What's Your Retirement Vision?

Posted by D4L | Wednesday, May 07, 2008 | , | 4 comments »

Where there is no vision, the people perish.
-- Proverbs 29:18

Let's look at a couple of definitions from dictionary.com:

vi·sion [vizh-uhn] : the act or power of anticipating that which will or may come to be
plan [plan] : a scheme or method of acting, doing, proceeding, making, etc., developed in advance

A vision is taking the time to think of (anticipate) in detail what the future will bring. You would need to consider future earnings, savings and economic issues such as inflation. Then based on what you foresee in the future, you would formulate an action plan to ensure the best possible outcome given your unique circumstances. You can't have a retirement plan until you have a retirement vision. It would seem to me that there are a lot or retirement plans out there but very few retirement visions.

Many people are putting money into various retirement vehicles, but they haven't taken the time to envision how it is all going to come together and ultimately if it will be enough. Unfortunately, a significant number of people are not even taking advantage of tools at their disposal. It was noted in a March 2006 CNNmoney article "Retirement: Ready or not? Not, apparently" that

only about 60 percent of workers over 40 who are eligible to participate in their 401(k)s do, and the number of workers covered by a defined-benefit pension has steadily declined. Meanwhile, young workers have the lowest 401(k) participation rates of all workers under 65.

A portion of my retirement planning includes dividend investing. One of the beauties of dividend investing is it provides you continuous feedback. As the years and decades go by you can see your earnings steadily grow as you invest your money in dividend stocks. When you hit retirement it is not that drastic change that many people fear. You have spent a lifetime preparing for it.

Time is only your friend, if you enlist him early. Wait too long and he can be formidable adversary.


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4 comments

  1. Carolus Rex // May 7, 2008 at 7:49 AM

    Again, nice post!

    I especially like the last two sentences... :-)

    My main strategy is dividend investing. Buying "good" companies, i.e. with a sound and proven operating and financial history. The crux is to find them... ;-)

    Not necessarily for retirement purposes (although I'm in for the long haul); it's a nice complement to handle everyday expenses (I guess I'm swearing in church here? ;-))...

    I'm currently building a portfolio of US stocks as the dollar is historically low (I live in Sweden) and many stocks are down due to the subprime crisis.

    Swedish companies mainly pay dividends on an annual basis; it's nice to add quarterly dividends to the pot! ;-)

    If the dollar recovers, then I'll de facto get additional dividend increases. As always, it can go the opposite way too...

    Best regards,

    Carolus

  2. Dividends4Life // May 7, 2008 at 10:14 PM

    Carolus: I have a couple of European investments that pay annual dividends. I don't care for that and much prefer quarterly. Right now many U.S. stocks are at fire sale prices and I am buying all that I can.

    Thank you so much for visiting my site!

    Best Wishes,
    D4L

  3. financialjungle // May 8, 2008 at 2:32 AM

    Great post. I love it when you said dividends offer investors continuous feedbacks. It's so true. Typically with other strategies, you won't know if they're working until maybe 5 or 6 years in. With dividend investing, you're seeing positive reinforcements on every dividend increase.

    FJ

  4. Carolus Rex // May 8, 2008 at 5:43 AM

    financialjungle,

    In addition, I find it easier to hold stocks during hard times when those regular payments show up at my account. It eases the pain of watching falling stock prices... ;-)

    D4L,

    I'm also regularily pumping in (almost) all my cash in US stocks. My US portfolio is currently about -10% (excluding dividend payments, but including the sliding dollar), but I'm optimistic and believe this is a window of opportunity.

    In the early 1990s, we experienced a severe financial crisis in Sweden (and elsewhere) and many stocks in the financial sector were ice cold. In retrospect, it proved to be a great moment to look for bargains...

    BTW, your blog is great!

    Best regards,

    Carolus

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