Retirement planning should be enjoyable as it is working towards a time when we do not have to work. When we gain our financial independence. For most people, this will require planning over the long term.
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 possibly beyond. Many governments around the world have provided tax incentives specifically for retirement planning. Therefore, where applicable, it usually makes sense to use these allowances.
You may not know exactly when and where you will be retiring. But 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.
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?
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