5 Tips To Prepare for Retirement (While You're Working)

A very warm welcome to the Early Retirement show, the show dedicated to helping you navigate the nuances of an early retirement, a non traditional retirement. Now let's get right into the episode so we can learn how to retire early. Welcome back to another episode of the Early Retirement podcast. Thank you to all of you who have been subscribing on YouTube recently, seeing a tonne of growth there. And I just have to thank you. And it is so helpful, because I love of course, doing these podcasts. Because if you're driving or you're working out, or however you'd like to podcast, I know this can be helpful.

However, I also know sometimes with numbers and financial stuff, which yes, of course, I tend to talk about on this type of show, it can be helpful to actually see that. So if you have not checked it out already, check out the YouTube channel, and you will be able to see that, it is in the description below. So let's hop into today's topic, which are the five tips to practice retirement today, how can you prepare for retirement while you are still working, both financially and emotionally. Now, if you've been listening to this podcast for a while, you know I love examples. And so we will be going through a few today. But also staying high level not going ultra granular want you to have a few action items. So you can go okay, here's what I can start practising immediately because I listen to this podcast. So without further ado, let's hop right in. And the first thing is, are you ready to retire? both financially and emotionally? If you're retired today, what does life look like?

And that's how I always like to start? And it oftentimes kind of perplexes people because they go, Well, should I know how much you know I have? Am I able to make sure I don't run out of money. And of course we want to do that. But we also want to take that first big step back and then get into the granular details. And let's start with Imagine you're retired today. How are you fulfilling your time? Is it with children? Are you saying you know what my spouse and I have just been dying waiting to travel? Is it you know what we have specific legacy goals. And we want to know that when we retire, we're going to be able to implement those great. All of those are amazing. There's no wrong answers. Once you know what you want to do with retirement at least generally, no one knows exactly what the next question is, how much do you have saved for retirement?

And some people will ask and you've probably heard this in a recent podcast is Ari do I need a million dollars to retire? And the answer is always no, you don't need 1 million, you don't need 2 million, you don't even need 5 million, I would even tell you confidently that 10 million might not be enough for you to retire. And you're probably thinking how is that even possible? Who needs more than $10 million. And the reason I bring that up is because you don't need 110, five or 10 million, what you need is to replace your income. And if your income needs in retirement, otherwise known as your retirement expenses, let's assume you want to spend $5 million a year well, having $10 million.

I know taking a bit of an extreme example there. But I just want to illustrate that it's not about how much you have. It's about what do you want to spend in retirement? And what assets do we have today to make it happen? And so the first thing is, where are our assets? Today? I mean, quite simply, is it coming from a pension? Is it Social Security, is that rental income is a combination of all of that. So that's what we explore for point number two is what assets do we have today to make it happen? And the first thing is, of course, well, where are we saving? And how are we investing?

And you know, that's what people tend to think about when it comes to retirement planning generally, and they just don't go deep enough, not because it's any fault of their own. I mean, I can just tell you personally, I am young, and I'm thinking about retirement planning. Because I know the earlier you start the better position you'll be in. And yes, of course, this is my job. So yes, there's a bias there. But I don't call it a job. It truly is a career because I want to do this for the rest of my life.

But if anything changes, that's what financial freedom is there for. And so if any of you are wondering, you know, what, how do I save? How do I invest appropriately? You know, this is what I do. So always happy to help now, with getting that plug out of the way. Let's hop into point number three, which is a big one in that point is what are you sacrificing?

Meaning when you go into retirement? Oftentimes a planner will tell you Okay, let's say you go through a planning process, they will say, Hey, Jack, hey, Jill, just for example, sake, you can spend $10,000 a month in retirement? Well, that's true. But I don't feel that that's really the job of a planner. I think that's one of the jobs, but the main job is to show you the trade offs. If you do spend $10,000 a month, that means that you're going to be spending a little bit more, which certainly might mean in this case that you might have to work longer. What if you said you know what, I want to spend $10,000 per month in retirement, I would say great. Do you want to retire early?

And let's say they say yes to that as well. I'd say great. My job is not to tell you if you can retire early, or even if you should spend $10,000 a month in retirement. My job is to show you here are the trade offs. If you're telling me you want to retire early, it might mean spending less and you might hear that and go oh my gosh, that is not what I want to do. I want to make sure I spend $10,000 a month in retirement and Then you might be thinking, Ari are you adjusting for taxes and inflation?

And yes, assume for this, I am adjusting for all of that. Well, if you want to spend $10,000 a month, it's my job to show you how you can best do that. So point number three, what are you sacrificing is another way of saying, what are your trade offs? Do you want to work more? Do you want to spend less? Okay? Well, most people don't want to spend less in retirement, they go, I have a number, I really want to spend that amount at a minimum, one to meet your needs. But to to be excited.

You don't want to just retire and go, Oh, my gosh, I can only spend $4,000 a month? I mean, what fun is that? Unless you go you know what? That is so attractive to me, because I want to retire early. And retiring early means different things to different people. And what I would say is there's really not a number retiring early is when do you have the financial freedom to no longer have to work where work becomes optional. So that is point number three point number one just to summarise so far, is what are you doing in retirement? How are you filling your time? Is it with travel, grandchildren, whatever that may be? What excites you? Number two is what assets?

Are you going to have to make it happen? And number three, what are the trade offs? If you want to retire early? Great, are you open to spending less in retirement, if not wonderful, it just might mean we're working a little bit more. And so those are the things to start to think through. Now let's hop into point number four. And point number four is what about work alternatives. And I always like to bring up this example.

And I apologise again, if you've heard it, but I always like to put a little different spin to it is some people think that they have to retire and then it's over. And then almost has this connotation of retirement is almost when life ends and it's done. And then sometimes after a few years when someone is retired, and I'm just thinking of a client in my head right now, I'll won't disclose their name, of course, but I want to just almost picture that in your head, is imagine that you're thinking of someone who just recently retired, they worked hard their whole life. In fact, they started working at age 18.
 
And they stopped working at age 66. Now they stopped working, and they said, Oh, my gosh, I've worked all these years, I'm so glad to be done. And what they found is two, three years after just sitting on the couch and playing golf and doing all the things people love to do in retirement at least sounds attractive, certainly, in the beginning of retirement. Well, they got a little bored. And they said, oh, sorry, I had planned out my retirement. And I thought I would have my time filled. But it's just not the fulfilment I was looking for. But they mentioned they didn't want to go back to work. And the reason for that is that they said part time income doesn't play a big role. And I really just really invited them to reframe the way that they viewed retirement income.

And especially after we're looking at social security and how withholdings occur and all of that financial stuff, that is my job, it's my job also to have the client understand that making an extra 20 to $40,000 per year can make a bigger impact than they may think. And so this point number four is illustrating the example that by working $20,000, $30,000, $40,000 A year and bringing that income in, that's not just 20 30 40 you're bringing in, that's 20 30 40, that is not being withdrawn from your portfolio, allowing that to compound even more. So part time income can play a bigger role in your portfolio.

And if you're listening to this going, I just do not want to keep working wonderful, this might not be the best strategy for you. But if you're listening to this, and you're going, You know what, I don't hate my job. I do envision when I retire, which I certainly do want to do, because I've just had enough for whatever the reason is, but you say you know what, I do see myself doing part time income just for either the enjoyment of it, or for the little extra cash or, or maybe you've just been working for 40-50 years, and you go you know what, I really don't want to stop in the sense that that's what I know.

It's my identity, whatever that may be. And I have another episode coming out on that identity in retirement shortly. But what I want to leave you with at a minimum is part time income can play a bigger role in your retirement plan than you may think. So certainly something worth considering. If you're going well how can I fulfil my time. And sometimes it can be fun if you find the right job. So something I want you to at least consider. And the biggest one point number five, I always want to leave you with the big kahuna, if you will, at the end is don't let retirement be the goal. Let an aligned life of happiness fulfilment, and really security be the goal, retirement. It's not as if you get to this date, and it's over.

It's almost like a new life. And sometimes once again, that retirement word has a connotation of it's over or I'm done or I completed it. And I have what I feel is a very powerful job, where it's to come back to you and show you the beauty of retirement. What an amazing role that I get to play where I get to show you well here are some fulfilling activities. What hobbies have you been putting off? Can we start to do those more? Can we take more trips, but really coming back to that big point? Retirement isn't the goal if you're 5 10 15 years away from retirement? Well, wonderful. Start having a plan in place.

Certainly, you know, that's what I'm all about. But also know that you can still have fun today and start practising retirement. In the sense that is there a hobby that you're going, you know, I really want to wait until retirement so I can focus on this. Well, can you start doing it today, maybe at a much lesser degree, but just start to introduce that. The last thing I want is for you to wait until retirement to start living your best life today. So let an aligned life have that security of that peace of mind and have that happiness be the real goal when it comes to retirement planning.

That is it for today's episode. As a reminder, all of this and more on YouTube, where you can find videos and watch along with some of the concepts I'm putting out. Always remember, you can submit your question on my website earlyretirementpodcast.com. And I will look to answer it in a future episode. I will see you all next Monday. Thank you for listening to another episode of the Early Retirement Show. If you have a question that you want answered in a future episode, you can always go to my website, earlyretirementpodcast.com. That's earlyretirementpodcast.com. And you can go ahead and submit a question that I'll look to answer in a future episode.

Thank you all for listening. Please do rate it, review it and share it with someone who you think would benefit from this information. If there's anyone out there that you know, I certainly appreciate it. And I will see you all each week. Hey guys, it's me again. Please be smart about this. Nothing in this podcast should be construed as financial, tax or legal advice. Consult with your tax preparer or financial advisor before taking any action. This podcast is for informational purposes only.