Goal Setting for Retirement
By Martin Hawes
I am a compulsive goal setter: I simply cannot stop myself from setting goals. This may not seem like the worst of addictions, but my malady means that I set goals for all kinds of things, whether work or play. I would not wish my disease on others but there is one area where I think it important that everyone should have a goal: retirement.
All of us, not solely the goal-afflicted and addicted, should have a goal for their “freedom” figure. This is the amount required to enjoy a comfortable retirement or semi-retirement. After all, the most serious saving is so that you can eventually kick back and start to enjoy your twenty good summers.
In retirement you need two things; your housing taken care of and some investment capital. Taking care of housing means either a mortgage-free house or sufficient capital to give you income to pay rent.
Beyond this, retirees need some capital to give income to fund retirement costs. Most people will have NZ Super which is around $18,000 p.a. for a single person or $30,000 for a couple (these figures may vary according to whether living alone and tax rates).
These are not amounts that afford a lavish lifestyle – many people will aspire to something better. This will mean planning for some investment capital as well.
Your goal for retirement or financial freedom may be something like: we will have a mortgage free house and investment capital of $500,000 by the time we are age 60. Even though such a goal may not allow you to stop work completely, it could allow you to change your lifestyle, do some different things and start to ease back a bit.
Just because you set a big goal for financial freedom, that is no guarantee that you will achieve it because setting a goal is not a magic bullet. However, that should not stop you from doing it. because a big, long-term goal tells you where you need to be and allows you to work out what you have to do to get there.
This is preferable to being aimless. Goals force you to work out what you want and to prioritise those wants. If you have set a big goal, you have decided what you want and will, if fully committed, put in the required effort.
Setting goals provide you with a long-term vision for your life, but also provides the short-term motivation to get started. If you set a goal and put it in writing, this gives a powerful incentive to follow through and strive to achieve it. Research by Locke and others shows there is a positive relationship between clearly set goals and performance.
Retirement ought to deliver the very best years of your life and as such, it is deserving of a big goal. It may be years or decades away, but good goal-setting gets you started, so you can take those first steps towards the things that you really want.
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