Summer is officially here! Time to enjoy your summer vacations, relax and unwind, and have some fun in the sun.
But would it surprise you to know that most people spend more time planning their vacation than planning for their retirement?
According to a recent survey, nearly 1 in 5 (20.1 percent) of American adults spend more time planning their vacations than managing their money. Another 34 percent said that they spend an equal amount of time on both tasks.¹
Planning for retirement in general can look a lot like planning a vacation: you’ll need an itinerary, a destination, and a budget.
Three ways that your retirement planning is like your vacation planning:
1. Itinerary: What to Do
Just like a summer vacation, you need to figure out what you want to do in retirement. It’s important to have a plan to transition into retirement. Whether this means having a list of vacation destinations, a hobby to turn to, or an organization to volunteer with, giving yourself some options can help you remain active and engaged instead of simply doing nothing.
People often plan in detail for vacation, but in retirement they simply “hope” instead of strategizing. Instead, try thinking about the end goal of what you want to do in retirement and what that would look like.
2. Destination: Where to Go
Many new retirees spend a lot of time traveling now that they no longer need to worry about coming back to a pile of work or rationing a limited number of vacation days. As you spend time traveling during your working years, take note of the destinations you’d like to return to. More than just longer vacations, retirement may also mean traveling to a new home—whether downsizing, moving closer to family, or even heading to a senior living community.
Relocating for retirement may be appealing for a host of reasons, including a change of scenery. Maybe you’re looking to lower your costs of living, or perhaps you want to embrace the newfound freedom you have when you’re no longer tied to a job. However, it’s important to consider both financial and non-financial costs before making a decision to move.
3. Budget: How to Pay for It
Whatever you budget for vacation, don’t you always seem to spend a little more? In a similar vein, people assume they’ll spend less money in retirement, but that’s hardly ever the case.
How do you afford your current lifestyle? What expenses do you expect to lose in retirement—and which ones might you gain? Just like planning a vacation, planning how you’ll fund your retirement can be a complicated process with many moving parts.
This planning can begin by evaluating how much your retirement lifestyle will cost, then figuring out how much income you’ll need to afford it. By looking at your Thrift Savings Plan (TSP), pension, Social Security, and any other savings, you and your financial professional can scour all your potential areas of income and figure out the most tax-efficient way to fund your retirement.
It’s About More Than Just Finances
If you think the most common retirement planning pitfall is a lack of finances, think again. It’s actually a lack of vision. Summer vacation is about enjoying the moment, leaving stress behind, and leaning into life’s smaller, simpler moments. Embrace that mindset when you embark on the retirement planning process, but don’t forget to enjoy the present, too.
While a vacation will come and go, spending more time planning vacations than your finances could come at a cost to your retirement.
Retirement planning can take time and effort—but just as you wouldn’t embark on the vacation of a lifetime without doing a bit of preliminary research, you also don’t want to leap into retirement without a plan.
If you’re ready to get serious about planning for your retirement from federal service, register to attend a workshop today!
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