Life expectancy has increased by a fair margin along with inflation over the past decade, and with healthcare costs growing, experts suggest retired people might face the problem of their savings and investments falling short.
Some start early, some start late, but at one point in time, we all start planning for our retirement. To financially secure those final years and retirement takes planning. You might be in a lot of pickles if you are not consciously saving for it.
It is human nature to care more about immediate matters than something that’s far away. Life expectancy has increased by a fair margin along with inflation over the past decade, and with healthcare costs growing, experts suggest retired people might face the problem of their savings and investments falling short.
Here is how to plan for retirement:
1. Be clear on when you want your retirement: Earlier, by retirement it meant that you leave the company, saying goodbye to your daily job. Today, however, the concept of retirement varies – It could be just slowing down and working for a few days a week, or, working a few hours each day. Also, the retirement age is not restricted to a particular age. Many people retire way before the conventionally set mark, or at the age of 60, out of choice.
Choose the option that suits you the best, depending on what you want from life. However, while doing so take into account your financial position and the number of dependents you have. For instance, if you want early retirement, you need to save much more than a person who wants to retire at the age of 60. Hence, think of the time when you want to retire and plan accordingly.
2. Have a plan: What most people don’t consider is life after retirement which is around 30 years with no income. Hence, you cannot leave such a long time to chance; you need clarity to embark on a strategy. Experts suggest the best way ahead is to have a financial plan in place and save more. Not just saving, but having a financial plan and saving and investing accordingly, however small to start with, will make a big difference to retirement income in the long run.
3. Make your retirement decisions right now: Retirement planning is not something you start at a specific point in time or after a specific age. Whatever we earn and accumulate during our working lives, we living off the money and other assets, during the rest of our life. Hence, our retirement plans are affected by the decisions we make or don’t make on our day to day life.
Keep track of your money and know where your money is going. Make necessary adjustments to your spending habits. Also, tracking your spending is a good way to manage your money, both now and during retirement.
4. Keep tab of your spending, savings, and investments: Try to put a percentage of your spending, savings, and investments. This way you will understand where you currently stand. To ensure you save adequately, start by keeping a watch on your spending.
To secure a sustainable retirement, you need to invest smartly, to build those savings into a retirement fund. Planning takes factors like the risks of longevity and inflation into account. Hence, your retirement portfolio must have exposure to equity. To start with, have a retirement goal, and then make a plan to achieve that goal.