Retirement in our country is treated as a long-term goal. A time when you can hang up your boots and enjoy the fruits of labour.
Steps to creating a healthy and sufficient retirement fund
Retirement in our country is treated as a long-term goal. A time when you can hang up your boots and enjoy the fruits of labour.
However, retirement is now taking on a new meaning. It is no longer treated as just a destination. Instead, it is the start of another phase of your life. A phase where you can switch off the alarm clocks and go wherever you want to go and do whatever that your heart desires. But, there is no denying the fact that your income would definitely peter down or perhaps even stop during this phase. Therefore, in order to truly enjoy your retirement phase, you need to start investing for it immediately.
New beginnings – it is important to sit back and assess what you want your post retirement years to look like. Do you picture yourself taking a round the world trip or do you see yourself enjoying a simple life at home? Do you see yourself starting a new venture or do you see yourself taking a part time job? While the possibilities are infinite, the funds are finite.
Thus, you need to keep an eye on the big picture and determine the funds that you would require to support your retirement goals. You will also need take into consideration your basic daily expenses and keep aside some money for medical and other exigencies. In addition to generating funds to meet your needs, you should also set aside some funds for unplanned expenses. Maybe a passion project or a big gift for your grandchildren!
Assess current and future resources – once you have identified your goals and prioritised them in order of importance, you need to figure out how you are going to fund them. The first step is to take stock of your current as well as future resources. These would include your current income, future cash flows like provident fund, part-time employment, interest income and maybe even rental income. Your current income is your biggest resource and you need to start allocating a portion of your current income to retirement savings, as early as possible.
An investment plan customised for retirement – based on your goals and resources, develop an investment plan that focuses on retirement. Determine your ability and willingness to take risk and then invest in assets that are capable of meeting your returning requirements while adhering to your risk metrics. Ensure that you create a diversified portfolio that is capable of achieving your financial goals.
Live life King size, but with discipline – one of the biggest risks an individual can encounter is outliving his retirement funds. Thus, it is imperative that you start saving for this phase of your life as early as possible and adopt a disciplined investment approach.
Welcome the new phase of your life with open arms and a smile on your face.