Retirement is something that most people really don’t think about until they’re in their 50s and it’s just around the corner. With the average lifespan being longer, it’s well worth getting a head start by exploring and planning now how you’ll spend your post-work years and can ease the stress and financial pressures you may experience.
Define the Retirement You Want
Retirement is a personalized investment, with what you want defining how much you’ll need to save. So, do you want an investment where you’re mostly traveling and seeing the world? Or have you already gotten that out of your system and are happy to stay in your local area? Picturing the retirement you want can help you start planning how you’re going to get there.
Estimate Your Retirement Needs
With inflation and the cost of living always going up, it can feel impossible to predict how much you’ll need in retirement. This is why it’s wise to just estimate how much, rather than chisel it in stone. Have a look at the different forms of income you could have in the future, such as any savings, investment, or workplace pensions, as well as social security. Each of these will likely change with inflation but can help you have an idea of how much you’ll have each month to spend. If you want a particularly luxurious retirement with lots of international travel, you’ll obviously have to add quite a lot to the final amount that you want to save.
Think About the Timeline
It’s hard to predict the future, but when you’ve estimated how much you’ll need to set aside, you can begin to plot how your retirement income may be spent during that period. You’ll need to budget for all the activities, expenses, and goals that you’re likely to experience, which will allow you to assess the kind of financial situation you may be in. This will help you to make informed decisions and will also help you with the next step.
Set Up Milestones
When you’ve plotted the timeline of your retirement, as well as how much you’ll need to save, you’ll be able to better visualize how your later years will look.
With this, you’ll likely be able to set a retirement date and in the run-up to that, you can create milestones for your savings. Savings targets can help you to stay motivated and will help you to reach the goal of your ideal retirement amount. When you reach the end of those milestones (one year, two years, or five), you simply set up some more and adjust the amount if you need to.
Adapt if Needed
Life happens. Sometimes, things come up that mean you can’t set aside as much money as you’d initially planned to. Perhaps you have an emergency bill. Perhaps you’ve had your hours cut back at work.
The point is that at times when money is tight, you’ll need to adjust your retirement plan. Don’t stop putting into it altogether; even putting aside a minimal amount each month can be helpful. If you have a preset amount per month going into your retirement fund, then contact the company and assess the amount, or reset it temporarily.
Retirement can feel daunting. With consistency, a plan, and milestones, retirement becomes easier to plan for and the amount you’ve set aside will quickly add up.
