Retiring after several decades in the working world is a major milestone in your life. To ensure a stress-free and enjoyable retirement, you need to be on the right financial path – but will your finances allow you to retire comfortably?
The retirement countdown
Many working people only realise the importance of retirement planning in their fifties, when they begin the last 10 or 15 years of their careers. Unfortunately, it’s not always possible to accumulate enough retirement capital in a decade-and-a-half, and many people end up taking a knock in living standards when they eventually retire in their sixties. To avoid this situation, people in their thirties and forties should already have retirement as a goal, even though it may still be decades away.
The younger you are when you start planning for your retirement, the less you’ll need to save each month – this is because compound interest will grow the value of your retirement capital over the decades. Your financial advisor will assess your financial situation and recommend the ideal amount that you should put aside each month.
I can’t save for retirement – I have a family to look after!
Many people believe that the cost of buying a house and car, and the additional expenses involved in having children, make it almost impossible to save for their retirement.
While nobody can deny that the cost of living and supporting a family has increased dramatically over the past few years, it’s essential that you have enough capital to retire on when the time comes. Here are some ideas for balancing your cost of living with the need to save and invest each month:
- Budget carefully – By keeping track of your expenses and finding ways to limit your spending, you’ll have surplus cash left at the end of each month.
- Live within your means – Don’t be tempted to buy items on credit unless they are absolutely essential, and instil this habit in your family members – especially your children.
- Plan ahead – It’s possible to lead a very comfortable life and enjoy a hassle-free retirement if you set achievable financial goals for yourself and work towards them. Save up for items your family needs, and make sure that your retirement savings are on track each year.
Before you retire…
If retirement is just around the corner, make sure that you meet with your financial advisor to ensure that you are financially ready to stop working. Once your finances are settled, you’ll be able to retire with peace of mind and enjoy the fruits of your hard work.