Retirement Planning

3 December 2016
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Category Retirement
3 December 2016, Comments 0

As a single without any dependents it is very easy to fall into the trap of thinking that retirement is a long way away and you can start thinking about it in the future. Leading this kind of carefree life has its pitfalls and you will discover them further down the road if you are not careful. Any financial advisor should be able to guide you in how to plan for retirement and the earlier you start the better.

In some countries the government will make it mandatory to lock away a portion of your earnings in retirement account that cannot be touched until you reach retirement age. This is to ensure that at the country level, the government does not have a time bomb in which their seniors are unable to provide for themselves. Yes it is nice to have your family take care of you when you are old, but hey you are single and how do you know you will have children that will take care of you. Better off that you take matters into your own hands and make some plans to ensure that come retirement you will have adequate funds to provide for your needs when that time comes

Having a longer term view also helps in that any mistakes that are made in the early years have time to rectify themselves and recover in the long run

So how do you begin to make effective plans?

Deciding what your long term retirement goal is

If you are lucky enough to have a company pension that provides for you after retirement then that’s very good. But if you need to build it yourself then what are you retirement objectives? Could it be to be in a position to take early retirement or could it be to have a minimum sum of money in the retirement fund or even to provide you with an income level at a pre-determined percentage of your last drawn salary? Whatever your decision, it will have an impact on the amount of money you contribute each month to your retirement fund as it needs to grow to the amount required so that an annuity or perpetiuity can be purchased with that some of money. With people living longer and longer you will want to make sure that the fund can pay you until the day you no longer need money.

Analysis of your current situation

Yes you are single now but do you expect to be single forever? You may be in a long term relationship or have plans to get married and have children. Or you may well have decided not to have children of know that you cant have children. But whatever the current situation it is bound to have an impact on the amount that you have available to put aside into the retirement fund. Being single now means that you may well have a higher disposable income. That does not mean you should spend frivolously although it is nice to reward yourself once in a while for your hard work. Better to exercise financial prudence so that in the future when your earnings potential drops, you do not need to worry so much. Also bear in mind that generally as you get older your expenses increase and you will have less to save unless your income keeps up with the expenditure.

Start your retirement savings plan

You need to be disciplined and keep putting money into the fund. Only when you do this can you meet your investment target. Also depending on how close to your retirement you are, you will need to consider your risk profile. You can be a risk taker when you are young because the higher the risk the higher the returns generally but the value of your investment can be volatile. This may be acceptable in your early years but certainly not a strategy that is advisable for someone approaching retirement age.  The risk profile needs to be reviewed periodically as it will change as you get older.

retirement-planningOnce your retirement fund is approaching the target you need to exercise more caution and allocate the assets into less risky products. Such products should give you a stable income and not be so volatile.

You can see that meeting your long term investment targets is certainly not an easy objective. There is no one size fits all approach although there are common things that we all need to consider as we progress through our lives.

Do seek the advice of your professional financial advisor for further information on how you can meet your own targets and life a happy life through your retirement years. While the steps that we take to do our own analysis may be similar, each of us will have a unique set of circumstances what may require some tailoring in the final plans

 

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