Don’t you just wish you could enjoy your life even before you hit old age? This is why planning for retirement is a practical and smart way to go during your 30s or 20s. Some people tell themselves that they just want to have the time for themselves before they reach the conventional retirement age, which means planning for their future carefully.
If you are fortunate enough to get a high-paying job at a young age, then there is no time to lose. As early as now, you can get serious about your retirement plans, particularly if you don’t want to end up working at an 8 to 5 job until 55 or later. And even if your salary does not reach a 6-figure each month, you can still find a way to pursue your goals of retiring early. The key is budgeting your money wisely and having a plan on how you can grow your money over time.
Here are some tips that should be able to help you prepare for your retirement and enjoy the rest of your life in style.
1. Make a list of your financial goals and priority
It will be easier to determine how you can plan for your retirement once you have a list of your financial goals and possible expenses for the future. Begin with your short term financial goals and come up with your long-term plans afterwards. For a short-term plan, this usually covers a period of 1 to 5 years. Typically, your list may include the following: get married and buy your own house. This still depends on your priority whether you plan on raising a family or not.
As for your mid-term goals covering 5 to 15 years, you may be thinking about saving money for your children’s basic needs and primary/ secondary education. At this point, you probably are thinking about buying a family car in case your old vehicle cannot accommodate your family. Miscellaneous expenses of your family will also be included in this list such as trips, non-academic lessons of your kids, and so on.
For your long term plans, these involve your financial goals for the coming 15 years or so. By this time, your children will probably be in college, which means you need to start saving up even before this period comes. Also, you may be setting aside money for your health expenses and retirement.
With a list, you are well guided on how you would tackle every expense that comes along. In the same way, you know where your money is going, along with having the ability to put in some money to your retirement plan.
2. Begin budgeting
It is just common sense that you start with your short term goals since these are things you will face first. A concrete example will be your goal of setting aside about $40,000 in your account in 5 years, if you want to achieve your short term goals. If this is the case, you will have to make it a point to put away $8,000 per year. But of course, it is always best to go for higher yield assets to boost your money’s growth such as in T-bills or SGS government bonds. The fixed interest rate will give you the peace of mind while making sure that your money is growing steadily annually.
3. Consider investing your extra money in reliable stocks
There are people who are afraid or anxious each time someone tell them to consider investing. They want the safest and most stable way to store their money, which is in the bank. Unfortunately, it does not always work this way since there are greater opportunities if you go for high-yielding investment channels. The thing you need to keep in mind is the “110 minus (your) age” for the stock-bond portfolio. This means that you may want to put your extra cash into an 86 percent stock and 14 percent bond portfolio. The good news is that if the market keeps performing well and does not crash, then you can expect to gain about a million dollars in your portfolio. There are also other means of further multiplying your money whether you invest in properties or dividend-yielding stocks for your passive income.
4. Save money from your monthly income
Consider saving 30 percent of your income and putting it to several investment portfolios. Usually, 50 percent of your income goes to your expenses, although there may be times when you have surpluses that can go to your investments or savings. Back then, the conventional idea about retirement is working for a company as an employee for 20 to as much as 30 years and stopping once you reach 55 or 60. But now, people are contemplating on having a more active and different approach towards retirement. They start doing less day jobs and picking up more jobs that interest them the most while giving them more free time.
For people who are leaning towards this means of moving into their retirement, they might consider going this route for 5 to 15 years. Afterwards, they decide to stop once and for all and enjoy their freedom more.In fact, in Singapore, 7 out of 10 employees over 45 years of age wish to retire at 50. They want to have more time to travel, pursue their other interests, spend quality time with their family, and move towards a different career or even volunteer work. But half of these people are not confident about retiring at 50 because of financial constraints. This is why careful planning, budget, and making sure that there are savings in the back are important ways to secure your future.
5. Get moving sooner than later
According to market polls in Singapore such as the study done by the DBS-Manulife in November of 2015, Singaporeans begin retirement planning by 38 on an average. These people are aware of the amount of money they want to set aside while considering the industry benchmarks as the determining factor in identifying how much money is enough.
Generally, this all depends on the current lifestyle of a person, along with their dreams of maintaining such kind of a lifestyle (or modifying it) upon reaching retirement. Based on industry benchmarks globally, this would be 60 to 70 percent of the current monthly income that could suffice for their retirement years. But of course, this still depends on how their basic needs may increase or decrease. There is no such thing as a one-size-fits-all plan, but as long as you allocate your assets and choose a more stable but high-yielding investment option, then you are certainly on the right track.
6. Revisit your plans and make necessary changes
Nothing ever stays the same, which means your expenses and income may change along the way. This is why you may want to check your strategy and be sure it is still directed towards achieving your retirement goal. As you minimize your expenses, the faster you will be able to retire. You may also adjust your holding in various assets to reduce exposure to risks and losses.
7. Enjoy your retirement
After you have exerted your efforts throughout your years working, you may be ready to just throw in the towel and stop working. This may also be the time for you to consolidate all of your assets and compute your money to be sure what you have is enough for the lifetime ahead of you. Aside from thinking about yourself, you may want to be sure that there is money left to leave as your legacy or inheritance to your loved ones. So, start young, budget wisely, save, invest, and experience living off your passive income to live life to the fullest. After all, this is the way to celebrate life instead of being an employee until the time you are too exhausted to travel and spend quality time with your dear ones.
Time is Money
Time is money. Everyone should start planning ahead because time waits for no one. Sometimes we do understand that things do not necessarily abide by the goals you have set for yourself. Whenever you are in need of capital to start an investment, you may always approach MoneyIQ for help, we’ve got the best list of Moneylender in Singapore. They will introduce you to the range of loan services they provide.
So start growing your money now, and the future you, will definitely be grateful!
