7 Habits for a Highly Effective Retirement Planning

In the pensive mood of Christmas 2024, why not gift yourself a blissful retirement? A well-prepared retirement doesn’t happen by accident; it’s the result of smart decisions, cultivated habits and good ol’ discipline. 

Whether dreaming of traveling the world, spoiling the grandkids or finally mastering the golf swing. It takes more than wishful thinking. Here are 7 habits for a highly effective retirement planning that have helped me reach retirement before the big 5-0.

1. Financial Habits

• Why it’s essential: You can’t plant trees without seedlings. Savings is the humble seed that will grow into a sturdy tree, providing you the shade of a blissful retirement. Make saving for retirement a non-negotiable part of your budget. Start now and make it your number 1 habit.

• What to do: Automate savings so you ‘pay yourself first’. Aim to save at least 15% of your income. If you have more outflow than inflow, be strict to cut out unnecessary expenses OR think of ways to increase your income. There’s no magic to it: if you want to retire well or early, spending less than what you make is the first crucial step.

2. Investment Habits

Investing is the cornerstone of building and growing your retirement funds. This is especially important in today’s economic climate, longevity trend and rising cost of living. 

• Why it’s essential: 

1. 1. Combat inflation and protect the purchasing power of money over time. 
   2. Earn passive income so you don’t need to deplete your savings.
   3. Harness compound growth and enjoy its magic. Invest $5,000 annually at age 25, at 6% growth annually, will grow to $820,000 by age 65. Starting at 35 will almost halved it to $435,000.
   4. Safety net to cover for medical emergencies, home repairs or unexpected expenses. Investments provides a financial cushion and safety net. 

• What to do:

If you have the aptitude, learn to invest in stocks, bonds or real estate. Otherwise, use simple and proven strategy like Dollar Cost Averaging (DCA) into a broad market ETF.  DCA automates investing over a long term, allowing you to stay invested the market. Pick a broad-based index fund for maximum diversification and risk minimisation.

3. Health and Wellness Habits

• Why it’s essential: Because we’re living longer and healthcare will be one of our biggest retirement expenses. Ultimately, health-span is more important than life span.

• What to do: Stay physically active by exercising to improve qualify of life in later years. Low-impact activities like walking, swimming or yoga are great for fitness. Keep mentally sharp through lifelong learning, hobbies and social engagement. Take classes, volunteer or take part in group activities to keep mentally alert. Don’t fall prey to the perils of modern-day living. 

Make preventive healthcare a priority with regular check-ups and keep a healthy lifestyle to stave off chronic diseases. Eat a balanced diet, avoid smoking, minimise alcohol and get adequate sleep.

4. Lifestyle Habits

• Why it’s essential: We are what we do everyday, so our days become our life. Having purpose instil meaning in life and building strong relationships anchors us. A strong support system improves our emotional well-being in retirement.

• What to do: Cultivate hobbies and activities that bring joy and purpose be it playing music, gardening or travelling. Stay connected with family, friends and the community by regularly meeting up, visits or group activities. Create a loose schedule and set goals for personal projects and activities. 

5. Education & Lifelong Learning Habits

• Why it’s essential: Learning new skills and knowledge keeps our brain active, reducing the risk of cognitive decline. The world is evolving rapidly and exponential changes are here to stay. Lifelong learning is a necessity rather than a choice so we can stay current with trends, technology and societal shifts.

• What to do: Read books, attend workshops or enrol in short university or college courses to enhance knowledge. There are no shortages of online learning platforms (Coursera, LinkedIn Learning, Udemy, Khan Academy) and MOOCs (massive open online courses) covering a wide array of topics and many are free. 

You can also opt for travel-based learning for an immersive learning experience. Operators like Road Scholar, Overseas Adventure Travel, Trafalgar combine travel with education, offering fun learning experiences around the world. Some tours for specific age groups, making it a great way to meet peers. Why not gather a bunch of like-minded friends to learn something new while strengthening bonds at the same time? 

6. Legacy and Long Term Planning Habits

• Why it’s essential: None of us exists in solo. Everyone of us is a part of the whole, be it family, friends or community. Instilling legacy planning habits ensure misunderstandings are avoided and loved ones are spared complications.  If you feel comfortable, communicate with family members about your plans, expectations and retirement goals.

• What to do: Draw up your will, lasting power of attorney and advanced medical directive. Make it an annual habit to clear your physical as well as digital assets. Share your plans for living arrangements, inheritance or long-term care with close family members or trusted friends. Keeping abreast with medicare development, tax regulations and pension scheme changes are good habits to cultivate too. 

7. Adaptability and Plan B Habits

• Why it’s essential: Life circumstances change: financial, personal circumstance, health, evolving interests/goals as well as global and social aspects. These make it crucial for annual review of your retirement goals to align with latest developments and preferences. 

Adaptability helps us to pivot when unexpected events arise while Plan B provides us with alternative solution, reducing stress and maintaining quality of life. Together, they empower us to navigate uncertainty with confidence and resilience. 

• What to do: Conduct honest review of you retirement goals regularly. Assumptions should be challenged and new realities factored in. There’s no point working towards an obsolete goal due to changes to your situation. 

Make It a Habit

Good habits are the foundation not just for retirement but for life as well. Start small, be consistent and adapt along they way. These habits will bear fruit tomorrow. So the earlier you start, the greater the impact and the longer you can reap the dividends.

 

Merry Christmas!

Savvy Maverick

(Main image: Yevhen Buzuk, Unsplash)

 

Disclaimer: The views expressed here are drawn from my own experience and do not constitute financial advise in any way whatsoever. Nothing published here constitutes an investment recommendation, nor should any data or content be relied upon for any investment activities. It is strongly recommended that independent and thorough research is undertaken before making any financial decisions, including consulting a qualified professional.