Over the years you’re sure to have encountered someone who’s told you to put some money into a retirement fund if you haven’t yet already. Many parents are now telling their children who’ve just started to make money to put some away for when they retire. Why do these people feel its so important to pass along the message to ‘save early’? Probably because they didn’t, and had to scramble to throw together a plan out of sheer necessity.
Really, the premise of planning retirement is quite simple: Save money now because you won’t be working later. Unfortunately, many people don’t realize how very important this is until it’s too late. Believe it or not, even people who would once consider themselves somewhat wealthy, doctors and lawyers, etc., have been reduced into living in low-rental apartment buildings in their golden years because they simply didn’t plan their retirement well enough.
So, since you are reading this it can be assumed that you’ve already realized the first and most important part of planning retirement: Start now. The rest is relatively easy.
Planning Retirement Successfully:
To successfully plan for retirement, there is a measure of dedication and financial responsibility involved. The most pain-free way is to write out a thorough plan, including a budget, and simply stick to it. If you’re lucky enough to be reading this fifteen to twenty years before you plan on retiring, the money you’ll be putting into a long-term savings fund will seem inconsequential. In other words, you won’t feel like you’re missing out on things you could have purchased with the money you’re now saving for retirement with. This is because it will amount to such a small percentage of your current income.
How much money you’ll need to save is calculated on a variety of different things, most importantly, how you’d like to spend your time. Traveling abroad, or staying near the grandkids. Living in a house you’ll have paid off, or adding a cottage by the lake. Really, it’s all about balancing what you want now with what you’ll want then: Bigger house now, or cottage on the lake then? In a perfect world, we’d all have the money for both, but that just isn’t the case sometimes so planning retirement should take you at least a few days worth of thinking, and it should be open to updates whenever something changes. Nothing about planning retirement should be set in stone.
There are many different avenues of income that are associated with retirement, some of which can have confusing terms. The term for saving for your retirement personally and then cashing it all in when you retire is called superannuation. This, unsurprisingly, is the most prominent form of planning retirement financially.
All in all, there’s no better time to start planning for your retirement than right now. Even if you’re not sure what your income will be like in the coming years, it always helps to write down what you think you’d like to be doing when you retire so that you’ll at least have an idea of how much money you’ll need. Though planning retirement can be stressful, remember that not having a plan when you’re suddenly 65 years old is far worse than doing a bit of number crunching now.
Summary:
To successfully plan for retirement, there is a measure of dedication and financial responsibility involved. The most pain-free way is to write out a thorough plan, including a budget, and simply stick to it. While planning retirement can be stressful, remember that not having a plan when you’re suddenly 65 years old is far worse than doing a bit of number crunching now.