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How Thinking About Retirement Shapes Your Life

David Ning

Many people dream about what they would do all day if they didn't have to go to work. The key is to dwell on retirement in such a way that it starts to shape your finances. Here's how my retirement goals have shaped my saving and spending patterns.

I want to be financially secure in retirement, so every dollar I save is the best dollar I will ever spend. I highly value freedom. Saving enough to retire will mean I'm no longer working because I need the cash to survive. I envision a future where I can choose to work only when the endeavor excites me. Whenever I find ways to reduce my spending, I'm really just diverting that money toward a future use.

I want to retire sooner, so I make an effort to increase my income. Working hard throughout your career is a given. But don't forget about other ways to bump up your income. For example, taking advantage of brokerage sign up bonuses and finding a credit card with great rewards can help you bring in a few extra bucks every year. When I was working for corporate America, I also started a side job. I wasn't making much money at first, but that side income turned into a full-time gig capable of supporting my family. I don't want to make it sound like every side business will turn out to be a home run, but I wouldn't have been able to leave behind the corporate world if I never took the first step of branching out. There was no certainty that my side business would thrive, but it was certainly better than not trying at all.

I don't want to spend too much time managing my assets, so I invest in index funds. Index funds have been proven again and again to outperform the vast majority of active funds with the same benchmark. Another advantage of investing in index funds is that it's simple to manage the investments. Even if I can beat the market by picking individual stocks or funds, I don't want to take the time to do it in retirement because that's practically a full-time job. I might as well start with a solid investment plan now, and not be stuck with complicated investments that are time consuming to manage and difficult to maintain.

I want to live an active lifestyle when I retire, so I do my best to stay healthy now. It's hard to find the motivation to keep working out and staying in shape, but I know I can't afford not to. Those who manage to struggle through exercising sessions several times per week will be rewarded with a higher quality of life in retirement. Plus, there are mental health benefits to working out as well. Working out makes you sweat, and the endorphins you generate can help reduce stress and in general make you feel happier. And we all want that.

Retirement may seem distant to you right now, but start thinking about your future self. Picture how you want to live in retirement, and make changes now to make that transition possible.

David Ning is the founder of MoneyNing.com .

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