It’s never too early to start thinking about your retirement. The combination of longer life expectancies, rising medical bills, and higher cost of treatment in old age means your savings are going to need to stretch further. Ask yourself the following questions to guarantee a happy retirement.
What’s your dream?
Retirement should be about doing all the things that you have wanted. Knowing exactly what you want in your golden years creates clarity for how much you need to plan and set aside for. Without that one aim to work towards, it’s difficult to measure how much time you’ll need to reach your savings goal. Map out what you hope to achieve in a set amount of time, given a set amount of money.
So… how much should I save for a comfortable lifestyle?
What constitutes a comfortable lifestyle is highly subjective. This is why it’s important that you first know exactly what you want to do in your golden years before laying a foundation for a regular savings plan.
As a rule of thumb, Forbes suggests having an annual savings goal of at least 10 to 15% of your salary, which you should adjust by referring to the list of things that you’ve planned and want to do when you retire. Bear in mind inflation too – it’s going to affect the value of the money that you’ve set aside. If the inflation rate stands at say 5%, it would mean that your $200,000 worth of savings is worth 5% less because the cost of living is going up but your money isn’t. To find out if you’re saving enough for the things you want to do, you can calculate and project how much you’ll need by using our personalised retirement calculator.
Is there a right time to begin saving for retirement?
The basic premise for retirement planning is: the younger you start saving for your retirement, the better. Starting younger means that you have a longer time to accumulate money and afford more risk in investments, to grow your wealth. If you start later in life, where the time horizon is shorter, there are less options available to you. It’s more difficult to cram saving $80,000 into seven years compared to a younger person who can do it over say, 20 years. Just remember, retirement doesn’t have to be a mind-boggling or expensive affair if you take action and start now.