As a general rule, the earlier you begin retirement planning, the better your future is likely to be. It’s now commonly accepted that in the not too distant future, the government pension won’t be enough to comfortably live on. The pension is certainly something you should not rely upon in your senior years.
If you’re in your 20s, retirement might seem eons away and it might sound too early to start even thinking about that part of life. If you’re in your 30s, it may be starting to creep into the back of your mind that it’s time to start preparing. If you belong to a higher age bracket, you could be thinking that it’s too late. You may be starting to feel pressured about your assets and how much time you have left to get ready. Setting about your plans sooner does help create a higher chance of having a comfortable retirement life. However, panicking doesn’t help as it can create an emotional block that disables you from making the best choices. Truth is, whatever age you are, the best time to begin is now. The next question is, “Where to begin?”
Retirement planning: What is the best retirement plan?
The right answer to that would be “What are your goals?” What suits one person may not necessarily suit you. It all depends on your needs and expectations about that chapter of life. That’s followed by an examination of your current situation.
1. Decide when you want to retire.
This serves as the target date of when you should be ready financially. This also serves as your starting point from which you’ll be counting the number of years you’ll have to prepare for. If you plan to retire at 55, then you know you should cover 30-40 years in your retirement planning. For those who prefer to retire later, you have more years to prepare for a shorter retirement duration.
2. Decide how you want to live when you’re retired.
What kind of life do you want to start living at the age of 55? Do you want to spend your days simply, listening to music and relaxing in your garden with your favourite cup of tea? Or do you want to spend all that free time seeing the world like never before? Or do nights out in town and the finer things in life suit you more? All these would entail costs that you need to include in your retirement plan. Get the total estimated cost and divide that against the number of years you’ll be earning. That’s how much you’ll have to put away every month at least.
3. Don’t panic.
It’s not expected that you’ll be able to afford your life in retirement with your first job’s pay or even your second. The purpose of retirement planning is to identify much you will have to set aside throughout your working life and selecting appropriate investment strategies to help achieve that. Your financial life is bound to improve and we’re hopeful you’ll advance in your career, yet there’s no assurance when and how much you’ll be earning. Even high-income earners are encouraged not to rely on their job’s pay cheques. It’s essential to look into different financial vehicles that will be most beneficial in the long run.
4. See exactly how much government assistance you would qualify for.
In retirement, any assistance is welcome. Take advantage of the financial assistance that will be made available to you and pay attention to the requirements needed. The guaranteed pension amounts vary based on the different sets of qualifications. Being aware and planning for this, lessens the pressure of how much you have to save up before you retire. In retirement planning, government pensions and other forms of public aid should always be considered.
5. Research on different investments you could venture into.
Your current income may be enough to supplement your needs and present lifestyle. However, there might not be sufficient room to save up for big expenses and life in retirement. This is why having investments is a crucial part of retirement planning. The sooner you venture you’re your desired investment vehicles, the more room you have to allow your finances to grow. Take note that when investing, risks are inevitable. Be realistic when setting expectations and understand there are downtimes. This would all depend on what type of investment you choose to go into. With proper guidance and the right knowledge, you’ll be able to better anticipate these risks and how to deal with unexpected ones.
Retirement planning isn’t a leisurely or particularly enjoyable activity however it’s an action that is necessary to live life as we believe we should. Keep in mind that seeking counsel from experts is wise. For more information or to book an appointment, contact our expert team. Our strategies will help your progress with a clear path and a comfortable, worry-free life.