It's easy to procrastinate planning the future. We're intimidated by the work that goes into it, and it feels like we have plenty of time to figure it out. But the sooner you start investing for retirement, the better off you'll be. Start by planning your first year of life as a retiree.
Picture: Nick Kenrick/Flickr
Writer and financial planner Leah Manderson discusses a common problem among her clients:
My clients often share with me that they want to travel. And really, planning for travel is simple. All you have to do is price out your trip, pick a date, and figure out how much you need to save between now and then to make it happen.
And yet, when I try to help people figure out how much to save, they get wishy-washy.They say, "Oh, I don't know when I want to go or if I can get time off of work then. I don't know what I want to do — how long I want to stay. I have no idea what it costs." I'll tell them that I can build a plan if they just pick something — but they sweep their dream under a rug and say they will get back to me.
And at that point, I know one thing for certain: their dream trip won't happen. Ever. It kills me. Unfortunately, however, that's the exact problem I see when it comes to saving for retirement.
Manderson is right. Too many people wait to save for retirement and end up playing catch-up at 40. It's the same psychology that goes behind planning to visit an old friend or family member. You say "yeah, I should do that", but you never actually do it, because you don't feel like considering the logistics.
To encourage people to calculate the logistics, Manderson tells her clients to plan out a year in their life as a retiree. Not only does this help them connect the future with the present, it's also kind of fun. You realise if you plan ahead enough, you can actually do some of the things you want to do with your life.
In the full post, Manderson outlines how to visualise this exercise. Check out her article to try it out for yourself.
The First Step to Fearless Investing [Leah Manderson]