Picture this: you are working furiously on a Monday morning, filling in paperwork and sorting through files. Suddenly, a very pertinent thought hits you- in a few years’ time, you will not have to work anymore.
A surge of happiness fills you, along with a bit of worry- without a steady income, how will you maintain your current lifestyle?
The worries deepen if you have children- how will you provide for them- their education, weddings and the like, without having any employment to fall back on?
The key to solving this problem is twofold- firstly, many retired persons continue to work from home, so the cash flow never really stops.
Another thing that helps a lot is planning.
If you start planning and organizing your retirement fund today, you will have nothing to worry about in ten or twenty years’ time.
Now, another question arises- how much pension do i need to live comfortably?
Unfortunately, there is no absolute way to ensure this. An average person should need 70 percent of their original salary to live comfortably- that’s the general rule.
But, if you have lavish post-retirement dreams, like world tours and expensive cars, you may need more than 100 percent of your salary.
The best way to know how much pension do i need to save is by creating an estimated budget that is realistic. This means that you should only look at the things you will have to take care of after your retirement.
- Know your expenses
After you stop working, the various aspects of your monthly budget are liable to change. For example, the mortgage on your house should be paid off by then, and you won’t need any transportation cost. On the other hand, your healthcare expenses may arise. It is important that you look at these aspects closely, and then decide on your retirement budget.
- Save enough to last
One thing people tend to overlook when they are setting a retirement budget is the longevity of the money they save. This means that one should set your budget according to the life expectancy of the person.
The life expectancy of an average male and an average female is around 80-85, currently. Since retirement usually takes place at 60, they need to plan and save enough to last them for 30 years.
- Keep saving till you drop
Once you set the budget, you need to start saving. Initially, the number may feel out of reach, but you shouldn’t give up just because you think it’s impossible. Remember, if you don’t save now, you may have to cut down on basic expenses 30 years down the line.
What if what you save isn’t enough?
Let’s be realistic, in today’s economy; it’s very difficult to save much if anything at all. So, in certain cases, you might find that your retirement budget is falling short of what you will need.
In such a situation, there are some alternatives you can take resort to.
- Delay your retirement. This will give you enough time to save all that you need to sustain yourself and your family. You will be making fewer withdrawals and more contributions to your retirement fund- this will increase the amount of your nest egg significantly
- You can also look for a part-time job post-retirement. It can also be beneficial to your mental and physical health. Getting a job will keep you up and running, and will not let your mind idle either.
- Other alternatives include cutting down on expenses even before retirement. This includes trading your current home for a less expensive one and contributing the profits to a retirement fund.
This brings us to our next topic.
How do you reduce your retirement budget?
Well, the most obvious thing you can do is revamp your current lifestyle. You might need to cancel the world tour and stick to a more attainable vacation plan.
Of course, you can also start working after retirement, but there is a slight problem to this. This current market demands fresh talent and is not very kind to the ones who are advanced in years. Plus, you might not be able to receive the kind of remuneration that you were accustomed to all this while.
Plus, you might not think it’s possible now, but old age comes with a lot of health problems. You might not have the stamina you had 30 years ago, and this might also affect your chances of finding suitable employment.
That’s why you should start planning your retirement as early as possible so that you don’ have to keep working till you are 75.
When you are in your thirties, retirement does seem like a far-off business, but in reality, it is closer than you think. The trick to living comfortably in retirement is to start planning and saving early. If you do that, you will be able to live comfortably for the rest of your life!
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