Retirement is a subject I've long enjoyed pondering and planning. While I enjoy what I do for a living, it's not so much the standardized version of retiring on some tropical beach for days of doing nothing that I like planning for so much, but rather looking for a secure financial future in general.
A retirement in which my family and I enjoy financial security, maybe working part-time, but with the opportunities to do what we want when we want is my main goal. However, I'm realistic enough to know that such a future won't just happen magically -- we have to make it happen. And making it happen can take time and effort. In fact, I kind of look at building our retirement like building a home.
Laying the Foundation
I realize that the years following college were the one in which we laid the groundwork for our retirement future. Like a home, our retirement needs a strong base upon which to be built. This base doesn't have to consist of a huge amount of retirement savings -- although that would be nice -- but rather in our case, paying down debt and creating an environment in which we can better plan and prepare for our retirement future.
In our situation, we used these years to do things like pay off student loans, buy a home, sell a home, and use the proceeds to purchase a smaller home outright. In the meantime, we worked to remain debt free in other aspects of our lives as well and find work that suited us well and provided enough income to start a family. Therefore, while we weren't saving a ton for retirement during this time, we laid the foundation upon which to build our retirement future.
Creating the Structure and Building Equity
The second phase of the retirement building process is one in which the structure begins to take shape in the form of equity. We were a little ahead of the game in this area when it came to our living situation since we were able to downsize and rid ourselves of house payments by owning our home outright. This provides us with some decent equity moving forward, and it will hopefully help us keep mortgages on future homes to a minimum.
Otherwise, this "creation" phase of the retirement process is one in which we started to focus less on the present and more on the future. Putting money into retirement accounts, gauging returns on these accounts and other investments, bolstering our emergency fund, while at the same time saving for college for the kids, are all aspects we're tackling while building the structure of our retirement future.
Maintaining What We've Built
Like a home, once our retirement plan has been built, it must then be maintained and at times, repaired. This is the end phase where hopefully the retirement savings structure that has been put in place can weather the many potential storms that can come its way.
Through diversification and knowledge, we hope to be able to keep a close eye upon and be prepared for a variety of possible pitfalls and be able to repair damage to our retirement holdings, if and when it should occur. Again, like a home, letting rot and decay eat away at our retirement savings through things like inflation, poor or outdated investment strategies, and improper risk diversification, could open the door to larger problems, and eventually mean that our retirement funds are ones that can no longer provide us with a proper roof at over our heads.
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