Many young people tend to view retirement as too far into the future to think about now, while older adults often feel a sense of panic as they draw closer to the age of 65 and realise they have failed to really prepare for life after work. This Tip Thursday, we give you five steps to take in planning for your own peaceful, prosperous retirement.
- Set goals and evaluate your expenses. Start by setting down your goals for retirement, such as the kind of lifestyle you want to have: If you want to be a jet-setting senior, you will require a lot more money than someone who wants a quiet life in the country tending her garden. You should also consider medical needs, especially if you have a current health condition that may get worse with age. Map out your current expenses and try to make an estimate of what your future bills could look like. Also, try not to carry any debt into your retirement, such as mortgage payments and credit card arrears.
- Start saving now. Don’t rely on your regular savings account. Open a retirement new account and sock away some money with each paycheque. The key is to be consistent. If you get a sudden windfall, put some of it aside in that account. Seek out high interest options or fixed deposit accounts or take advantage of designated retirement plans offered by your financial institution.
- Take advantage of your company’s pension plan. Many companies offer pension plans where they put funds in an account for you and/or match your personal contributions. If your workplace offers to match your contributions, try to deduct a reasonable amount from your pay so you can start building a substantial cushion.
- Consider an IRA. If you are self-employed or your company doesn’t offer a pension plan, educate yourself about individual retirement accounts (IRAs), also known as approved retirement schemes (ARS). One benefit: tax breaks. Contact your financial institution for more details.
- Invest in your future. Another option to explore is investment. Once you have built up a sufficient nest egg, you should consider investment vehicles that can give you more bang for your buck. Options include stocks, bonds, unit trusts, government paper and real estate. Consult with your financial representative to determine the best choice for you based on the goals you would have set out in step one and your current situation.
Retirement is the time to spend doing what you want to do, so you don’t want to be worrying about how you will take care of yourself, especially if you have no children to help you. Also, be careful about banking on the support of said children, as they will have their own expenses to take care of, such as families of their own. Do the necessary planning now to ensure that your golden years are as comfortable – or adventurous – as you want them to be.
Read more on the Reform Of The Public Sector Pension System here.