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No matter your age, it’s never too early to start planning for retirement. But before you start planning, it’s key to identify your retirement goals, which experts say are essentially the desired results for your life as a retiree. It’s important to set these goals ahead of spelling out your retirement plan, because they’re precisely what will inform the parameters of that plan, which will fund your post-work life.
Experts in This Article
Akeiva M. Ellis, CFP, is a certified financial planner and founder of the personal finance website The Bemused.
certified financial planner and the author of Owning the Dash: The No-Regrets Retirement Roadmap
So, how do you go about setting those retirement goals? According to financial planners, it’s best to take a two-pronged approach: figure out what your ideal retirement looks like (aka your retirement vision) as well as when you would like to retire. With those two retirement goals outlined, you can then start to work backwards in creating a plan to help make it happen.
Retirement goal 1: Figure out your vision
“The first key piece, before you even look at the money or the numbers, is the vision,” says Anthony Delauney, CFP, author of The No-Regrets Retirement Roadmap. To help you pinpoint your vision for retirement, Delauney suggests asking yourself a few questions:
- What is it that you really want retirement to look like for yourself?
- How do you imagine it taking place?
- How do you see your calendar? Your day? Your years?
- What activities or hobbies do you want to be able to do?
In dreaming up your retirement vision, Delauney says to also keep the stakeholders in you life in mind. For example, if you have a life partner, your vision should likely be shared. Also, consider how close (or not close) you want to be live to your friends and family, because that answer will help inform where you envision yourself living during your retirement. Once you know what your vision is, Delauney recommends putting it on paper and sharing it with whomever it might impact.
Retirement goal 2: Decide when you’d like to retire
The second prong of this approach has to do with pinpointing the age at which you want to retire or become work optional, which Akeiva M. Ellis, CFP, founder of personal finance site the Bemused, says means that you don’t have to work if you don’t want to, financially speaking.
“Your time horizon is definitely a huge component of the picture,” says Ellis. “We can’t just start saving money aimlessly.” Figuring out the “when” of retirement “informs what types of investments you might need so that your money can grow fast enough to meet your goal,” she adds.
“It’s really hard to figure out where or how much to save if there’s no set goal for when someone wants to be able to retire.” —Anthony Delauney, CFP
Without setting the goal of when you’d like to retire, you’re not giving yourself a timeline to work with—which is crucial in the planning process. “It’s really hard for individuals to figure out where to save or how much to save if they don’t actually have a set goal for when they want to be able to retire,” says Delauney.
When you determine this retirement goal for yourself, it makes the planning process easier because you can start figuring out how much you’ll ultimately need to save. “There are some people who say, ‘You know what, my idea of retirement is making work optional, and I want to do that as soon as possible,” says Ellis, adding that this goal would make their retirement plan much different than someone who’s looking to retire at a specific age.
While it can and should be your prerogative to set your retirement age goal for whenever feels good to you, Ellis does advise to “be realistic and also take your situation into mind.” For example, she says, if you have a chronic illness that you know may not allow you to work until your ideal retirement age, you may benefit from fast-tracking your savings plans or even altering your retirement vision goal to accommodate your reality.
And while it’s true that it’s never too soon to start setting retirement goals that inform the planning process, Ellis also wants folks to be aware that it’s never too late to do the same. “It’s a very personal matter. And each of us has to come to the ‘what’ and ‘when’ on their own time.”
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