Hardly anyone in their twenties thinks about retirement, much less plans for it. Who has time to plan for something that’s forty or fifty years away (especially if bills or student loans are due right now?) Retirement could hardly feel more remote, but this feeling is an illusion. Delaying retirement planning forces you to play catch-up later in life, making painful sacrifices in your thirties and forties that can be totally avoided with a little foresight today.

Run Some Numbers

Write this down: there is no such thing as “retirement.” Not in the abstract. In order for you to retire and support yourself from savings, you will need a specific amount of money. Unless you save on a fairly set-in-stone schedule (the same amount every month until retirement age) you wont have it. Sorry to be so bleak, but unless you plan on winning the lottery, it’s quite true. Sticking your head in the sand and trusting that it’ll all work out is not a strategy.

You can’t get too specific, of course – no one in their twenties knows exactly what lifestyle they’ll want fifty years from now or how much it will cost. But you can make intelligent projections. MSN Money’s retirement calculator asks you for relevant numbers (planned retirement age, target yearly income, how many years you expect retirement to last) and tells you whether you’re saving enough. Save what it tells you to and you’ll be in much better shape.

Your Desired Retirement Lifestyle

These calculations are a starting point, not the end. Now it’s time to think long and hard about the kind of retirement lifestyle you might want. Again: it’s impossible to nail this with pinpoint accuracy at 24 years old. The point is simply to begin thinking about these important questions so they don’t sneak up on you later:

• Where in the country will you want to live?
• What will your hobbies include?
• Will you want to travel or just enjoy simple “around the house” leisure?
• Will you own your home? Will it be paid off before or after retirement age?

All of these things are interrelated. By keeping them in mind, you will always be analyzing how different retirement scenarios and opportunities could affect your preferences in those areas.

Consider Your Career

With your preferred retirement lifestyle in mind, consider your career. Your income is probably the biggest factor in retirement planning. It dictates how much you can save, how frequently you can save it and how quickly you can reach your goal. Do you earn enough money to get there? If you don’t currently make enough, will you? How? When?

Remember: denial isn’t a strategy. Retirement planning is all a numbers game, and if the numbers don’t add up, you’re only fooling yourself. Unthinkable as it may seem right now, your current career might be a poor match for your retirement goals. If you truly want the retirement lifestyle in your head, your income needs to support it. Two choices remain if it doesn’t: change your career or change your retirement goals. Changing your career is never a breeze, but it’ll never be easier than it is now.

Revise The Plan Over Time

As you get older, your goals, priorities and preferences are bound to change. The wild, travel-heavy retirement you thought you wanted as a 25 year old may seem excessive by the time you’re 35. Or, the tame, hobby-centric retirement you wanted might seem boring by that age. The point is, you are unlikely to move from your twenties to your sixties with the exact same retirement goals.

Be mindful of your changing preferences and adjust your actions accordingly. If a new wrinkle in your plan calls for more money, start saving more. If it calls for less, start saving less (although it’s always smart to save a little more than you anticipate needing.)

Track Progress

Would a ship’s captain point the boat toward home, assume all was well and fall asleep at the wheel? Of course not. Any number of changes (rocks, storms, choppy waters) could ruin the original plan. Until the captain reacts and changes course, the boat just drifts further and further away.

The same is true of retirement planning. Although we encourage you to automate 401(k) or IRA savings, don’t take a total set-it-and-forget-it approach. Make a point of looking at your accounts and comparing them to your overall plans. If things don’t look right, investigate what’s going on and make the needed changes. Forewarned is forearmed.

Seek Help If Necessary

Retirement planning isn’t rocket science, but if you’re a busy professional, it might feel that way. Not everyone has time to devise, implement and diligently execute a comprehensive retirement plan. It doesn’t mean your ignorant or lazy – just busy. Luckily for you, there are professional retirement planners whose job it is to help people in your predicament.

Schedule an appointment with one as soon as you realize you’re in over your head. Your retirement planner will clearly lay out your options, help you establish goals and (with your help) put together a specific road map for getting there. Then, your job will simply be to follow it.

Colin Anderson is a freelance writer for Noomii which is an online directory for coaches where people can find coaches in various cities such as a life coach in Houston.  Colin lives in Houston, Texas with his wife and 4 children.

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When you are saving for your retirement or as a pensioner, you want to know that your money is working as hard as it possibly can so you can have as wealthy a retirement as possible. One interesting financial product that can help people save for their retirement is a British creation known as an ISA (individual savings account). In some ways, this is similar to an American Individual Retirement Account, but with a few differences. Let’s find out more.

What is an ISA?

Essentially, an ISA is a way to save tax-free in the UK. It allows people to put in a certain amount of money each year and all interest and dividends earned on that money is tax-free. Anyone over the age of 18 can get an ISA and there are now junior ISAs available for children.

The two main types of ISA are the cash ISA and the shares ISA, which is a form of investment while the cash option is a more traditional form of savings. There is also the option to combine a cash and investment ISA, as long as you don’t go over the annual limit you’re allowed to put in.

How do they compare?

So, how do ISAs compare to IRAs? Well, in some ways they are very similar. For instance, they both have an annual limit as to how much you can put into them. However, the limit on a stocks and shares ISA is significantly higher than it is for an IRA: £10,680 per year as opposed to $5000.

Also, these two products differ in that ISAs are not exclusively for retirement. This means that if you have an ISA, you can use the money in it for anything you want, which is why they are popular with so many other consumers as well as pensioners and people saving for retirement.

Another difference is that ISAs are typically more relaxed about you withdrawing money, which is another benefit of the British model; this is in contrast to IRAs, which can hit you with hefty penalties if you withdraw money too early and require you to start withdrawing the money at a particular time. This means that if you have got an ISA, you can leave the money in it for as long as you like without withdrawing any of the cash.

One of the benefits of this is that it allows you to make the most of your investment; since most stocks and shares ISAs are pegged to the stock market (usually the London Stock Exchange), the money can go up as well as down in the same way as IRAs invested in stocks can do. However, being able to withdraw the money at a time of your choosing means that if the market isn’t too great when you retire, you have the option to hold on until it picks up again.

The best ISA investment options also work hard to minimise their risk so that they have the best chance of growing; since ISAs, like the IRA, are designed with long term investments in mind, this can help to ensure a wealthy retirement when consumers decide they want to access their money.

Regardless of your age, planning for retirement should be critical component of your personal finances. However, many individuals choose to neglect saving for the future in order to serve more immediate needs. Failing to allocate enough resources toward retirement can result in having to work long past the normal retirement age.

Here are 5 ways to build your retirement savings:

1. Start Young

Building wealth doesn’t necessarily require an enormous paycheck. It simply requires time. For example, investing as little as $1000 each year, with an average growth rate of 10%, can turn into a $200,000 nest egg in 30 years. This is the result of interest compounding over time. Waiting until you reach 50 takes time out of the equation, meaning you will have to invest a significant portion of your paycheck without the aid of compound interest.

2. Automatic Investments

The best way to combat the desire to spend is to put it out of reach. One of the benefits of a 401K contribution is the money is taken from your paycheck before it enters your bank account. A matching contribution from your employer will only further increase your retirement savings. Even if your employer doesn’t offer a 401K, you can put automatic tax-deferred or after tax contributions into an IRA. As withdrawing from an IRA early results in penalties, you will have additional incentive to let the account grow.

3. Motivate Yourself to Save

Rather than visualize retirement as a number, think about it in terms of tangible goals. Normally, when people consider saving for retirement, they are saving for some distant, nebulous construct, something far less appealing than the here and now. That is why when you are debating whether to spend or save, tell yourself you are saving for that trip around the world, or weekends out fishing, and not for some vague and arbitrary number. Creating a tangible benefit will allow the future to better compete with the temptations of the present.

4. Age Appropriate Investing

Part of the importance of starting young is the ability to ride out riskier investments. Although past performance is no guarantee of future gains, stocks and aggressive mutual funds have a history of outperforming safer investments such as bonds and money market products. However, this typically holds true over decades of time, and in the short term risky investments can dissolve your nest egg rather than grow it. A smart investor will choose a financial portfolio that best reflects their age group as well as their opinions on the market.

5. Make a Budget

Often times, failing to build your retirement savings is not a product of being unable to save, but rather being unable to not spend. Constructing a budget and finding creative ways to meet that budget will allow you to save without sacrificing your personal life. For example, calculate how much you can save by taking a bag lunch to work, or eschewing high priced coffee in the morning. Remind yourself that all of these tiny expenditures add up, not only in terms of the money you spend but the compound interest you lose over time. If quitting cold turkey seems a bit extreme, try putting off such luxuries until the end of the week. You may find that the less you consume something, the more you appreciate it.

Joel Edwards writes for EquityRelease.net covering a wide range of retirement finance topics.

Recently my husband and I had a conversation with a friend about whether or not he should buy a sports car. Since he already had a vehicle that was in great shape, our advice was to keep his car and put what he would spend on a sports car into savings. While this made perfect sense to us, a married couple with a kid, it fell on deaf ears with our single friend who has no debt and a great income.

At first it was a frustrating conversation, but I had to recall a time not too long ago where I had the exact same frame of mind. I had no real debt, a great income, a job I loved and money had always come relatively easily in my adult life. So why save? Life is short. Enjoy your money, right?

Here are some reasons you might consider saving even when money seems easy to come by.

Think ahead

Retirement is so far away. We start our careers with that thought and it becomes a self-fulfilling prophecy. We see retirement as 40+ years away so we don’t start saving early enough and then end up delaying retirement because we haven’t saved enough and can’t afford to retire. If only we could start our careers knowing that retirement is as close or as far away as our spending and saving habits dictate.

Be prepared

My favorite quote is “Luck is where preparation and opportunity meet.” Having savings set aside can allow you to take advantage of great opportunities that come your way. It was always my dream to work abroad and when that opportunity came my way, I had to pass it up because I had too many financial obligations (i.e. a ton of credit card debt). Had I been debt free, working in another country could have been a very cool experience for me in my twenties.

Follow your dreams

Figure out what you want out of life both in the short-term and in the future. Whether it’s as simple as owning your own home one day, becoming financially independent at the age of 40, or something way out there like buying a Turkish property to retire in Istanbul, or some other wonderfully exotic location. Whatever your goals are, align your spending (and saving) to match.

Expect the unexpected

I think there’s a commercial on TV that says, “Life happens, so expect the unexpected”. It’s true. Emergencies happen to all of us. Whether you lose your job, become ill, need home repairs or all of the above, having an emergency fund in place can save you from financial ruin. Experts suggest anywhere from $1,000 if you are paying down debt to 9 months living expenses for those only holding mortgage debt.

Doing with less now so you can have more later is a lot easier than trying to catch up when you really need it.

The thought of retiring abroad has always been a romantic idea for me. The prospect of warm tropical weather and the adventure of living in a new county is very appealing. But what is the reality of retiring abroad? What will it cost to live comfortably? How do you know where to find the best overseas investment properties? Will I have access to healthcare?

There are many safe and affordable places to live outside of the US. I’ve pulled together five beautiful locations from Europe, Central America and Southeast Asia that offer mild-to-warm climates, great healthcare and a low cost-of-living. These retirement hot spots will soon have you dreaming of retiring abroad as well.

In addition to being great places to live and retire, these locations also present the possibility of finding below market value or bmv investment opportunities on property.

Nha Trang, Vietnam

Nha Trang is located on the south-central coast of Vietnam and is surrounded by miles of beaches and green mountain ranges.

Climate: Hot. Temperatures hover between the 80s and low 90s year-round. Monsoon season is November through early December.

Healthcare: The 1,000-bed Khanh Hoa General Hospital is located in Nha Trang.

Cost of Living: A retired American couple can live comfortably on $750 a month in Nha Trang. For $1,000 a month you can live in the lap of luxury. And while not the official currency, US dollars are widely accepted.

Roatan, Honduras

Roatan is home to the world’s second longest coral reef, warm Carribean waters and long strands of white sand beaches. The U.S. dollar is accepted and real estate prices have come down in recent years. English is the primary language.

Climate: The average temperature in Roatan is a lovely 81 degrees. Warning, Honduras lies in the hurricane belt.

Healthcare: On the island there are several clinics and two hospitals. Larger medical facilities are located on the mainland in San Pedro Sula and La Ceiba.

Cost of Living: A retired American couple can live comfortably in Roatan on $1,200 a month.

Bocas del Toro, Panama

On the Caribbean in western Panama, Bocas del Toro offers miles of sandy beaches, turquoise waters and sprawling rainforests. The U.S. dollar is the currency and English is widely spoken even though Spanish is the country’s official language.

Climate: Warm and tropical. Temperatures range from the low 70s to high 80s. Rainy season can stretch from May to January.

Healthcare: There’s a public hospital on the main island in the Bocas del Toro archipelago. It’s adequate and inexpensive, but most expats head to David or Panama City for checkups and planned treatments.

Cost of Living: A retired American couple can live comfortably in Bocas del Toro on $1,500 a month.

Bearn, France

Bearn is located in southwestern France, near the border with Spain. The landscape is dotted with medieval towns and there are many markets and vineyards to explore, not to mention a plethora of churches and castles. Living in Bearn is cheaper than in better-known parts of France such as Provence.

Climate: Mild Temperatures range from the 30s to 50s in the winter and the 70s to 80s in the summer.

Healthcare: France ranks #1 on International Living’s Global Retirement Index for health care. There are several hospitals in the Bearn region.

Cost of Living: A retired American couple can live comfortably on about $2,000 a month.

Lunigiana, Italy

This part of the region is Tuscany on the cheap. The Mediterranean coast is a short drive away. Florence and Pisa are also reasonable day trips.

Climate: Mild. The warm season can stretch from April to October, with temperatures from the mid 70s to low 90s. In winter you can expect lows in the 50s and 60s.

Healthcare: Italy ranks #2 on International Living’s Global Retirement Index for health care. Towns in the region with hospitals are Aulla, Fivizzano, La Spezia, Pontremoli and Sarzana.

Cost of Living: – A retired American couple can live comfortably on about $2,500 a month.

When you’re young and just starting your career, retirement seems so very far off that it’s hard to make it a priority over other goals such as paying off student loans, buying a new car or just having some fun on the weekends. But your twenties is exactly when you should be thinking about retirement. Time is your greatest asset at this stage. But unfortunately too many of us squander it and don’t start thinking about the future until we have the added responsibility (and expense) of a family to care for. If I could re-live my twenties with the knowledge and experience I have now, there are three things I would absolutely do:

Step 1: Max out my 401K

This is a no brainer, set it and forget it.

Step 2: Stay out of debt

I spent my early twenties racking up credit card debt and the latter part of my twenties paying it off. That time and those resources were wasted on frivolous spending. I would have been much better off if I had put those resources into the third step….

Step 3: Purchase a positive cash flow rental property.

This is an aggressive strategy and not for everyone. But purchasing a rental property even in my late twenties would have allowed me to pay off a 30 year buy to let mortgage well before retirement thus providing me with inflation adjusted income throughout my retirement years. Income that you can never outlive!

So I can’t go back to my twenties, but I can still take steps 1 and 2 and possibly step 3 toward a secure and anxiety free retirement. We just have to work a little harder at it now.

In this month’s edition of Money Magazine they interviewed 100 dedicated savers to learn their stories and find out the tactics they employ to save 35-60% of their income. All of these couples and individuals are well on their way to a very comfortable early retirement.

1. They set goals, and they make them specific.

Behavioral finance experts have found that earmarking accounts for particular goals can have a dramatic effect on savings rates. In a 2009 study, Amar Cheema of the University of Virginia and Dilip Soman of the University of Toronto found that labeling a college fund with the child’s name nearly doubled how much was saved. “When you know what you’re saving for, it’s close to your heart and you’ll feel regret if you stop,” says Cheema.

2. They live below their means

They purchase homes and cars based on what they need versus what they can afford.

3. They delay gratification

Super savers don’t make impulse buys and often save for months in order to pay cash.

4. They avoid debt

They pay cash, even on big ticket items like cars and houses avoiding thousands, even tens of thousands in interest.

5. They save on the everyday expenses

They are diligent in comparing prices, clipping coupons and scouring Craigslist for deals.

6. They have multiple streams of income.

The have two salaries, live on one and save the other. Or if they are a single income earner they have a side hustle to earn extra cash.

7. They track their spending

In a study of 50 undergraduates, Amar Cheema had students write down every expense for a month. All 50 cut their spending that month by an average of 14%. Six months later, 34 of them were still spending less.

8. They automate saving

They automatically fund 401K, Roth IRA, 529 and savings accounts. They don’t miss the money because they never see it.

I’m pleased that we are doing 7 of the 8 (we currently only have one income) and currently save 32% of our income. But my goal is to get to 50%.

How about you? Do you employ any of these strategies?

Secrets of Super Savers, Donna Rosato, Money, August 2010

It’s never too soon to start saving for retirement. When you’re young time is on your side. If used wisely it’s your greatest asset. However it can be the biggest detriment as retirement seems so far off. It’s easy to put off saving until next year, and then next year, and so on. Next thing you know you’re 45 and wondering why your nest egg is so small.

Likewise, it’s never too late to start saving. It’s better to start late than not at all.

The future is in your hands and so is your financial security. You can’t rely on Social Security, there’s a possibility it won’t be around for you.

20s and 30s

• Max out tax deferred retirement plan contributions – If your employer offers any kind of match to your contributions, be sure to take advantage of that. A 50% employer match means that if you contribute $100/month, your employer will add another $50. And with a tax-deferred plan, your contribution of $100 will reduce your paycheck by only about $80. By giving up $80 of monthly spending, you gain an investment of $150/month. After 25 years with an 8% return, the result is $142,000 for retirement! But don’t stop there! As you start to make more money, minimize lifestyle inflation and put those raises towards retirement savings.
• Fund Roth IRAs to the maximum amount allowed – Funding a Roth IRA provides you non-taxable income in retirement.
• Establish and maintain an emergency fund – Unplanned expenses can derail retirement saving and also send you into debt. Maintain an adequate Emergency Fund to fall back on in case you lose your job, experience a medical emergency or to cover other unplanned expenses.
• Avoid debt – Do you really want to give your hard earned dollars to a bank in the form of interest? Avoid the debt trap and put those dollars in a high-interest savings account and let the bank pay you instead!
• For aggressive wealth builders, acquire a positive cash flow rental property – Rather than rent an apartment buy a starter home or a small apartment building that you can live in now and use as rental units later. A 30 year fixed rate mortgage will be paid off by the time you are ready to retire and you will have inflation adjusted income you can never outlive.

40s and 50s

• Build your financial intelligence to avoid costly investment mistakes
• Create your first ballpark estimate – According to the American Savings Education Council, Americans who have done a retirement calculation have nearly five times the savings of those who haven’t.
• Establish plan to be debt free by retirement
• Consider reviewing your retirement plan with a fee-only Financial Advisor
• Evaluate investments for age/risk profile
• Take care of your health

5-10 Years from Retirement

• Update your ballpark estimate
• Compare revised estimate to current savings. Work to close the gap.
• Are you on track to be debt free by retirement? Work to payoff debt.
• Evaluate investments for age/risk profile
• Determine retirement locale, do you plan to downsize?
• Take care of your health

1 Year from Retirement

• Estimate a budget for retirement
• Consider part time jobs if you need to stretch your retirement savings
• Speak with a Social Security representative to determine when you should apply for benefits.
• Review will and power of attorney; ensure that beneficiaries on retirement accounts are up to date.
• If retirement comes before Medicare eligibility, make plans to purchase private health insurance or continue your employer’s plan through COBRA.

Everyone’s vision of retirement is different. But hopefully with this Retirement Planning Checklist you’ll be able to realize your vision and enjoy your retirement years free of stress and anxiety.

As we prepare for the arrival of our son I’m thinking about his college education and how we’re going to pay for it. I know, that’s 18 years out. But with the soaring cost of education, if we don’t prepare and start saving now, we may not be in a great position to help much once he approaches college age. And the last thing I want to do is send him off into the world with a mountain of debt, so I plan to set up a 529 Savings Plan right away.

(Canadians: While 529 plans are only available in the US, there is something similar called an RESP, or Registered Education Savings Plan. An RESP is a tax-free savings account that allows contributions to be made by anyone, anytime, until the child begins post-secondary.)

But the numbers are daunting. Using the SavingforCollege.com calculator I looked at two scenarios: In-State Public and Out-of-State Public Universities.

In-State Public (currently California)

Cost per year: $30,000 (included tuition, fees, room and board)

Inflation rate: 6%

Annualized Return: 8%

Forecasted Costs: $375,000

Monthly Contributions Needed to Meet Goal: $686 ($8232/year)

Out-of-State Public

Cost per year: $40,000 (included tuition, fees, room and board)

Inflation rate: 6%

Annualized Return: 8%

Forecasted Costs: $500,000

Monthly Contributions Needed to Meet Goal: $915 ($10,980/year)

Gah! On the low end I need to put away nearly $700 a month! That’s a pretty large sum considering our priorities are paying off debt, saving for and subsequently paying off a house and contributing to our retirement accounts…all of which are part of our retirement plan. Saving for college is a priority but our retirement takes precedence as it is even more important to us that we’re able to live independently and not be a burden to our family through our retirement years.

So how do we do both?

1. Check your Latte Factor®: Your Latte Factor is the amount of money you spend on a daily basis on non-essentials such as bottled water, lattes, fast-food or cigarettes that can be redirected to areas such as paying off debt, saving for retirement or college. For example, if you spend $5 a day at Starbucks, that’s $150 a month you could save by making your coffee at home. If you also eat out for lunch 5x a week at $6/meal, that’s another $120 a month you can save by bringing your lunch.

Checking your Latte Factor is probably the quickest way to find room in your budget. We went through this exercise a couple years ago and have squashed our Latte Factor. The only non-essentials in our budget ($100 for eating out and a Netflix subscription) are there deliberately to avoid a frugal meltdown.

Projected yearly savings: $0

2. Lower your expenses: This is an area that I am constantly looking at.

Insurance: Every six months I look at our insurance policies and shop around for better prices. Very often this will save us $150-$200 over the policy period.

Food: This is the one area of our budget where I think we have significant room for improvement. I am very diligent about planning ahead and finding the best prices, but I have yet to incorporate couponing into my routine. I’m also planning a huge garden this year and plan to freeze and can my ‘bountiful harvest’. Between these two things I think I can cut our food costs 20-30%.

Projected yearly savings: $1500

3. Earn side income

Surveys: Earlier this month I wrote about making money from paid online surveys. It’s still too early for me to determine if this is viable long-term, but currently I estimate I can bring in $100 a month from taking surveys.

I have other projects in various stages of development that may or may not generate income this year.

• Blogging: Right now my focus is quality content and growing my readership. I realistically don’t expect to start generating revenue until next year
• Internet-based business: I’m in the brainstorming phase of outlining a potential business. But with a baby due in May, I really doubt I’ll make much progress in this area until later in the year.
• Selling baked goods: This is a little off the wall for me but we have three large apple trees and a pear tree on our property that produce way more fruit than we can eat, freeze or giveaway. I hate to see any of it go to waste, and I make an awesome Blackberry Apple Sourcream Pie, so I’m looking into selling baked goods at the local Farmer’s Market over the summer/fall.

Projected yearly savings (Surveys only): $1200

4. Enlist your family

We have two young nephews. Whenever holidays and birthdays come up I’m always amazed at how much “stuff” they get. The room is littered with toys that will get very little use and clutter up their parents house. About two years ago we decided to become the “boring” relatives and instead of getting them more toys that will eventually end up in a landfill, we’ll give them money to be put into their savings accounts.

And now that we’re expecting our first child I think about this a lot. For many reasons (that I’ll expand upon in a later post) I want to avoid all the “stuff” that we’d inevitably receive. So we decided to set up a College 529 Savings Plan and ask our immediate family to, instead of buying toys or other gifts, make a contribution to our little guy’s college fund. Once we explain how important it is for us to fund our son’s education, I think they’ll be fully supportive.

Projected yearly savings: $1500-$2500

If I can implement all of these things this year I estimate (on the low-end) we can save $4200 a year. That’s a little over half of what we need to save for a 4-year in-state public university. That’s not a bad start and we won’t impact our debt reduction plan or our retirement savings.

I’d like to hear from you. Have you found creative ways to save for your child’s education?

Also, check out these two fantastic articles from fellow Yakezie members.

The Crap We Buy Our Kids Equates to $100,000 at 21 Years Old @ Darwin’s Finance

How To Get An Expensive College Education for 80% Less @ Wealth Pilgrim

I’ve been so preoccupied with our short-term goals of building an Emergency Fund and paying off debt this past year that I’ve given little thought to our retirement. But as a member of the Yakezie Challenge I’ve been reading some very cool blogs by people that are creatively pursuing early retirement and some are even living their early retirement today.

I encourage you to go check them out. Here are just few :

Jacob @ Early Retirement Extreme is retired and living off his investments at the ripe old age of 33
Sam @ Financial Samurai has a goal to retire by 45
In his early thirties, The Rat @ Ending the Rat Race recently achieved his goal to retire early

Be sure to check out all of the Yakezie members.

These blogs have inspired me to start thinking beyond getting out of debt and to start mapping out our future.

Most discussions on retirement center around a number. What number do you need to retire? A million dollars? Two million? Or find any retirement calculator and it will likely ask you what percentage of your current income you want to live on.

According to T.Rowe Price’s Retirement Income Calculator we will need $5,000/month to retire. That is a nice number but I don’t think it’s realistic because it’s solely based on our current income. Today our monthly expenses are around $3,200. In the next two years I expect that to drop to $2,500. We also plan to buy a home and pay it off before we retire. That will bring our expenses down even further. Even adjusting for inflation do I really need monthly retirement income that equals 3x my expenses? Truthfully I don’t know.

What I do know is that it’s hard to accurately forecast your income requirements without a clear picture of what you want your retirement to be. So how do I envision our retirement?

• Our house is paid off
• We have the appropriate Health and Long-Term Care Insurance in place to ensure we do not become a burden to our family
• We travel 3-4 times a year
• We have enough money to do the things we want to do
• We have enough in savings to support us at least 35 years

This is a simple list but it gives us a starting point to figure out what we need to do to achieve the retirement lifestyle we envision and how to do it in the timeframe in which we want to retire.

But this is the just the starting point. Now it’s time to build our retirement plan. I’ll update you on my progress and share with you the end result.

And now my question to you is – How do you envision your retirement? Do you have a plan in place?