Learn About Retirement Planning

What is Retirement Planning?

 

Retirement Planning is about setting aside a portion of your current earned money for the purpose of retirement consumption. It is part of the wealth building strategy for wealth consumption due to living too long. The ultimate goal of retirement planning is to achieve financial freedom or financial independence in golden years.

 

When should you start saving for retirement?

 

You can have dozens of excuses for not saving for retirement. You may tell yourself I am still young, I have no money, I do not think I can live that long, I am too old to start now, I do not know how much to save... and the lists go on.

 

But you only need one reason to do it. The best time to save is NOW.

  • Yes, you may be too young. But being young is always your biggest asset. You do not have to save in a big amount because time will get it compounded for you.

  • Yes, you may not leave that long. Only God knows. But just in case (JIC) you 'accidentally' make it to 70 or 80, what would you live on?

  • Yes, you may be too old. If you have missed the 5.00pm bus home, which bus is the best to bring you home? Correct. It's the bus arriving now!

  • Yes, you may have little knowledge on how much to save. Can you start with the amount you are comfortable with?

The ultimate answer is NOW. No matter what were your excuses. Now is always the best time.

 

What are the expenses during retirement?

 

The spending trends of pre and post retirement could be very much different. Before you retire, you may have commitments like mortgage, car loan, children's education fund etc which may have depleted a large portion of your bring home pay. These commitments are supposed to be cleared by the time you reach your retirement age. Therefore, your expenses should be less during retirement. It should be that way because you are now living on your savings which may only go one way; towards depletion.

 

But retirement is not about just sitting at home and doing nothing. This is the time where you have opportunities to do what you like. You may go for your hobbies, which you had too little time to involve in during your working days.

 

On top of that, you may also plan for trips out of your homeland with your friends and family. This might have been your dreams while you were working.

 

As you grow older, your health deteriorates and you need some quality foods to maintain your body. You may need extra supplements on top of your daily diets. If your health going from bad to worse, you will need frequent consultations and treatments.

 

Your hobbies, your planned trips and your health care may appear to be your new expenses during your retirement. The health care, especially, could become the main reason behind the rapid depletion of your retirement fund.

 

Therefore, retirement planning is not only about how much wealth you can accumulate. How to protect what you have accumulated is equally important.

 

 

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