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Would you enjoy spending your senior years cruising the Mediterranean, sipping pina coladas? Or perhaps you’d rather throw a football around with your grandchildren in the comfort of your backyard?
No matter how old you are, it’s not too soon to think about how you would like to spend your retirement years and how you plan to pay for them. Unfortunately, most people delay the lifestyle and financial decisions critical to a happy retirement until much too late in life. As a result, they are left with few options, except to keep working.
The younger you are, the more flexibility you have both in your choice of future lifestyle and the way you fund that lifestyle. Pre-retirees with a few years of employment have some choices about how they arrange their assets for retirement, but workers with 20, 30, or 40 years to plan have a universe of options and the potential to create real wealth for their senior years.
The key to a happy and successful retirement is to begin planning early. By early I mean the first year of full-time employment. You’ve got to ask yourself some important questions, “How do I want to live? How much will that lifestyle cost? How much do I need to save right now?” The answers to these questions will lead you to solid, manageable financial goals and strategies.
For many people, saving to meet their future lifestyle goals is a big challenge, and the challenge is only getting more complicated. Industrial Age income estimation rules are invalid and investment strategies that worked for previous generations will not work in the Information Age.
In the Industrial Age people needed about 70% of their working income to maintain their lifestyle after retirement. In the Information Age it is estimated that people will need about 90% of their working income to maintain their lifestyle after retirement. In some cases, the lifestyle goals pre-retirees have set for themselves will require more income than they will regularly earn. They don’t just want to retire, they want to retire wealthy.
This poses a problem because many traditional sources of retirement income such as government retirement benefits and traditional employer pension plans are shrinking in their value to retirees. Huge government deficits and entitlement programs threaten to undermine the value of Social Security benefits. Corporations are cutting back on guaranteed defined benefit pension plans and the personal savings rate in the U.S. is one of the lowest among industrialized countries.
Having affluent golden years is not impossible or even unreasonable for people who get a good financial education, start saving for retirement early and invest wisely. One of the keys to building a solid retirement fund is taking advantage of long-term compounding interest and the long-term growth pattern of the investment markets.
Novice and uneducated investors often make the mistake of choosing very conservative investments with returns that barely outpace inflation. As a result, their balance at retirement may be much less then they will need. Younger investors need to get a financial education so that they are willing to take a little more investment risk for the potential of a much higher return.
Financial studies have shown that against years of inflation, more money has been lost from overly conservative investments than has ever been lost in any kind of a stock market downturn. Approaching retirement age is the time when you should decide to move your investments into more conservative vehicles, after the bulk of your nest egg has been earned.
Life insurance is rarely a good investment but variable life policies that allow you to choose from several investment options can be useful, particularly if you need to protect lots of assets when you’re younger and then shift to retirement savings later in life.
However, the cost of the insurance portion of these plans always cuts into the capital available for investment, so they rarely perform as well as direct investments, such as mutual funds.
You need to learn how to match your lifestyle goals with the right investments, but unfortunately, that’s not always an intuitive decision. That is why it’s essential that you get a financial education.
The first thing you need to do is learn how to read a financial statement and then get in the habit of doing one every month. You need to look at your finances every month, watch your cash flow and see what your assets and liabilities are. If you cannot read a simple personal financial statement, then, there is no way you can ever get control of your finances and save for retirement.
Learning how to invest in real estate is one of the best financial decisions you can make for your retirement. In the Industrial Age people would buy homes knowing that they would appreciate in value 10% to 20% each year. They expected to sell at retirement and use the profits of the sale as retirement income. In the Information Age people will be lucky if their homes can hold their values.
You need to learn how to buy real estate as an investment that generates income for you. Get a good education in real estate and develop a plan to buy properties, fix them up and sell them for a profit. Lean to by properties that you can fix up and rent out for positive cash flow each month and get the tax advantages that come with it. By doing this you not only have positive cash flow when you reach retirement age but you also can have a sizable net worth as well.
Every individual must understand that life is not a dress rehearsal. This is the real thing. Whether you’re young and just starting out or middle age, the time for retirement is going to come. No matter what you’re age is, it’s almost never too late to plan for your retirement, but you must do it.
You can choose to do nothing about it and when the retirement time does come you’ll have to keep or working and struggle to make ends meet. On the other hand you can get a good financial education and plan for your retirement thereby making retirement years the “golden” years of your life. Either way the choice is yours. | 
