Anyone who knows me, knows I’m a planner. It is not so much a career, but a way of life for me. It may even be a disease and that is apparent in what I did with this. I took planning to a whole new level.
It will come as no surprise that I created an excel worksheet for this. Actually I created several (I may have a small addiction).
So what the heck am I planning for?
My goal of course. As I said on my Freedom post, that is something different for every person, so my plan will not look anything like your plan, but the principle is the same.
Your goal might be to pay off your mortgage? Upgrade your car? Buy a yacht and sail around the world? Or leave a little nest egg for your children? Whatever you choose, you will need to plan accordingly. For me my goal was: to not have to ‘work-to-live’ by the age of 55.
Moving the Goalposts
I am already 53 (time flies when you’re having fun)! I have done many things to work towards this goal over the last few years, so I’m not starting from scratch here. I don’t have a mortgage, I live in a low cost economy, I already only work part-time and my requirements are fewer than most. I’m fairly low maintenance.
You’ll notice I said my goal was. There was a slight spanner in the works that made me rethink my whole plan. In short my father had an accident and the house I assumed I would inherit was about to be taken away by the state to pay for his care.
Obviously I wanted the best for my Dad, but also it made me think hard about how I could still achieve my goal without my share of the house.
Assume the Best (Plan for the Worst)
The problem, though, with planning so far in the future, is that you have to make assumptions. In making assumptions you can often get bitten by one of them. Therefore, I would suggest you also prepare to change those assumptions.
The fixed parts of my plan were as follows:
- Amount I am able to invest – more checking down the back of the sofa.
- The current date
- My current salary
- The interest rate offered at this moment in time.
- My current age
- What age I would like to retire (55 – 60)
My assumptions putting my plan together went something like this:
- The interest rate continues at the current rate
- I will keep my current part-time income for X number of years
- How long I will live after I retire
- I will continue to spend at the current rate i.e. costs will be stable
- I stay living in a low-cost economy
My biggest problem here is my money will run out if I live too long…almost a good problem to have 🙂
Using a mixture of these assumptions it is possible to calculate a financial target and a deadline to achieve this.
My target must be met by these investments by 2025 in order for me to live after my retirement and until my death.
I will openly admit that this target feels massive and may or may not be attainable.
My initial investment is relatively small. I will have to rely on reinvestment strategies, but believe it is possible.
For this reason I will openly track my progress for all to see as I journey towards a stress free retirement.
If you want to follow my strategies, my progress towards these goals and the ups and downs I encounter along the route – hop on over to the MoneyWorkx tab where I detail my status on a monthly basis.