October 10, 2019

Planning for a comfortable retirement

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As experienced Financial Planners we have become skilled in assisting our clients plan for their eventual retirement. A comfortable Old Age is not, however, just about having a pension plan, even though this may be part of the solution. Clever planning for retirement can assist greatly by:

1. Building Sufficient Savings & Investments

Once you retire you will need to ensure that you will have a source of sufficient income for the rest of your life, especially if you encounter medical issues in later life. Ideally, you should have enough savings to allow you to approach investing in a conservative manner which will provide you with a monthly income you can live from.

It is very important that you diversify your investments so if one specific investment fails it will not have a disastrous effect on your wealth. Why not use our retirement calculator to see how much money you’ll need to have accumulated before you retire, and then read our articles on how to invest to learn more about diversification and smart investments.

2. Considering Inflation

Inflation is the hidden and subtle threat to any person in retirement as it is quite probable that, once retired, you will not be capable of replenishing your capital through future income. The long term Eurozone average rate of inflation is circa 2% per annum. If this continues into the future it will mean your money will lose 2% of it’s value every year on average. In order to merely keep up with inflation, your funds will need to make that much, as a minimum with your investments.

3. Getting Out of Debt

Before you retire you should pay off all your debt. Ideally, it should be cleared substantially more before just retirement. Apart from decreasing your monthly personal expenses, it will also free up money for investing to provide you with even more retirement income as the years progress.

4. Trim Your Expenses

The lower your ongoing expenses are, the easier your retirement will be to manage. Because of the change in lifestyle it is quite probable that you can find areas where you can save money, leaving you with more to enjoy doing what you want to do most.

5. Revisit Your Health Care Coverage And Buy As Much As You Can Afford

It’s likely you’ll need medical care at some point during your retirement, and even it is quite probable that such costs will increase substantially as you get older. Make sure that you are not compromised by your health at a time in your life when you can least afford serious financial expenditure.

6. Consider Retirement Timing

Many people aspire to retire early but this has a dual effect on retirement funds. Firstly there is less accumulated and secondly the same fund has to service a longer period. We would always encourage our clients to consider how much better they can live by postponing their retirement by a few years. If you already have sufficient funds to retire, working several more years will significantly increase your retirement income and security. This being said, the prospect of more retirement income should be balanced with your own quality of life. Money isn’t everything and it is important to enjoy your life while you can.

Planning for a comfortable retirement need not be a distant hope or desire once planned carefully.

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