When the time finally arrives for you to retire, will you be able to afford it? Nearly all of the research carried out on this subject, in recent years shows that most individuals are unable to qualify for financial readiness that’s required for their retirement.
Whether you are working in your home country or overseas, you should invest for the future. Send money exclusively to be directed into your retirement fund. If overseas, you could send money to an account there, in the foreign country itself to benefit from the favourable currency exchange rate.
It may sound alarming but saving for retirement is a difficult process, however if you plan carefully and follow-through, it can be achieved and you can enjoy your retirement without any financial worry. Here are some tips that will help you be better prepared.
1. Start saving as early as possible
It is obvious advise to encourage people to start saving from an early age. But it is never too late to start even if you are already close to your retirement years. Every penny saved will help to cover your retirement living expenses.
Saving on a regular basis can be a tough, especially when there are all those tempting consumer goods that entices us to spend our disposable cash on. Hence you can safeguard money from this temptation by treating your retirement savings as a recurring monthly expense, just like having to pay your rent, mortgage or a mobile phone bill. What you could do is set up a standing order every month, whereby 10% (or whatever is affordable) of your take home salary is transferred directly into your retirement fund, on the same day your salary is credited to your bank account.
2. Knowing where to cut cost
Saving a lot of money is great, but the benefits are nullified if it means you have to use high-interest loans to pay your living expenses. Therefore, preparing and working within a budget is essential. Your retirement savings should be counted among your budgeted recurring expenses in order to ensure that your disposable income is calculated accurately. Try to keep a record of every single expense on a monthly basis against your income, to see where the leakages are. Most people don’t do this and therefore can’t see where they could be saving.
3. Diversify your portfolio
Don't make the mistake of putting all your savings into one form of investment. This increases the risk of losing all your investments, and it may limit your return on investment (ROI). As such, asset allocation is an integral part of managing your retirement assets. Just holding your retirement savings in one savings account, or one asset might not be enough. You may need to look at ways to make that money work harder.
4. Estimate for your potential expenses
When planning for retirement, some of us make the error of not considering expenses for medical costs, long-term care and income taxes. When deciding how much you need to save for retirement, make a realistic list of all the expenses you may incur during your retirement years. This will help you make realistic forecasts and plan accordingly.
5. Re-assess your portfolio
As you get closer to retirement, you need to re-asses your financial needs, expenses, risk tolerance change and strategic asset allocation. Accordingly your investment portfolio must be altered. For example, you may have paid off your mortgage or the loan for your car, or your child has grown up and moved out. These changes must be taken care of. A re-assessment of your income, expenses and financial obligations will help to determine if you need to increase or decrease the amount you save on a regular basis. This will help you ensure that your retirement planning is nicely on the right track.
6. Seeking the services of a qualified financial adviser
Unless you are experienced in the field of financial planning, employing the services of an experienced and qualified financial planner will be a good investment. Choosing the one who’s right for you will probably be one of the most important decisions you make, so take your time and do your homework.
So are you financially ready for your retirement?
Keywords: Send money, currency exchange rate, mobile phone bill
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