I started preparation for retirement from my first job out of collage. Immediately when I qualified for savings contributions to their 401-K plan I participated to the maximum the company matched, I contributed 6% before taxes and the company contributed an additional 3%.
If I was fortunate enough to get a 6 percent raise, I would increase my savings contribution 4% and keep 2% for me. I did this year after year until I was saving over 25% of my salary. The overall generalization I could pass on, is to “live below your means”. While your neighbors are happy with a new leased Mercedes, international trips or new clothes, why not be happy with a larger savings account?
I have used just about every retirement calculation program available on the market. Some computer programs were free and some cost over $400. The very best I have found is Quicken Deluxe which has a robust retirement calculation program. Years prior to retirement, I tracked our living expenses and made adjustments to estimate what expenses might be in retirement. For example, medical expenses go way up via contributions to a high deductible health savings account and the employer subsidy often is reduced but monthly contributions to savings go to zero. Quicken allows one to make assumptions regarding longevity, investment rates of return and inflation. I would make certain assumptions and when Quicken said I had enough money to retire, I would make more conservative adjustments to the assumptions and wait for Quicken to calculate I could still retire. Eventually I felt secure in retiring.
It is also very important to stay active and busy in retirement. Do not run FROM your job or boss that you may dislike, rather run TOWARD something, such as photography, golf or some other combination of hobbies….. Sitting around wondering what to do now is no way to live in retirement.
Save money, stay out of debt, live below your means and have a life outside of work. It is as easy as that…. Three years of retirement may not make me an expert, but I think all is going well so far……