For young people, retirement seems like an abstract thing. It is so far into the future that we seldom think about it.
A lot of the time we are so engaged in being productive trying to search for more income that we forget that there will be a time when we will have to leave our jobs upon reaching the normal age for leaving service. Even in the case of self-employment, there will eventually reach a point where productivity will be highly reduced due to age.
Even with economies experiencing growth, it appears as though the citizens are not feeling the benefit of this. Especially for those approaching the age of retirement. They face the prospect of exhausting the state provided pension and private pension funds in a very short period of time.
Without proper planning for this stage, quality of life can significantly deteriorate.
This challenge, however, can be overcome. It may require people to adopt a proactive approach and think about alternative ways of generating and saving their income. By doing this, they would be preparing for a blissful retirement
Here are some tips to help you prepare for your retirement.
For any person who contributes to a pension scheme and is expecting to add on to that income with state funds beyond their retirement, there could be a tendency to take a more relaxed approach towards making even more savings.
This is a flawed kind of thinking. However, your capability to live cheaply and embrace a financially prudent lifestyle can, in a sort of way, boost your pension income and also cover potential shortfalls.
This, however, shouldn’t negatively impact your enjoyment of life. It’s important to cut expenditure where possible and maximise your savings, discounts and any promotional offers.
Besides your pension funds, your savings accounts and fixed-rate bonds, you should also consider yourself as a viable financial asset. You are equipped with experience, knowledge and a carefully nurtured skill-set.
You have the capacity to earn and that is the factor with the most influence on the quality of your life after retirement. By realizing this early and maximising your earnings by utilising your skills through freelancing and consultancy and the like, you could lay the foundation for a less oblique retirement.
In order to challenge any established thinking patterns and to cultivate a more positive behaviour, having goals is essential especially when it comes to building and retaining wealth.
It is vital to set the correct goals. However, just as in minimizing spending you are able to save more, you can optimise your earning potential and stay liberated from debt.
This needs considerable planning into the future, which allows you to think about your long term financial goals and reduce any risks that could hinder you from attaining them.
At this age, there is so much information about things. More people than ever before have become more knowledgeable about issues concerning health and the impact of a poor diet.
Developing a healthier lifestyle will not only enable you to improve on your physical fitness and live longer but provides you with the opportunity to save money by eradicating costly habits like smoking, alcohol abuse and junk food.
Over time, the savings you make can very fast accumulate and increase your personal wealth considerably. Not to mention the savings on healthcare costs post-retirement.
Without financial literacy, it’s impossible to comprehend staple economic factors like interest rates and how it impacts your investment income and earnings.
More specifically, it’s important to get a better understanding of how fluctuating interest rates impact the various investment options so you’d be able to calculate which one offers the best financial return at any given period.
Note financial literacy is an ongoing process rather than a destination. You have to keep abreast of changing factors in financial management as well as keep practicing personal finance management skills.
The cost of living and inflation are key factors that impact disposable income levels. It's not only important to know and understand these concepts, but there is a need to keep up with the real-time economic trends that relate to them.
With the change in the nature of the economy, especially in the labour market, we have found ourselves in the age of the “accidental entrepreneur”.
This kind of entrepreneur is the kind described as having marketable skills and being a calculated risk-taker. When it comes to investing your money, you need to develop this kind of mindset.
You can't just hope to gain significant returns without putting your capital on the line. In investing to get returns, taking a risk-averse approach can give you the best returns.
Economic recovery is more often than not driven by consumer spending. This is true especially in the current modern age where there are so many new and innovative short-term money lending platforms available.
While there is nothing wrong with this, it may become a problem when you borrow to sustain an existing lifestyle or as a way to bridge a short-term shortfall in income. This could lead to the development of cyclical and long-term debt, which may slowly eradicate your hard-earned savings over time.
With this knowledge, you should limit yourself to borrowing money only with a clear goal in mind (like an investment) and if you’ve already calculated the possible risks and returns.
Your ability to save and boost your pension income depends heavily on your financial philosophy.
Even if you’re employed full time and saving a significant chunk of money every month, it’s crucial that you look for other new opportunities continually to increase your income.
Taking this kind of proactive approach will return significant rewards over time, especially for young people who are still in the development process along their career path.
When your retirement time is more than a decade away it may seem like a distant event.
However, it is critical to plan carefully and set attainable goals so that time remains on your side and can enable you to enjoy the kind of retirement you have, in all the while, dreamed of.
However late you’ve started saving and investing for retirement, or maybe you haven’t yet started, know that you are not alone, and there are measures you can take to boost your retirement savings.
Start today. You are not too young.