Retirement is the time to start checking off items on your bucket list, like taking a trip overseas or picking up a new hobby, but many of those checkmarks might require some additional savings. It can be difficult to budget money for leisure activities until you know exactly how you might like to fill your retirement days. That’s why it’s important to take time before you retire to explore your interests. By doing this, you can plan and allot resources for the activities that bring you the most pleasure.
Explore Your Interests Now
When many think of retirement plans, traveling and vacationing are often top of mind. Whether on a cruise, aboard a plane or in the sand, you have the freedom to go wherever you choose, but there are numerous activities beyond travel that could occupy your time. According to a 2014 American Time Use Survey people ages 65 to 74 spent an average of about seven hours per day on leisure activities. Trying out a new hobby, renovating a home or even buying a second property could also keep you busy after your working years.
Don’t be afraid to explore old and new interests before entering retirement:
• Take a trip
• Sign up for a cooking class
• Do something spontaneous
It’s wise to explore your interests and desires while still working, because you can’t completely establish a retirement plan unless you know what kinds of leisure activities might impact your budget.
When discovering where your interests lie, it’s important not to dig too deep into your savings before retirement, but by entertaining your curiosities you can learn what opportunities will offer you the greatest satisfaction later in life.
Save For The Leisure Days
Aside from leisure expenditures, your expenses will change when you’re retired. In order to sustain the same standard of living after your working years, it’s estimated you’ll need about 70 percent to 80 percent of your annual income for every year of retirement—it’s also prudent to calculate in an average annual inflation rate of about 3 percent. Once you’ve budgeted for the big-picture costs, you might start figuring in the expenses of your wish list activities, whatever they may be.
If you choose to travel, how often will you go and how much will each excursion cost? If you take up a new hobby like photography, for example, how much do you plan to spend on new equipment? These kinds of expenses could put pressure on your base spending plan, so begin outlining ideas for your leisure time, because it could affect how you spend your money.
Prepare For Unexpected Surprises
However, a budget for all of these exciting retirement activities should only be factored in after you’re sure you have enough savings and income to protect you for the future. Regardless of how well you plan, budget and save, the future is unknown, so having a reserve of resources is vital. Not every dollar of your retirement savings may have an explicit purpose, because a certain portion should be reserved for those “just in case” moments.
Take advantage of the well-deserved time off. Make checkmarks on your bucket list, and if you don’t have a bucket list yet, explore your interests now, so you can develop a leisure plan for the future.
About Cordasco Financial Network: CFN is an independent Registered Investment Advisory firm focused on bringing value to clients beyond choosing and managing the right investments. Whether it’s retirement, owning a business, or pre-retirement planning, CFN creates clarity and comfort while providing financial guidance. To learn more please visit www.cfnplan.com.