Old age is an eventuality that each and every one of us will ultimately have to confront at some point in our lifetime. Immediately after attaining the age of 64 years, we inevitably have to quit the work force. However, we still need to pay our bills, rent our homes, and cater for our daily expenses to mention but a few!
This requires some degree of financial endowment, which necessitates some form of savings. The following are some of the retirement planning steps that we can take during our active years in employment to prepare for our eventual retirement:
Determine Your Retirement Figure
The retirement figure is the amount of money that one requires to retire comfortably. There is no standard figure as it varies considerably with lifestyles, cost of living, and past incomes. It is therefore up to each individual to carefully calculate and determine his suitable figure.
Map Out and Stick to your Retirement Goals
Retirement goals are the possible strategies that may aid individuals in raising their retirement figures as outlined above. These strategies are often too complicated to be drawn alone and thus require the involvement of financial experts.
Savings should be prioritized as early as possible. One should not wait till he is in his advanced years before embarking on the task of saving. This is something that ought to start as early as the 20’s or as soon as one enters the work force. It is also generally advisable to save around 10% to 15% of your current income for retirement.
It is important to get out of debt as soon as possible. This could be undertaken by either consolidating a number of debt instruments into one, clearing all high interest loans, and then getting rid of credit cards or any combination of these strategies simultaneously.
This entails getting rid of unnecessary expenses such as magazine subscriptions, holidays, night outs, and partying and then channeling those savings into a retirement plan.
According to the International Labor Organization, the retirement age is 64 years. However, in several jurisdictions, the retirement age is usually fixed at around 55 years. In order to retire well it is advisable that persons delay their retirement to as close as possible to the global limit of 64 years of age. This will not only help them not interfere with their retirement savings, but also enable them earn extra income which they may still save.
Enroll in Corporate Retirement Plans
All employers are required by law to participate in some kind of retirement plan. It is strongly recommended for all the members of the work force to identify their employer’s retirement plan and enroll in it.
Open an Individual Retirement Account
To complement the corporate retirement plan, it is also necessary for each member of the work force to open his own individual retirement account as early as possible and contribute as much as possible.
It is worthy to note that the retirement planning tips listed above are by no means exhaustive since there are innumerable other plans which, owing to space constraints, could not be fully enumerated. It is thus advisable for each potential retiree to engage the services of a financial expert in order to explore those other possible alternatives first, before selecting the range of options which best suit their needs.
Bonus: Check out the 5 retirement planning myths