Much of what is written about retirement planning concerns rates of return, inflation, savings standards, tax breaks, budgeting, asset allocation, and other relatively dry and somewhat stressful topics. However, most people worry about their finances and retirement plans because they have dreams for the future.
It’s important to remember that your financial strategy is just a means to an end – the life you want. And by keeping your plans focused on those dreams, you can produce better results.
Here are 11 guidelines for using your dreams to create a financial plan for the life you want.
1. Focus on your dreams, not your savings balance
When planning for retirement, it is more meaningful and effective to base your plan on what you want to do and experience in the future, rather than based on your arbitrary savings balance.
In fact, don’t start with something you think you can save money on. First, think about your dreams for the future. Those dreams may inspire you to do something different now.
2. Create a future budget for the life you want
You’ve probably read this book before, but knowing how much you need to spend (and how much you want to spend) is the most important aspect of retirement planning.
Your future expenses will determine how much you need to earn and save for retirement. The more detail you have, the better the results. Unfortunately, this message has not reached everyone. (According to a report from Merrill Edge, many Americans have no idea how much they should save.)
Creating a budget for the life you want doesn’t have to be difficult. Have you tried NewRetirement Planner’s NewRetirement Budgeter? Planner Plus Budgeter has 13 categories and 70 subcategories to help you envision your future.
- Setting spending levels for both “must spend” (required) and “want to spend” (optional) can help you plan your income and investments.
- Adjust your spending over time to match the different dreams you have at different times in your life.
- Additionally, there are features to improve the tax treatment of expenses.
3. Celebrate milestones, not birthdays.
Is your birthday a memory you want to make? Do you want your retirement focus to be your age?
Eric, reader NewRetirement Facebook Grouphe writes:I’m starting to feel the need to set goals to celebrate milestones other than age.“
For example, do you want to remember 2021 as the year you turned 66, or do you want to remember 2021 as the year you and your family attempted a Guinness World Record?
4. Think about your purpose when planning your dreams.
This research shows that giving your life purpose and meaning is better for your mental and physical well-being than pursuing happiness.
When dreaming about your future and setting goals, think about how your purpose fits into your pursuits. Here are some resources for inspiration.
5. Be flexible about how you define your dreams.
Sure, many people dream of spending luxurious days on the beaches of the South Pacific, but it’s not affordable for everyone.
In fact, many of us still have to work into our 60s and 70s. In some cases, you may want to apply your dreams to that reality. There are many satisfactions you can get from working. Work often brings meaning, purpose, and structure to your life. And, as explained above, they are very good dreams.
6. Dreams don’t have to cost a lot of money.
Jeff says: “There’s nothing wrong with budgeting for a trip, but my dreams are much smaller. This morning around 4 a.m., I was lying in bed listening to the rain. Or read a good book. Or spend time with your wife. You don’t have to go to work.”
He continued, “Although there is no line item in my budget that allows me to live at a stress-free, slower pace, I am living the dream.”
7. Be careful of disordered lifestyle habits
Lifestyle abnormalities occur as incomes increase and once luxuries become necessities. You get used to spending more money.
Karen warns: [how much you need for retirement] It continues to rise. ”
To avoid derailing your lifestyle, it’s important to evaluate what makes you happy. Get what’s essential to your life. Understand what “enough” means. “Enough is enough” is my dream.
8. Understand that many people save too much
Oversaving is more common than you think. It’s not as common as not having enough savings, but it does happen.
Oversaving often stems from a desire to be prepared for all possible future scenarios and a fear of running out of money. It can also be a deeply ingrained habit. It can be difficult to transition from a lifelong habit of saving to spending for yourself and your dreams.
Learn more about why people save too much and evaluate advice from others who save too much.
9. Put your spending into perspective
Many of the wealthiest among us are seriously worried about spending, especially on things that don’t seem necessary, such as “dreams.”
Some recommend putting your spending into perspective.
“I’m always amazed at how we reflexively resist spending an amount that corresponds to about an hour’s change in the value of our portfolio,” says Keith.
And Ray added: I bought a car during the chaos surrounding the pandemic. As I was negotiating the $400 difference, I realized that the daily fluctuations in my net worth were worth three other cars. That made me laugh. ”
10. Know your savings balance so you can live with peace of mind
One of the most frequently cited retirement goals is to have enough money to feel peace of mind and live carefree.
David writes about the ultimate formula for knowing how much money you need in retirement. He advises: “Last month, I told my brother-in-law, who is five years away from retirement, that the key to happiness in retirement is being able to just sit back and enjoy life without worrying about money or spending. , sitting on the deck and just enjoying life and family gatherings, going on a trip and enjoying the experience without worrying about money.”
Feeling at ease means having a comprehensive financial plan that:
- We support a wide range of your future possibilities
- make your dreams come true
NewRetirement Planner is the best online tool to create and maintain this plan.
11. Plan for the future, but live in the present.
It is important to make a plan towards your dreams. You can’t achieve your goals without a plan.
However, you also need to find happiness in the present. Check out his eight tips for thriving where you are, no matter where you are in life, and especially if you’re in that awkward in-between stage.
