When should I start planning for retirement?

Retirement is a huge event in someone’s life. For 40 odd years, you have been going to work, meeting and working with the same people. Then it all comes to an end. For those who plan, they will start a great new chapter in their lives where they start doing all those things they always wanted to do but never thought the had to the time to do.

While you should be building your assets (not just pensions)  from as soon as you start working, when should you start seriously planning for your retirement? I believe that you should start formalising your plans for retirement 10 years out.

Why should I start planning for retirement 10 years out?

  • You can take stock of where you are and what shortfalls you have.
  • You have a good idea of any major future expenses. You will know if the kids are still going to be an expense.
  • You will have developed interests and hobbies that you are likely to carry into retirement.
  • You have enough time to fix any shortfalls in income before retirement. If you wait until 1 or 2 years before retirement, it is too late to fix any big shortfalls.
  • You have enough time to take more risk than you would normally take.
  • You can make adjustments as your life changes.
  • Any major financial decision from that point forward will be made with retirement in mind. During the Celtic Tiger, how many people within 10 years of retirement took on additional debt without considering what it would be like to have to a mortgage in retirement?
  • You will have accumulated assets at this stage and you can decide on their use.
  • If you own you business, you can start on your succession plan. It can take years to sell and business and you want to get the best price for it. It takes time to get the company in the best position for a sale.

There are plenty of things to think about before you retire, starting with what do you want to do and how much will that costs? How much consideration have you given to how much you want to live on when you stop working and where that money is going to come from?

If you have any questions, please email me directly at steven@bluewaterfp,ie