Define Your Goals, The Wealthy Janitor, Part 4

October 26, 2007 · Filed Under · Comment 

Part 4 – Define Your Goals. My friend, ‘The Wealthy Janitor’, and I, always end of talking about investing and retirement savings as I love to pick his brain about this stuff. He always talks about the importance of defining your goals and what retirement means to you.

Why Define Your Retirement Goals?

He has told me to define what I actually want out of retirement, whether I want to travel a lot or play golf everyday, or just drink coffee and play cards with old buddies. He stresses the importance of this so you can better figure out how much money you may need and when enough is enough. No sense putting off today if your plan for tomorrow is already sufficient. He uses a general rule of thumb that your savings + Social Security and any pension you receive should provide you with at least 70% of your pre-retirement income. This percentage would obviously need to be higher if I planned to travel the world with my wife. And perhaps lower if I planned to generate some income by making things to sell in my wood shop in the garage and not spend money on lavish vacations. You get the point.

I also remember him stressing the difficulty many have figuring out when to retire. You want to be young enough to still do the things you want to do and have enough money to do it, but on the flip side, you don’t want to wait to long and not be physically able to get everything out of retirement. Finding that balance can be a tricky thing.

Check out all of ‘The Wealthy Janitor’ series:

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