I am still young (34), but believe in the following tenants and is my own financial strategy. My circumstances may be unique, but this is how I am proceeding and what is working for me.
Education: Get a new degree or certification every year. Keeping your skills relevant is the key to ensuring you have a skill set that will carry you into retirement. I know too many old farts in my industry who let their skills grow tepid and as a result couldn’t find a job when forced out in their 50s and started a second low paying career late in life. I have skill sets in project management and cyber security. MBA, MS, PMP, CISM, CISSP, CCSP, PMI-ACP, CSM, CSPO, Proj+, A+, Net+, Sec+, ITIL means jobs security and income. I have started saving for the kid’s college early. I could also see going back to school for another undergrad as I approach retirement age. I am a few months away from a History undergrad now.
Housing: Don’t go nuts. I believe that eliminating payments is the key to growing your wealth. No more than 25% of your income should go to rent/mortgage, and if a mortgage no more than a 15 year. If all goes according to plan will have the house paid off before kids start college.
Lifestyle: How much do you really need? I like the pinball hobby because you can get out what you put in so how expensive is it really?
Debt: Other than the house, don’t do it.
Investing: Maximize your tax differed accounts. Max out the ROTH, and the 401k at least to the employer match, if not to the max. Put your funds in aggressive ETFs and mutual funds. Do I think my funds will go up next year? Maybe. Do I think they will go up in the next 31 years… yes. I have a small (~10% of retirement) day trading fund for my risk taking. Not my whole nest egg.
Affairs: Don’t do it (can’t control everything your spouse does, but keep them happy). Happy wife happy life.
Retirement Age: As far as my “close to retirement plan” I plan to keep working as long as I can, but maybe not as many hours as I can. I happen to be one of those weird people that likes their job. I enjoyed my time in the Marine Corps, and I enjoy my time in government contracting. I have seen too many people work their entire lives to retire at 65, and then drop dead 2 months later. I have also seen folks forced out in their 50s and forced to retire early or start second careers, with detrimental financial impact (see education note).
Retirement Work Hours: In the area I’m in, what I have seen that I really like, is a few older folks that work part time here. If you have in demand skills, they will let you work less than full time. My main workmate here is 72. He started working 4 days a week when he hit 55, 3 days a week when he hit 60, and 2 days a week when he hit 65. He’s a “retired” full bird Air Force Colonel so doesn’t need to work, but likes his job, and doing this keeps him happy and healthy. I don’t plan to work until I’m 70, but if I could start taking 3 day weekends when I hit 50 or 55 I would be very happy. This would also take care of health insurance if that works the same way 30 years from now as it does today.
I would like to be in a position where I don’t have to work in my mid to late 50s, but likely will continue to do so. Easing into retirement sounds like a much better plan to me than diving in all at once if I can control that.
Disclaimer: I have been very fortunate in life. Your mileage may vary.
Beginner note: If you want basic investing/how to handle money advice, I have found the following flowchart to be excellent.
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