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do you think about retirement?

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I’m in my late twenties, so it’s about 40 years until I hit state retirement age, and it’s more than 25 years until I reach the age at which I can withdraw any of my pensions. I don’t often think about what retirement might be like, or whether I’ll be able to afford it.

I do have a little spreadsheet, that tracks my pension contributions, and investment balances and gives me an inflation adjusted projection of my retirement income. (What can I say, I’m a spreadsheet geek.) It’s currently suggesting that I’ll be ok to retire when I’m 68. I’ll be rich enough to have an income that’s about what I have now, assuming that I’ll have paid off the mortgage by then.

I do put a reasonable amount away that’s earmarked specifically for retirement - currently around 11% of my gross salary. My combined investment amount this year is likely to be around 16%-17% of my gross income. This is marginally more than 2007, and I’m hoping to increase it more each year if I can.

The rule of thumb is to contribute 10% of your income, and although I’ve had a pension since I left Uni, I’m not sure when I started contributing more than 10%. But then, I don’t know if 10% is going to be a good rule of thumb for me. I’m pretty sure that you’re supposed to start with what you want retirement to look like, and then work from there, but I honestly can’t really imagine it.

I’m not anticipating taking early retirement. Compared to many of my m-network friends I have quite a conventional career/life thing going on. David @ my two dollars works for himself in various online ventures, Mrs. Micah has a patchwork career, being frugal and paidtwice are both pro-bloggers/SAHP/loads of other great suff, Patrick @ cash money life, pinyo @ moolanomy, gibble @ gather little by little, single guy money, and the doughroller are all heavily into alternative income (or have aspirations that way). I’m just well, me.

If things continue as they are for me, I’m likely to work (at a job I like) for a number of years, and then just retire when I can afford to. Pretty traditional and conventional. I absolutely don’t mind this at all, it’s just that without envisaging a kind of semi-retirement, it all seem such a very long way off. I am likely to be at least twice the age I am now when I retire, after all.

Because I’m sensible, and because I have no intention of being a poor old person, I’m dutifully putting away a good proportion of my money into retirement. Only enough that will do for retiring at 68 though. I just can’t get excited enough about retiring to work harder on it.

What do you think? Are you working towards early retirement or semi-retirement? Or are there other conventional people like me out there? Let me know in the comments.

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21 comments for “do you think about retirement?”

  1. I really don’t anticipate retiring early; there are enough interesting things I enjoy doing that people are willing to pay me to do that I want to work for as long as possible. However, I’m going to do my best to sock away as much as possible now, while I’m young and unencumbered. Later I might need more of my income for a mortgage, children, or caring for aging parents.

    Posted by E.C. | May 12, 2008, 12:22 pm
  2. Hmm. I’m hoping that I won’t have to pay for aging parents (first choice they’ll remain in good health, second choice they can pay themselves).
    But you’re right, that could work out expensive later on, so it’s just as well to make hay now whilst the sun is shining.

    Posted by plonkee | May 12, 2008, 12:33 pm
  3. My goal is just to avoid going back to a traditional job. :)

    My husband and I don’t really think about early retirement. He’s the type that would go crazy without working, and he loves his job, so his plan is to work as long as he’s able.

    Posted by Lynnae | May 12, 2008, 12:41 pm
  4. Perhaps retirement is just a state of mind. A feeling…whatever. And not a physical position or situation we find ourselves in. And perhaps by this definition, you are already retired.

    And this statement you made is making me talk this way.

    “I just can’t get excited enough about retiring to work harder on it.”


    Posted by fathersez | May 12, 2008, 1:22 pm
  5. I’m putting away as much as I can now, so that I will have more options later. My wife and I both work, and don’t have children yet, so we have been able to afford to live well and still save a ton of money for our future. I’m sure when we have children our savings rate will drop dramatically!

    As for alternative income, I think it is important to have more than one income source. There are very few guaranteed jobs out there. I look at it as another form of insurance.

    Posted by Patrick | May 12, 2008, 3:32 pm
  6. I didn’t always think about retiring early but recently the thought of working another 35-40 years has made my stomach turn. I quite like my current job but still hope to need to only work part time by my mid/late 40s.
    My S/O is very conventional in his outlook but he loves his job, I don’t think he’d know want to do with himself if he retired early.

    Posted by Looby | May 12, 2008, 5:06 pm
  7. Funny, I have actually been thinking on this a lot lately. I am trying to make some decisions on how much I’m putting into my retirement accounts and what kinds of accounts I have.

    Posted by deepali | May 12, 2008, 5:35 pm
  8. We’re trying to save for retirement. Hopefully Micah will be able to teach and write past 65, which will be good for income as well as for him. I wouldn’t mind becoming a best-selling author someday…living off that. ;)

    But if I ever did become rich and famous or we were rich enough that I didn’t HAVE to work at all, then I’d shelve part-time at our local library, write and run blogs just for kicks (though I’d probably still have ads for extra income) and save that for the future. Because I like having something to do, I’m just not feeling the 40-hours at the same job every week thing. (I work more than 40 hours, but it’s broken up enough that I don’t mind)

    Posted by Mrs. Micah | May 12, 2008, 6:11 pm
  9. I use to be very focused on aggressively saving to retire early. Then three things happened. (1) I learned that it was unreasonable to exect a 10% compounded return and that I’d need to save even more if I wanted to retire early. (2) I stopped focusing on the future to the detriment of the present. And (3) I started thinking about ways I would enjoy working part-time during “retirement” which makes retirement more feasible.

    Posted by Aaron Stroud | May 12, 2008, 6:35 pm
  10. Hmmm… I don’t currently save enough towards my pension, I know that for sure.

    I’d love to be able to work until I was about 40, then retire and travel the world, but realistically I know I’ll probably be working until I’m about 70.

    Posted by Rob Lewis | May 12, 2008, 8:37 pm
  11. @Mrs. Micah:
    Isn’t that exactly what you do now? ;) (But with more security of course.)

    My projections use 4% above inflation I think. I guess that as I get older, I’ll modify it somewhat, but it’s ok for mow as I’ve got so many more years ahead than behind.

    Focussing on the present as well as the future is definitely good.

    I’d like to travel the world too, but I want to do it now, rather than when I’m older. I’m just doing it a little piece at a time.

    Posted by plonkee | May 12, 2008, 8:54 pm
  12. I’m a conventional girl too. I’m also putting away 11% and expect to retire at 65 or so.

    Posted by debtdieter | May 12, 2008, 9:46 pm
  13. Being a veteran of the Cretaceous Period, I could retire right now, were I so inclined. And in fact, if the university should decide not to renew my contract, the result would be retirement, since I’m too old to get a job doing much other than greeting people down at the Walmart.

    But I like my job, and it’s so easy that it amounts to semiretirement. As long as it continues unchanged, I figure to putter along in it till I’m around 70.

    However, nothing goes unchanged and nothing lasts forever. For that reason, I’m trying to build a second income stream that will bring in the amount I would need today, above & beyond Social Security and investment income, to survive. That’s about $12,000 a year. So if I lose the job now, I’ll get by; if I stay employed, those earnings can go into the retirement fund.

    Starting to save now, as all you young bloggers are doing, is the smartest thing! Even if you can afford only a little, compound interest IS seemingly miraculous. People shouldn’t be discouraged if the amount they can put aside is small. Just do it!

    Posted by Funny about Money | May 13, 2008, 2:02 am
  14. At 30 I think a lot about retirement. Retirement to me is freedom. I doubt I’d give up working all together, but I would like the flexibility to pick any role, job, position, or volunteer work I choose.

    Posted by One Frugal Girl | May 13, 2008, 3:11 am
  15. I’m pretty conventional too; I got a late start but have the equivalent of 22% of my income going to retirement. Once I pay off my debt, I’d like to get to a place where I could semi-retire at 55 (in 20 years). I think I’ll always want to do something, but at that age, I’d like to switch over to the patchwork approach, with the security of some invevestment income backing me up.

    Posted by Mydailydollars | May 13, 2008, 11:48 am
  16. Just by putting money away early, at all, people are getting a good start. It is amazing how few do even by their 40’s. It is so difficult to predict what your needs will be and how events will unfold (investment returns, inflation…) that I don’t think you can be precise decades from retirement. By saving a good deal (say over 10% of income) and investing well you can get in a good position. And then you can add larger amounts later if you have options to retire (or semi retire, or retire and just work for yourself…)… That is my plan, save a good deal to give myself options to semi-retire early.

    Posted by John Hunter | May 13, 2008, 1:25 pm
  17. I retired at the age you are now, plonkee.

    It was not excatly by choice - my mom developed a terminal, but long-term illness (a rare, non-Alzheimer’s form of dementia)

    She had enough complications from her disease that I needed to monitor her care on nearly a daily basis.

    18 months into her illness I had hit the wall; realized I could not work full time and care for her as well.

    Mom finally died end of last year, well over 10 years later.

    I’ve been spinning my wheels since then.

    Retirement is boring, but I don’t know how to break back into the world of Fortune 500 companies I left over a decade ago.

    Money’s not an issue in the short-term - more that it’s weird not doing what my peers are doing at my age (late 30s)

    Posted by Bill | May 13, 2008, 6:34 pm
  18. @Funny about money:
    Compounding truly is the greatest thing known to man.

    @ Debtdieter and Mydailydollars:
    Hoorah for conventional people - we’ll just have to be *different* in other ways.

    @John and One Frugal Girl:
    You’re both right about trying to give yourself options, I just don’t find any of those options as appealing as using my money to go to Egypt, or to decorate/refurbish my house. I suppose it’s all about balance.

    I’m so sorry about your mother. I think now is a good time to start a second career - not necessarily in an attempt to earn lots of money, but to challenge yourself with something new and exciting. Periods of retirement can be punctuated by periods of work - it’s a lot of fun doing something you enjoy, and if people are willing to pay you to do it…

    Posted by plonkee | May 13, 2008, 7:07 pm
  19. Bill, I’m sorry about your mother. I’m sure the time you spent caring for her was the absolutely best thing you could do with your time.

    Regarding work, perhaps you have the opportunity to pursue an interest or hobby that doesn’t require working for a big company.

    Posted by Aaron Stroud | May 13, 2008, 7:48 pm
  20. I dream of semi-retiring at 55 and having the financial independence to continue to work anywhere I wish. I’m only 27 but I think about this A LOT, probably because I dislike my job and love to save money.

    plonkee would you be so kind as to share a template of your spreadsheet with all of us? I would love to try it.

    Posted by finaidgirl | May 14, 2008, 4:47 pm
  21. I have been thinking about it since I was 18 (im 20 now). Don’t know what it will be like b/c its so far away,but I save for it anyway. I would like to retire sooner than later too. This is why I am trying extra hard. It will pay off eventually.

    Posted by David Carter | May 28, 2008, 7:26 pm

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