy pinching pennies, or are you \u201cspendy\u201d? Do you like to travel, or are you happy in a comfortable chair reading a great book? Do you want to ride a Harley, or is a Schwinn more your speed? Are you happy with a simple lifestyle, or do you really want all the modern conveniences? Do you have family and friends that you want to visit often or are you OK with once or twice a year? How is your health and your family health history, i.e. do you expect to live to a ripe old age or are your years likely to be fewer? Ask these questions (and many others) of yourself and<\/strong><\/em> your spouse\/partner. The answers will guide most of your decisions later.<\/p>\n Beyond these more general questions, you and your partner really ought to talk about where you would like to live in retirement. It’s a pretty basic question, but also pretty important don’t you think? So talk about it! Many people are very happy where they are and will be even happier simply not working while living in the same town, same house. Some want to live closer to their grandchildren. Others want to travel the world, move to another climate (north to south, south to north), or even to another country and culture.<\/p>\n In our first year of retirement (the anniversary is coming up soon) we’ve done a bit of each of these last three things and are really enjoying the journey. I will say this though: we don’t really like to travel, but we like being in new places. The travel part is mostly drudgery for me, especially air travel, and even more so international air travel, and kick it up another notch when you’re hauling everything you own plus two dogs. So our ideal is to go somewhere new and stay there for months or preferably years. We want to settle in and become part of the community, not just a pair of vagabonds passing through on a boat or a plane. It makes us happier not just meeting new people, but really getting to know them on a deeper level.<\/p>\n BTW, please don’t assume your spouse is just like you \u2013 talk about these things, talk about them a lot<\/a>! Even if you have different ideas of a perfect retirement, I bet you can come to a middle ground where you are both very happy. But to do that you need to talk about it – this is foundational, in your relationship and in your retirement. Once you have this foundation, retirement planning has a real purpose, much greater than just \u201cnot going to work\u201d.<\/p>\n Educate Yourself<\/p>\n If you are a couple, both of you don’t need to become financial planners in order to retire. But in my opinion at least one of you should do some homework. As I started to get into the early stages of planning, I was talking with everybody I knew that was \u201cof a certain age\u201d. We may not all be in the same boat but we’re all in boats, and we all care about the waves and the tides!<\/p>\n One good friend (thanks Dave Staud!) pointed me to a book called \u201cUnveiling the Retirement Myth<\/a>\u201d, by Jim Otar. He’s a financial advisor in Canada, but originally from Turkey I believe. He started his education and career as an engineer, and his writing style and approach to problem solving really fit well with my technical brain. Now I will say the book is 525 pages, so you have to be really motivated to want to dig into something like that! I was pretty proud of myself when I actually finished it. He also sells an Excel based retirement planning program called the Otar Retirement Calculator, which I use religiously. It’s not without some issues, but I like it a lot.<\/p>\n There are also great online resources \u2013 Motley Fool has a retirement focused page<\/a> and Bogleheads does as well<\/a>, both very good. They are two very popular sites for good reason, and they each have excellent ebooks associated with them as well. But when you dig into them, you’ll find a lot to read, and of course the Internet is a rabbit hole that Alice in Wonderland had nightmares about. It can be a little overwhelming, especially when you’re just getting started thinking about retirement planning.<\/p>\n