Most people do not look forward to getting old despite knowing that it is inevitable. Often they are too busy ‘acting’ young and they fail to plan early for the future – in this case, their retirement. Then they realize that they are over 40, the alarms set off and the retirement they have been postponing suddenly looms.
Most financial experts agree that the best approach to retirement planning is to start early and watch your investments grow over time. But if you started late, the first thing to do is focus forward. Do not dwell on past mistakes.
Fortunately there are many options to help you make up for lost time, although they may require making sacrifices or adjusting habits and plans.
The first strategy you need to implement is to decide how much you will need to retire. There are materials online to help you, including free retirement calculators.
The next thing to do is start saving and do it now. You do not necessarily need to know how much you should retire with before commencing saving. However, an estimate of how much you need enables you to design all actions and plans around your retirement savings goal. If you do not have one, you will have nothing to work towards and hence no motivation for success.
Take a hard look on your expenses. You may find the need to cut expenses on items such as call cards, an extra vehicle, entertainment, clothes, vacation and even food.
Maybe you are in the habit of procrastinating putting some money aside or you have had some bad breaks that kept your savings off track up to this point, it is time to prioritize savings.
In any case, you have been making some irregular savings; experts believe that the best way to compensate for a retirement shortfall is to increase savings. You can maximize your contributions to employer-based retirement plans. Monitor your savings so you can spot the holes from which your money is leaking away.
Pay off debts. One of the best guarantees for comfort in retirement is being debt-free. Never spend more in a month than you can afford so you don’t accumulate new debt. Owning your home for instance, can dramatically reduce your living expenses and even allow you live comfortably on your pension. When you own the house, try renting a space you are not using.
Do not increase expenses as a result of a raise. Control spending by sending all raises and bonuses directly to savings or invest them in a business where it can earn more income. Do not hold too much money in cash.
Consider working part-time or ask your employer to postpone your retirement to enable you work longer. The additional months or years adds not only one more year of retirement contributions, account growth, it is also one more year you do not need to live off your savings. There are many jobs you can do part-time and you can start a small business and run the show yourself.
Invest your money with prudence. Do not succumb to the temptation to do something drastic to shore up your retirement savings. Seek expert advice if you do want to make a sophisticated investment. Furthermore, diversify your investment. Putting your egg in one basket can be too risky.
Finally, a way to create pension for you while in retirement is to buy annuity. An annuity will give the security of a guaranteed income in retirement. However, buying an annuity might be too expensive.
FRANK ELEANYA
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