Planning for retirement is for many of us an enormous challenge if we want to maintain the same standard of life in retirement that we have had during our working lives. The reality is that the vast majority of people just cannot do it. Even if you are one of the fortunate few to become a millionaire, the chances are that a big proportion of your wealth is tied up in the property you live in or in a holiday home. Neither of which will generate an income for you.
So what is the retirement trick? A very good friend of mine taught me the retirement trick a few years ago. It is a really useful way to stage retirement especially if you run and own you own business.
It works like this. Let’s image you are over the age of 50 and you are starting to think about retirement seriously for the first time.
At the start of year 1, you plan 4 holidays equally spaced 12 weeks apart. But you have to be serious and take these holidays – you must take them or is doesn’t work. Now many of my clients want to travel in retirement, so the trick is to start doing it in your 50’s. Write down that bucket list of places you wish to visit and start ticking them off one by one. But there is another side to the trick, you have to work extremely hard in between the 12 week breaks, to make sure you are still earning what you need to earn. This is really important.
So at the start of year 2, you need to plan your holidays and breaks once again. But this time instead of booking 12 weeks apart the holidays should now be 11 weeks apart. And again working hard in the in-between weeks has to be top rate. The reason why this may work for you is 2 reasons. Firstly you have always got a break to look forward to, but also it should hopefully extend your working life as you will not get worn out so quickly.
And in year 3, yes you’ve guessed it, instead of having a break every 11 week’s, this time it is every 10 weeks. Some people plan to go down to a 4 day week or even a 3 day week, however I think that this has potential to work even better. Not only can you travel further and see more interesting places, whilst you are at work you are there for the full working week, which hopefully will mean you are more productive and of course making more money.
By the time you get to what most of us regard as a proper retirement age in our mid 60’s the chances are we have been to all the places we would like to go to, which in turns means, maybe we don’t need quite such a large retirement fund after all, not to mention than you might think that working to 70 and beyond may not be so bad after all.
This article does not provide specific advice and you should always seek professional advice from a qualified adviser before making any decisions.
Contact Martin Dodd on 01902 742221 or email him at [email protected] if you would like talk about money issues.
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