Many of us look forward to a time when we do not have to do the 9-5. For most people this will require planning over the long term.
What Is Retirement Planning
Retirement planning is very similar to saving on a regular basis. The main differences are that the process is usually over a very long period of time – ideally your whole working life and beyond plus many governments around the world have provided tax incentives specifically for retirement planning. Therefore, where applicable, it usually makes sense to use these allowances.
When Should I Start?
Whilst you may not know exactly when and where you will be retiring, the sooner you start saving towards this goal the better. This is because the longer you hold and investment the larger your retirement pot will be, all other things being equal.
How Much Should I Save?
Most people want an income in retirement which will keep them comfortable. ‘Comfortable’ varies from person to person but I recommend a percentage of all of your earnings this includes salary, bonuses and overtime.
Of course, you need to live today but the amount you save will need to be reasonably stretching. In the 30 years I have been working in financial services, I have come to understand it is not the amount of money a person earns that determines how much they can save but the amount they spend.
Whilst a retirement plan is a long-term investment, you may not remain invested in the same funds or products for the whole of that time. Regular reviews are essential.
For example, recently investment costs have fallen dramatically. Many investors in old style funds would benefit from switching to the new low-cost investment options as this would result in a larger retirement pot for them.
Regular reviews also enable you to adjust course by making changes to your portfolio to improve chances of a safe and timely arrival.
What Should I Do Next?
Please contact us for more information on retirement planning.