Tips on Retiring Comfortably
Many of us view retirement as a concept too distant to immediately affect us. What we on the other hand focus on is bringing up our children or making payments on our houses. The younger you are, the lesser the thought of saving for retirement is appealing. At around age 40, your finances may be directed towards a business venture or college fees for your kids. Soon after, you are in your fifties and retirement in not too far, which shocks you. You then realize that time is not on your side.
We all have our reasons for wishing away retirement. Nobody wishes to imagine how old age feels. Your current financial responsibilities also make thinking of the future stressing. To alleviate these fears, you will have to understand the process of retirement planning. This is the only way you will plan sufficiently. This will also help you strike a balance between current and future expenses.
Your current needs are not too different from your future needs. The needs of food, shelter, clothing, to name a few, are similar at any age. People in retirement also take holidays, require personal transportation and occasionally go out to eat. These expenses are high. A range of the needed amount can be measured. The first agenda would be to assess your monthly income, then compare it with your lifestyle. If it is required, make corrections.
Look at the expenses your employer covers for you that will be absent once you retire. Examples are house, car and medical allowance. Add up their cost to your monthly income. The next additions will be the secondary needs like travel and extra medical cover. Do not forget to include emergent expenses like car repairs.
The next step is subtraction of expenses that will disappear at retirement. This includes fare for commuting to and from work. What you spend on work clothes can also be subtracted. The the cost of professional development and such will not be there anymore. Subtract to the amount you pay for loans you have. An example is mortgage payments.
Seeing as your children should be independent by then, take away their monthly maintenance costs. Factor in your spouse if they are also doing the same calculations. The both of you could manage your lives together, making it easier on you. Should you also be expecting some inheritance, factor that in too.
The final figure should give you an indication of what to work towards. An important tool to implement at this point is a profit sharing calculator. It is a computer software that will greatly aid you in your calculations. It factors in the benefit of tax deferral on any retirement related expenses or income and the portion of your employer’s contribution to your retirement scheme. You will get a bigger sum when you aim to retire much later. After it makes its calculations, it will give you a solid retirement savings plan.
Saving for retirement needs to be appropriately done, in a secure vehicle. Approaching retirement is unsettling for most people. Getting old while poor is far much worse.
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