New research suggests up to 77 per cent of retirees have failed to adequately prepare for the first five years of retirement by not including leisure activities, including travel.
But fun doesn’t just happen, you need to budget for it.
If you don’t factor fun into the lifestyle you want for your 60s and beyond, you might find yourself with a crater-sized hole in your financial plan when you do spend money on such activities.
You could be living another 30-plus years after you’ve turned 60, which would make life pretty dull if you don’t start including a financial plan to incorporate things like travel or living in a different place for a little while.
How then can you budget for fun? It’s as easy as 1… 2… 3.
1. The 80 per cent rule
There’s this assumed rule of thumb that most of you will be living on 80 per cent of your pre-retirement income however, the reality is you’ll be ticking items off you bucket list soon after your retire.
Financial planner, Douglas Kobak says, “Most retirees need an income of at least what they were earning just prior to retirement, to maintain their lifestyle and do leisure activities as well.”
That takes into account the cooking class you have had your eye on or the holiday safari in Africa. You’ll be wanting to take advantage of your youth and ability to do these things early because by the time you reach 90 or 95 health and mobility might hold you back.
2. Creativity is the key
You might want to make the most of your leisure opportunity, but that doesn’t mean you have to put yourself in the poor hour with expenses. If you no longer have a steady income you’re going to have to get inspired so as to make the most out of your money.
Consider how your passion might open up a leisure opportunity. For example, you could volunteer abroad and see places like Jamaica, Nepal or South Africa, and Starts at 60 knows of at least one former teacher who was able to travel to Italy to teach English in a homestay.
Involve your partner in the planning
Believe it or not, two-thirds of retirees who have a partner don’t take the time to talk about how much leisure time they want to spend together or how much money they’d like to spend on it in retirement.
What this means is that if you have a dream of running a B&B in the south of France, while your special someone would be content fishing off the end of the local pier, you might want to start talking about how it is going to work.
That’s not to say it’s the end of the relationship, but until you start discussing things you also can’t put a monetary value on things.