Retirement plays a big role in the lives of people. Once you are retired, you would want to have a comfortable lifestyle. Others would want to travel the world. Others would want to get a home facing the beach or the mountains. Others would want to spend their retirement with their loved ones. In order to achieve this kind of lifestyle in the future, here are some tips on how you can start planning financially for your dream retirement :
1. START SAVING AT A YOUNG AGE
What I’ve noticed with the young generation nowadays is this way of thinking : INCOME – EXPENSES FOR WANTS = SAVINGS. It should be the other way around : INCOME – SAVINGS = EXPENSES FOR WANTS. If you start to set aside a certain amount for your savings, no matter how big or small it may be, you can be assured that this savings will grow and can be enough for your planned retirement.
2. Know at what age you plan to retire
Once you have this kind of habit : INCOME – SAVINGS = EXPENSES FOR WANTS, then it’s time to identify at what age you plan to retire. This is very important because this will help you identify on how many years you would want to save in order to reach your dream retirement. So if you plan to retire at the age of 65, you can start saving at your 40’s. But it does not necessarily mean that you should start at your 40’s. Earlier than your 40’s (like around your 30’s or 20’s) will be more beneficial and there will be a huge growth in the money you saved.
3. Have an idea on how much you plan to set aside for your retirement fund
An idea to set aside for your retirement fund varies in your current condition. It depends on your current lifestyle, current income, important events in your life, etc. What others would do is the 80-20 rule (Pareto Principle). 80% of your income goes to your needs and wants and the 20% goes to your savings. On the other hand, there are other people who divides their income into 3 buckets (50% goes to your needs, 30% goes to savings then 20% goes to your wants).
4. Approach a Registered Financial Advisor/Planner
So now you have an idea on what age you plan to retire and an idea on how much you want to set aside. Then it’s time for you to consult a Registered Financial Advisor/Planner. They can give you tips and advices on what will be a perfect plan for you to start with your retirement fund. Like with the example I gave a while ago, it does not necessarily mean that you have to keep on saving for 20-3o years. There are other plans that can let you save for 7 or 10 years. If you have to make changes with your retirement plan, a financial advisor will be there to help you in every step of the way.
So I hope these tips can help you in planning your retirement fund. The younger you start, the better. I hope to talk you soon.