Please enjoy this 1-minute video (for those receiving this by email: please click on the blog title line above to view).
The video discusses the fundamentals of goal setting. But where (what) is the goal post for retirement planning as a goal? There’s more to it than simply saying I’ll retire and income will come from my retirement savings (401k, 403b, 457, IRA, Roth, etc.), Social Security and/or pension.
Here is a fundamental approach that should be considered and used for developing all your goals: Journalism 101 Meets Personal Finance 101 where Who, What, Where, Why and How are addressed for each goal.
When it comes to everyone’s retirement goal it’s easy to get confused about what that goal should look like in the first place! The easiest answer is basically what most people seek … to maintain today’s working years standard of living (what I call your Lifestyle Standard of Individual Living (SOIL) (Audible)) into and through your retirement years. As your working years SOIL adjusts, so should your retirement years SOIL target.
What’s an easy way to determine your SOIL without the old fashion budgeting approach? How about A Bank Statement Approach to Budgeting – but NOT used like you’d think!
Your lifestyle SOIL is unique to you. Thus, you shouldn’t compare how you’re doing against what others are doing. Keeping up with the Joneses is a flawed approach to measuring success basically because they’re not you! One things is probably true – they haven’t evaluated what their goal posts should be or even their goals. So how can that be your measure of being on track? Know your own goal posts and maybe the Joneses will try to keep up with you (especially when you retire and they can’t)!
Finally, as I mentioned above, when your lifestyle improves (or retreats, hopefully temporarily), you need to also adjust your retirement target lifestyle (What is a Retirement Feasibility Timeline?), otherwise the goal goes out of balance with your target, and the over spending during working years is not sustainable until an older retirement age (probably not the original goal where you now have to retire even older than planned or desired). In other words … Beware the The Insidious Impact of Lifestyle Creep.
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