Retirement isn’t just about setting aside of lump sum of wealth. The original version of this article was published on FundingSocieties.com.my.
Many of us think that the best phase of life is probably the post-retirement phase. You can finally say goodbye to work-life pressure and have ample time to relax. However, things are not as simple as they seem to be. Retirement brings a lot of worry therefore it is advisable for you to plan ahead well so that you don’t end up facing difficulties, especially with the financial aspects. Let us share a few tips with you that might prove to be helpful in your financial planning for retirement:
1. Discuss Everything with Your Life Partner:
Just like you consult your partner before making important decisions in life, discuss this with them too. Together, you need to discuss what you will be likely to invest in post-retirement and plan it accordingly. Agree on the lifestyle you both plan to maintain in retirement. Planning ahead could prove to be much like the phrase ‘prevention is better than cure’.
2. Fix a Current Budget:
It is imperative to plan a budget first so that you have an idea of how much you are likely to spend at this stage and can invest/use your money accordingly. Having a back up plan ensures that you are not left out to dry in the event of an emergency.
3. Estimate Future Budget Properly:
Make proper estimations about the money you would like to save before you retire. Many of us intend to set high goals for ourselves and end up saving not even half of what we think we can. Consider your post-retirement lifestyle choices, health/medical treatment preferences, post-retirement investment attitude, and life expectancy. Know what you want before you put numbers to your expectations when setting your target retirement fund. Qualify before you quantify. The goal is to save 1/3 or 1/2 of your earnings to have as expendable income.
4. Set Shorter More Achievable Goals:
Most of us have a tendency to set a large sum as a probable figure of our final savings. However, it is advisable to set periodic goals instead. We should rather think about how much we are capable of saving per year or per quarter.
5. Try to Pick up a Part-time Profession:
These days there are a number of part-time professions to which the retirees can easily devote themselves. This will help you to have at least a sum of money to as an income supplement. Many of these professions could help you to earn money while sitting in the comfort of your home such as excel data entry, photo editing using photoshop and blogs writing or ghost writing.
6. Take Practical Scenarios Under Consideration:
While planning you need to take into consideration some important real-life scenarios of which you may come across and which could directly impact your financial plans, such as inflation. Keep in mind that inflation can occur at any time in any place and it may affect your financial plans negatively.
7. Do Not Have Any Liabilities:
Before you retire, make sure you do not have any liabilities or unpaid loans as it would be difficult to repay them once you retire. Instead, try to have assets that would prove to be helpful during this phase of life in some way or the other.
8. Cut Down on Your Daily Expenses:
Think twice before buying that dress that costs you a fortune. Consider driving your own car rather than hiring a chauffeur. Stay away from the extravagant lifestyle and never lead a life beyond your means. To save money is like earning it. This will allow you to have more savings to spend when the time comes that you don’t earn.
Consider the financial aspects and non-financial aspects – these will help you to have a relaxed, stress-free retirement!
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What other non-financial aspects have you considered in your retirement planning?