My parents have been retired for just over 15 years, and I am happy to see them enjoying a comfortable retirement. I remember hearing my mom having conversations with my dad about retirement planning. I was probably a teenager, and it didn’t jolt me because I was young and thought that discussion did not concern me.
Fast forward to my adult years. I instinctively started saving once I got my first job because that was the thing to do. I wasn’t saving for anything other than a rainy day, but having savings is more than a rainy day. This post aims to guide you on the steps taken when thinking about retirement.
I started working in the financial industry about ten years ago. It began as a side hustle and then became a crusade for me; because I realized many persons, myself included, did not understand retirement in its entirety. It wasn’t until some of my clients started to retire that I grasped it.
I will address one tiny aspect in this post. Retirement planning can be overwhelming. Here are some simple steps you can follow to make your retirement comfortable.
Have Three Accounts
Have three accounts that you use for saving/investing. Allot one of the accounts for emergencies, one for short-term goals, and one for retirement. It is essential to keep the money separate because if you only have one account and you keep dipping into it for emergencies, vacations, and everything else, it will be depleted when you need it for retirement. So the best bet is to have separate accounts that serve different needs.
Investing vs. Saving
If you have facilities for investing your money, invest it. Most savings accounts will give 2% interest, which is insufficient to grow your money. Inflation is at 5.1% now; if your money is only attracting 2%, it’s not growing.
How Much Will You Need
Know how much you will need to stay retired. The best way to project how much you will need in retirement is to have a financial plan done. You may think you need $3500 a month to retire, but with inflation and all the other factors to consider, you may need $5000 a month. A financial plan will show an accurate picture.
Get Started Now
Do not wait until you are 50 to start saving for retirement. The longer you wait, the harder it becomes to accumulate all the money you need. My advice is as soon as you get that first job, have a financial plan done, and start saving towards retirement.
Source of Funds
Do not depend on the government and pension funds for retirement. In retirement, your funds usually come from the government, pensions, and what you saved. Government policies can change that can affect how much you get; if any, companies can go belly up, and you can lose your pension. While it would be nice to depend on the first two options, the best bet is investing for yourself in preparation for retirement.
In Conclusion
So, if you haven’t already started thinking about your retirement or started retirement planning, I encourage you to get started today. The hours turn into days into weeks into months and years. Before you know it, you’re 65, and if you are not adequately prepared, you may be forced to go back to work because you did not gather enough in your formative years. We have approximately 40 years to gather, it is a long time, but we have to use it wisely. Invest for your retirement, understand how taxation and market fluctuation works and how they can impact your future. Above all, note retirement is more an amount than an age. If you gather what you may need before 65, you can undoubtedly retire at that age.
This topic is such a well-needed discussion in our community, especially among Caribbean families. You made some really good points. Inflation can turn a $3000/month to $6000/month expense. Who can predict that social security will be around when we are ready to retire?
Yeah man, we have to fund our own retirement. In my case, I have 24 short years if I choose to retire at 65. It’s not a lot of time at all.
Planning for retirement and getting started as soon as possible is so important. My husband and I have a retirement plan but we wish we started sooner and that we put more money in when we were younger. Thank you for all of these great tips!
Thank you for this post! Definitely a good read for someone entering their 30s, like myself. I’ll be referencing this in the near future.
Great article, I don’t think people pay enough attention to retirement
Awesome post! Planning ahead is key, and you’re never too young to start investing and planning for retirement. Thanks for sharing!
I encourage your god statement and I love this. I agree saving is most important. The hours turn into days into weeks into months and years. Before you know it, you’re 65, and if you are not adequately prepared, you may be forced to go back to work because you did not gather enough in your formative years.
Thank you so much. Preparation is key.
I totally agree Maria.