Most people have a hard time staying organized. I know this as I have coached thousands of people using the Money Mastery online training program. As I have reviewed their Spending Plan I have urged them to create (or a budget as some call it, but it really isn’t), I see a lot of disorganization in those plans. I work with them to revise the plan and make it easily trackable. When we move on to discuss their debt plan, I see even more chaos, which I have to help them put right so they can get out of all debt in just a few years as I promise they will if they will follow the plan. Lastly, when I review their retirement and investment portfolio it isn’t pretty. Picture an old abandoned garage with shelves full of stuff that’s not being used much, like tools, battery chargers, spare tires, quarts of oil, a wood splitter, an old bicycle, etc. The way most people’s retirement plan looks is based on them setting something up years earlier and then rarely if ever reviewing it to be sure it is still relevant and helpful.
How can a person be successful planning for retirement when they are basing it on outdated goals, investment accounts about which they know nothing, insurance products that they no longer need, and so forth? I say, get organized with your spending first, then your debts and finally make some sense out of your retirement portfolio. This effort is so important.
Here’s how to get started…
First, ask yourself this most important of all retirement questions: “What does ‘retirement’ mean to me?” Does it mean that you will quit working? For some people, it does. Some people don’t want to quit work, ever, and will hope to continue on until they are too sick to do it anymore. Does “retirement” mean that you will quit work but continue providing service and philanthropic ventures? Does “retirement” mean travel for you? In order to be organized for retirement, you must know what your goals are going to be and the things you want to do when you retire.
Second, forecast some future dates at which you think you might want to retire — perhaps a year from now, five years, or 15. Then ask the following questions for each period of time.
- How much surplus savings will I have at that time?
- How much debt will I still have, if any?
- How much income will I have at that time?
- How healthy will I be?
- What are my other specific goals that are important?
As you answer these questions, you will get a feeling of how well organized you are and hopefully motivate yourself to make a list of actions needed. If you will do this every six months for the rest of your life, you will be so much better prepared when you retire. If you choose not to take stock every so often, plan on a disorganized, outdated, and disappointing retirement that looks like an old garage you forgot to clean!