Green Retirement Blog

Getting to retirement involves climbing two steps.

A proper retirement plan turns achieving your retirement, which at first may appear to be a steep wall, into two easily surmountable steps. But before you can climb those 2 steps into retirement, you need to know their names, they are Today and Tomorrow.

Step 1 to Retirement - Today

The first step in retirement planning is to understand where you stand today. What is your current financial situation? Having a clear understanding, of your total current financial situation, is essential to being able to properly plan your retirement. You need a household balance sheet - just like a business.

• Assets
• Liabilities (Debts)
• Income
• Expenses

A household balance sheet will show your current net worth, your savings rate, and details your spending.

Step 2 to Retirement - Tomorrow

Having completed step 1, understanding your current financial situation, you are ready to take the next retirement planning step. But what are you stepping into? That is what step 2 is all about, answering the tomorrow part, of retirement planning. How much do you need for retirement? Step 2 is creating a retirement budget.

• Annual expenses in retirement

Housing, health insurance, cable, gas, phone, vacations, clothing etc. What is your annual spending budget going to be in retirement? In order to create a retirement plan, you have to answer that question, before you retire. Once you know how much you will be spending annually in retirement, you will have taken the two steps necessary, to creating your retirement plan.

The Retirement Plan

Now that you know how much you have today (step 1), and how much you will need tomorrow (step 2), you can create your retirement plan. And answer the following retirement planning questions:

1. When can I retire?
2. How much savings will I need for retirement?
3. How much can I spend in retirement?

The answer to those three questions are a function of, how much you have today (savings), and how much you will need tomorrow (spending). I will go into greater detail, in future posts, the simple mathematics of calculating the three retirement planning questions. For now though, I wanted to introduce, the 2 step process to retirement planning.

Learn more about Green Retirement Planning - And find out how you can save your retirement and the planet!