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Secure your retirement by planning now!

It’s never too early (or late) to save for retirement

Retirement is a hard topic for many people. It’s all tied up with getting older so many people don’t like to think about it. I don’t know if that’s the reason so many people don’t know about their retirement savings, but I have been surprised by how many people and types of people haven’t planned their retirement savings in any detail.

Do YOU know how much you will have to live off at retirement? How much you would need?

The effects of compound interest mean that if you start early, saving is SO much more effective – you get more from saving less. This example shows how it would go if you put in 100 a month (I said dollars, but it’s a percentage so it’s the same for any currency) and earned a conservative average of 5% a year.

Chart, line chart

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In 10 years it is still worth doing, but the longer you have, the more you earn on your investment.

I’m not going to talk about the actual investing here as I realise that is a much bigger topic with a whole other lot of emotions attached, but if you have time. Start investing now.

Why invest while you’re young? I have plenty of time and not that much money.
The thing is, when you’re young you assume you’ll have more money when you’re older, and often that is true, but you also usually have a lot more commitments so it ends up that you don’t have any more available money. If you can get into the habit of putting a little aside each month from an early age and keep up that habit as you get older, you don’t have to put aside as much money.

To save the same amount (250,000) in only 20 years you would have to put in 630 a month which comes to 151,200 or 91,200 MORE of your own “starting” money.

So don’t put it off until later. Start saving now. Make it a habit and then you can forget about it for a long time.

What if I didn’t save (enough) when I was younger?
Obviously, not all of us were sensible when we were younger and we just have to make do with what we have and where we are in life. But when I say make do, I don’t mean just keep plodding towards retirement without planning! I mean, accept what stage you are at and make a plan to arrive at retirement in the best possible situation.

Making your plan is pretty simple. You need approximately 3 ingredients:

  1. What do you want to do and how do you want to live in retirement?
  2. How much can you already expect to have as income/savings (including any state pension, employer pension, savings you already have or are building up)?
  3. How much is it going to cost you to live? (This will be an estimate but it really helps to have a rough idea.)

Then you calculate the difference between what you need (or would like to have) and what you already have in place and if necessary make a plan to make up the difference?