Retirement Goals: Importance, Types, and How to Set Them

Imagine being retired, but not knowing what to do next. Would you sit there and stare at a wall for the next 30 years? Well, that’s certainly one option. The other option is to get excited about retirement and set some retirement goals.

I’m going to explain why retirement goals are important, the different types of retirement goals, how to set retirement goals, and then finish off with some examples.

Setting goals for retirement is the first step in preparing for retirement, so let’s get the ball rolling!

Why Retirement Goals & Objectives Are Important

Retirement goals and objectives are important, because they provide the basis for every financial decision you make between now and then.

It also simplifies the decision-making process, because you can decide whether such a decision will move you closer to your goals, or further away – and the answer to that will be the answer to the decision needing to be made.

When you know where you want to go, you’re more likely to end up there by making decisions that are aligned with your goals. And, by documenting these goals, you’re probably going to begin forming a visual representation of what your retirement will look like.

Let’s take a look at the types of retirement goals you might have.

Types of Retirement Goals

There are two main types of retirement goals you might have. These include non-financial goals and financial goals.

1. Non-Financial Goals

Non-financial goals are arguably the most important goals of all. These are the goals that define how you want to spend your time throughout retirement.

When you think of retirement, what do you see? Are you caravanning through Australia, exploring the world, spending time with grandchildren, beginning a long-awaited hobby, learning languages, exercising more, fishing everyday or just living a life of leisure?

Whatever your non-financial goals, it’s important to document these; because the clearer these goals are, the more likely you are to achieve them by subconsciously working towards them.

Your non-financial goals will also sculpt your financial goals, because your financial goals will be the funding mechanism behind living the retirement lifestyle you’ve envisaged.

Non-financial goals are qualitative and not designed to be measurable from a retirement planning perspective. Conversely, financial goals are quantitative and measurable, as described below.

2. Financial Goals

Your financial goals are goals that have a specific cost and timeframe. These are split into one-off capital expense goals and ongoing expense goals.

What type of one-off financial goals will you have? Will you be upgrading your car, renovating the kitchen, buying a caravan, going on a once-in-a-lifetime holiday, or gifting some money to the kids? If so, when? And, how much will it cost?

What about ongoing expense goals? What income will you need in retirement to cover living costs, travel costs, and so on?

In the initial stages of preparing for retirement, it’s not always possible to know what’s affordable and what isn’t. You might not know where to start. But, you don’t need to worry about that yet. Simply getting started and knowing how to set retirement goals is all you need to know for now.

How to Set Retirement Goals

When it comes to financial goals, all you need is a starting point, because as your retirement plan begins to take shape, the numbers and values will fall into place.

Here’s the 5 things you need to consider when setting retirement goals.

1. Write a Retirement Lifestyle Statement

A retirement lifestyle statement is a one or two paragraph statement that provides the theme of how you will live your retirement – almost like a mission statement.

A retirement lifestyle statement can help keep you true to yourself and give you guidance when considering your goals and objectives.

It’s likely you’ll feel a little lost in the initial month and years of retirement, with friends and family pulling you this way and that. By having a retirement lifestyle statement in place, you can be reminded of what’s important to you.

This statement can be updated regularly as you learn more about yourself throughout retirement and become more aware of what you value most.

Go ahead and write your statement now (example towards the end of this article).

2. Create the Perfect Week (with your non-financial goals)

Once you have documented your retirement lifestyle statement, a good exercise is to create your perfect retirement week with your non-financial goals.

Will you be playing tennis on Wednesday morning, taking Spanish lessons Monday night, watching the sunrise every Thursday, having lunch with friends on Friday, or playing golf on Saturday?

Obviously your week will change from time to time, but having a schedule of some sort will ensure you’re accomplishing in retirement what you were hoping to and give you some kind of structure that you’ve probably been used to for most of your life.

Draft out your perfect week (example towards the end of this article).

Related Article: 5 Biggest Retirement Planning Mistakes

3. Be Realistic, Yet Ambitious (with your financial goals)

Most clients we work with underestimate what is affordable in retirement when they first come to us and aren’t aware that they’re in a much better financial position than they thought.

Don’t fall into this trap. I personally believe it’s better to get a bit gnarly when setting your retirement planning goals and then dial them back a bit as you work through the retirement planning process.

Sway the bar a bit more towards lofty goals, rather than realistic expectations. You’re only retired once, so you may as well get the most out of it.

Make a list of your one-off capital expense and ongoing expense goals now (example towards the end of this article).

4. Be Precise

With all of your goals, both financial and non-financial, it’s important to be precise with your goals. The more precise you are with your non-financial goals, the more likely you are to live the retirement you envisage.

When it comes to your financial goals, it is imperative to be precise with dates and timeframes, even if you’re not completely sure at the beginning. Just get some numbers down. The reason for this is that you will need to complete some initial projections to see if you’re on or off track – and flaky dates and numbers just won’t cut it.

5. Prioritise

The final step to setting retirement goals is to prioritise your goals as best as possible. This is because there might need to be some give-and-take when it comes to building your retirement plan.

You might need to push retirement out by 12-months, or you may have the luxury of bringing it forward. You might need to spend less on those renovations, or have enough saved to afford a higher retirement income goal. By prioritising your financial goals, you’ll have greater perspective on which levers to pull to lead a more fulfilling retirement.

Sometimes it can be tricky thinking of all your financial and non-financial goals. So, I thought I’d compile a list of examples for you to help get the ball rolling.

Retirement goals example

Listed below are some examples of both non-financial and financial retirement goals, as well as a retirement lifestyle statement and weekly timetable. You can amend some of these and make them your own, or come up with completely different ones.

Examples of Non-Financial Goals

Some examples of non-financial goals include:

  • Spending Tuesdays and Friday mornings with the grandkids
  • Going to the gym on Monday, Wednesday and Saturday
  • Take Spanish lessons on Monday evenings
  • Play golf every second Saturday
  • Have lunch with a friend every Thursday

Examples of Financial Goals

Some examples of financial goals include:

Lump Sum Capital Expenses:

  • At retirement, complete kitchen renovations at a cost of $20,000.
  • Upgrade my car at age 63 every 7 years thereafter until age 85, at a cost of $30,000 each upgrade.
  • Purchase a caravan for $60,000 during the first year of retirement.
  • Gift $25,000 to each child when I reach age 65.
  • Go on a once-in-a-lifetime holiday to Canada at age 65 at a cost of $50,000.

Ongoing Income Expenses

  • Cover retirement expenses of $50,000 per year throughout retirement, from age 63 until age 100.
  • Spend $7,000 each year on domestic travel until age 80.
  • Spend $20,000 every second year on international travel, until age 75.

Example of Retirement Lifestyle Statement

An example of a retirement lifestyle statement might be:

I’m excited to start this new chapter in my retirement! I want to explore new things, take care of myself, and connect with my family and community. I’m going to focus on staying healthy through exercise and eating well. I also plan to keep learning new things and volunteering my time. And of course, travel the world and discover new cultures.

Think about what’s important to you in retirement and write your own retirement lifestyle statement. Feel free to use part or all of the one above.

Example of a Weekly Timetable

The table below is an example of the weekly timetable, so that you can create your perfect week.

MondayRead a BookGym & Spanish Lessons
WednesdayGymFree Time
ThursdayWatch the SunriseLunch With Friends
FridayGrandkidsFree Time
SaturdayGolf (every 2nd Sat)Family/Friends Catch-Up
SundayGo for a WalkSee a Movie

Create your perfect weekly retirement timetable. Not only will this help you prepare for retirement mentally and emotionally, but it can also get you excited about the prospect of retirement and motivated to get there sooner.

Wrapping Up

Documenting your goals for retirement is the first step towards preparing for retirement. This allows you to use your goals and objectives as the basis for your retirement plan and all of your financial decisions now and throughout retirement.

If you want to understand more about the preparation for retirement, I suggest reading this article: Preparing for Retirement in 7 Steps

Alternatively, engaging a professional for personal retirement planning advice can fast-track your retirement plan, give you greater confidence that you’re on the right track, and ensure you avoid any costly mistakes.

Our financial planning firm, Toro Wealth, specialises solely in helping 50 to 70 year-olds optimise their financial position in the lead up to retirement. If you’re interested in learning more about our service and cost, click here.

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Thanks for stopping by - Chris