Retirement is a topic that people often talk about, but most do not prepare well for it. They think they will have more time to prepare for it, but here’s the truth: the earlier you prepare for it, the better your retirement will be. Let’s see important steps for retirement planning in 2021.
Whether you’re seeking expat retirement planning or just simply planning to get started, this article is for you. We’ve broken down the seemingly intimidating process of retirement planning into five crucial steps!
The reality is that you cannot work forever. Your steady source of income today may not exist down the line, which is why it’s vital to cushion yourself and your family for the future. Here are five steps on how you can get started:
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Decide your retirement age.
The rule of thumb is to retire at 60 years old, but some retire earlier or later. There’s no hard and fast rule to this, as it all depends on your financial capacity and preparedness for the future.
It all boils down to choice and capability. However, it’s still crucial to determine your retirement age to set your goals accordingly. After this age, your income stream will come to a halt or significantly slow down. This is the time when you will depend on your savings and investments to answer your needs.
Start retirement planning as young as you can.
Planning will help you retire peacefully. It is similar to any other goal you have; the earlier you start, the better and earlier you will complete your goal. If you have several years to prepare for your retirement, then it can only mean success for you.
Delaying retirement means compromising your future goals. The worst-case scenario is that you may even end up being dependent on your children or other family members. Prepare well to ensure that you can live a happy, stress-free life.
It’s never too late nor too early to start preparing for the future. As tomorrow is uncertain, knowing that you are secured will give you peace of mind.
Find out the future value of your current savings.
Have you calculated how much you can save per year after deducting all your expenses? This information is vital, as a part of your yearly savings should go towards your retirement fund.
The retirement fund is something that should be untouchable unless there is an extreme need.
Once you’ve figured out how much you can save per year, the next step is to determine how much it will be worth in the future. This is done by factoring in the expected rate of return on your investment or the value of your assets and savings upon your retirement.
Cut back on unnecessary expenses.
The best way to meet your retirement goal is to cut back on retirement expenses. However, we don’t mean that you shouldn’t buy things for leisure! A simple act of restraint on something that you can live without will already go a long way.
It’s essential to strike a balance between treating yourself and being smart with your money. Being financially wise will allow you to invest more and bring you closer to your goal.
Track your retirement plan regularly.
We recommend monitoring your progress at least once a year. Monitor your plan’s status to check if you are on track to meet your goals.
Changes are inevitable, especially when it comes to financial standing, emergencies, etc. Hence, these all need to be factored into your retirement plan.
These five steps are only the beginning. A retirement plan should not be a lofty dream but must be one with concrete steps to meet your goals. Do you have any tips when it comes to retirement planning? Let us know in the comments!
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