Now that I am well into the retirement mode—having actually retired back in 2013 and started collecting my Social Security—it is way easier to look back and see what I did in planning and executing my journey. 2013 may seem like eons ago, but in reality it’s just a flash in my mind and that’s the way time seems to go for all of us. One day you’re 35 and retirement seems like it will never get here and in a flash you’re 60-something and you need to have all your ducks lined up and a real retirement plan in place. That’s where the little reminder I came up with comes into play: P.R.O.T.E.C.T yourself, or Plan Retirement Options To Ensure Cash Tranche.
P is for Plan
When the word “plan” comes up in any conversation, it requires that you do something. You means you and not someone else who may have a plan and you just may be a part of the fringe of that. For example, when it comes to your future and retirement, if your family has built wealth and you are planning to inherit some of it to fund your expenses and even your retirement…don’t count on it. While that may qualify technically as a plan, it is a terrible one!
There are so many things that can go wrong with that scenario that it would be hard to include them all in a post like this. Just know this, you can’t count on any money that you don’t have ever coming your way and if you do, there’s a good chance you will fail. The only way you can protect yourself for sure is to use, get, obtain, grow, and earn your own money for a retirement plan. And that is the method you need to use in your real plan.
R is for Retirement
No, it’s not really sitting in a rocking chair and listening to chamber music while sipping a glass of chardonnay. Well, it could be that way, but the chances are you will want to be more active than that, health permitting. Since retirement may mean not actually stopping work, you need to think more about it than before. You want more money available than in previous generations if for no other reason than you will be living longer than any other generation and there will be many more options to occupy your time, hence more cost to do just that!
O is for Options
Not only do you have more options in spending your time and money in retirement, but your options begin long before you leave the full-time workforce when it comes to retirement money.
I’m talking about the “hope” that your money grows before retirement and there are many options for doing just that. The diversification of your money isn’t just something to do, but it acts as an insurance policy for you so that you can hedge against the things that can limit growth or even cause you to lose money along the retirement path.
Consider not only your basic work 401(k) plan with matching company funds as the backbone of a retirement plan, but also IRA CDs, company pensions if offered, investment stock market strategies, annuities, real estate, savings bonds, and any other money strategies—the more the merrier. Each will have an edge that the others may not and will act as protection so that if something happens to one there are alternatives.
TECT is for To Ensure Your Cash Tranche
Aretha said it best when she said “TCB” (Taking Care of Business) while singing about RESPECT back in the day, so I thought I’d apply it here to P.R.O.T.E.C.T. and your retirement plan, too.
When the day finally arrives and retirement is here, you must respect it at all costs because if you don’t, it will cause you real financial pain.
There are some basics that don’t stop when you retire. One of the biggies is to remember that you are still very much on a budget and your money must be stretched even more than ever if you don’t have all of your Options for income that you need to have in place.
One of the best ways to protect your retirement money is to not use it until it’s absolutely necessary. That’s why I recommend that you find a way to produce income even when in retirement. A side gig, a hobby that can earn money, a part-time job all go well to help offset retirement costs and help you fulfill yourself and keep active, too. Even a small amount of new income in retirement goes a long way.
The Downsizing Strategy That You Will Need to Do
File downsizing under P for planning or O for options, it really doesn’t matter.
I am constantly amazed at the resistance to downsizing that so many have and that’s really foolish. Downsizing isn’t a dirty word.
It makes little sense to continue to pay for large homes that are mostly empty, heating and cooling costs of square footage not used, owning several vehicles that are no longer necessary, and so on when you are retired. It’s a simple fact of life that your daily expenses will shrink if you downsize and that means more money to take care of what’s really important to you. Having a three-car garage isn’t really a requirement, is it?
I can’t prescribe an exact retirement plan for you or anyone else. That is a very personal decision you make and it has factors that all must be considered like where and when, and health factors that can affect every decision you must make.
But there is one thing I can dictate to you and it’s this: P.R.O.T.E.C.T. yourself now long before retirement arrives so that you have options and can live comfortably and enjoy retirement.
Executing a good plan requires doing something and the sooner the better. I am not joking when I say the first time you need to start thinking about retirement is the day you begin your very first job!
If you do, then you have taken step one in providing that protection. Smart people do that kind of thing and those who wait and wait find themselves often in a large hole trying to find a way out later in life. Don’t let that be you!
How much thought have you given to retirement? Do you have a plan in place now? Make a list now of all the ways you will fund your retirement and how much you anticipate you will need each year when it occurs. Have you considered what retirement life will look like when your primary source of income stops?