Are you looking forward to a stress-free retirement with a comfortable income and the freedom to enjoy your life, or are you worried that your retirement portfolio just won’t be large enough to carry you through old age?
We all want an easy retirement – the best reward for decades of hard work and careful planning – but what is the secret to retiring comfortably? Is there something that people who retire comfortably do differently than the rest of us, or are they just lucky? Let’s find out.
Why some people never manage to retire comfortably…
If you think about for a moment, you probably know at least one retired couple who aren’t financially secure. It could be a lifelong friend who has had to scale back their lifestyle considerably since retiring, or a relative who has ended up moving in with their children and grandchildren – simply because they can’t afford to support themselves anymore.
It’s easy to judge these people as irresponsible or unlucky and tell ourselves it will never happen to us – but what causes some retired people to fall on such dire straits? In most cases, it’s a lack of proper retirement planning.
While others seem to breeze through retirement
On the other end of the spectrum, let’s take a look at the financial habits of those people who do enjoy a comfortable retirement. The main difference between working life and retired life is simple – when you retire, you lose a big chunk of monthly income.
If you lost your job today, provided you have unemployment cover and a healthy amount of savings, you’d probably be back on your feet before too long – but what if nobody would employ you or you couldn’t work? That’s the situation most retired people find themselves in, but those of us who have planned our retirement correctly shouldn’t worry too much – because we won’t need to work at all.
And that is the secret of easy retirement.
Income replacement – the goal of every retired person
Now that we’ve discovered the simple-sounding answer to a comfortable retirement, let’s move on to the difficult part: generating enough income when you stop working.
A lot of working people still rely solely on their company’s pension fund to provide for their retirement, while others believe that money stashed away in a fixed deposit account will somehow produce enough income to fill the gap if their pension income isn’t sufficient. Unfortunately, this way of thinking is responsible for a lot of financial shortcomings during retirement.
To really retire comfortably, you’ll need to draw your income from several sources, or revenue streams. Using Northwood’s retirement planning worksheet, you’ll be able to plan your retirement portfolio to include a pension fund, endowment fund, rental properties, and maybe even a business venture.
By spreading your risk across these different assets, you’ll be able to ride out changes in interest rates and the economy – and that will help ensure that your retirement income lasts into your golden years and beyond.
To find out how you can retire securely, speak to us today. The Northwood team is on hand to assist you with any retirement-related queries.