To retire isn’t a simple case of working one day and not working the next. Retirement significantly impacts every aspect of your life, especially how it affects your standard of living.
Ultimately, it’s our own responsibility to get organised, but too many workers are disengaged from retirement planning, especially during the early parts of their work life. They know they should be saving for retirement, but they don’t really understand what a comfortable retirement might look like. Often, they don’t know how to set a realistic goal or how to get there.
So, what represents a good retirement income?
No matter who is asking, I always give the same response:
“An income that keeps pace with inflation that will allow you to keep the standard of living you enjoyed in the latter part of your working life throughout the rest of your life.”
That is what you should be striving for with a retirement plan.
One of the best ways to ensure you can support an expected standard of living in retirement? Start early, save more, invest for growth and monitor your progress.
Of course, every plan needs a reality check; your plan must be realistic. If your goal seems out of reach, keep in mind these four ways to truly improve the probability of a good retirement:
1. Save more.
Ultimately, this means lowering your lifetime spending level, and likely, your standard of living. While it’s relatively simple in theory, it may be more complicated in practice.
2. Work longer.
Opting to work longer can help in two ways. First, you may have the opportunity to save more. Second, you will have a shorter retirement period to support.
3. Take more risks.
With less infringement on your current lifestyle, taking on more investment risk may seem like the way to go. But it’s important to have a backup plan. Don’t count on higher returns being a sure thing. Risk is real, and if taking risks is part of a solution, then one must be prepared for what to do if the risk is realised by, say, a big decline in stocks during retirement.
4. Make the most out of assets available at retirement.
While the above strategies are driven by creating more assets, this fourth is about getting the most benefit from the assets you have at retirement time. Retirement is not the time to remove all risk from your investment portfolio You could be retired for 20 or 30- years, and it makes sense to invest some money in things that will perform best over that time frame, like property and shares.
Did you know that over half of today’s retirees say they never intend to work again.
Learn more here about how the traditional approach to retirement is changing.
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