I just came across a couple interesting articles about envisioning your early retirement and saving for early retirement and how those two things relate to each other.
The first article, from MoneyWatch relates the top ten words that MIT researchers heard from people when they think about “life after their work careers”. They are pretty fun words that do a good job of describing the ideals of reaching financial independence & retiring early: Relax, Happy, Travel, Retirement, Family, Fun, Success, Freedom, Money, and Fulfillment. In addition, some of the most common images people envisioned in the same exercise were family, beaches, cruises, nice homes, cool cars, hobbies, and exercise.
The second article, from The Capital Group, shows that when people go through this kind of exercise – envisioning how retirement looks, what activities they would like to do, and what their investment objectives should be – they IMMEDIATELY state a higher savings rate goal for themselves. Instead of the 16% savings rate a control group averaged, people asked to envision their retirement stated a 22% savings rate. That’s a full one-third higher.
Keep in mind that the actual retirement savings rate in the US is only about 6% today, but the study shows that if people get their ‘eyes on the prize’ they may set higher goals for themselves. Dreaming leads to better plans.
I try my best to alternate the content in this blog between two themes: 1) sharing our personal finance experience; and, 2) the lifestyle change/fun that comes with FIRE. I’m glad to see from the study that these two things work together for people and that taken together they work symbiotically.
How much dreaming do you do about early retirement versus how much time you spend planning the financial side of it?
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