Retirement is a stage of life for which you must be prevented and keep it in mind from the beginning of your work activity. You have to be prepared for that moment, so you should start planning as soon as possible.
If you are used to a standard of living, it is possible that with the public pension you cannot maintain it, so having the necessary resources when the time comes is essential.
Here are some tips for retirement planning advice in advance.
The first thing you should keep in mind is how much income you will need for your retirement. More or less calculate that the ideal thing would be to obtain between 70% and 80% of your current net income, while we are active at work we will need more liquidity, it is normal that we have more expenses than during retirement.
For this stage, it is better to have settled the mortgage or the loans you had. You will arrive more relaxed!
Anticipate the expenses you will have
Being retired is usually synonymous with more time available to enjoy leisure activities. Take into account the expenses in this area as well as the usual expenses in clothes, food …
And do not forget that a high percentage of retirees have to bear dependency costs to perform daily tasks. It is also true that, from the age of 65, discounts are applied in many leisure activities and in important expenses such as medicines or public transport.
If you think that, when it is time to retire, you have not yet settled your mortgage or, if you have children, that by then you will still have to help them finish their studies, quantify these needs and calculate the time that they can foreseeable last: that way you will not have to give up your standard of living to be able to attend them.
Saving from young people
Start saving as soon as possible, even if it seems far away. The sooner you start thinking about your retirement, the easier it will be to reach your goal.
It is recommended to start between 25 and 30 years to arrive with a good mattress, have economic stability and not go drowned once retired. Preventing in advance can avoid many headaches in the future.
For example, if you start saving with 45 years, you will have to contribute twice as much annually as if you start at 30 to constitute the same capital on your retirement (67 years), supposed a return of 2.7% per year.
How to make the contributions?
It is much more comfortable and involves less effort to make periodic contributions (monthly and better at the same time of receiving the income) than to make one a year of a higher amount.
Your pocket will be less affected if every month you go into a pension plan or any other savings product 50 euros, than if you decide to make an annual contribution saving 500 euros at once.
Adapt the contributions to your income
To start, save with small amounts (between 30 and 50 euros, or one that fits your budget and lifestyle) and each year you can gradually increase the amount you add to your savings.
With 30 years, surely your income is lower and do not run in such a hurry to save for retirement because you have plenty of time to recover it, start with small amounts and set an annual goal to raise contributions.
Let yourself be advised by experts
To choose the savings plan that best suits your needs, let yourself be advised by experts who will help you manage your economy. They can help you by suggesting the product that best suits your financial goals, not everyone is looking for the same goal, nor does they have the same tax treatment, and surely with help, you will find the formula that best suits your needs. Listen to the advice!
Fixed or variable income?
The younger you are, the more risk you can afford in your investment, so it may be more advisable to initially invest in equities because you can get more benefits, even if your capital is riskier.
As you approach the expected retirement age, you can invest in a mixed-income product (fixed and variable). A few years after retirement, it is best to bet on fixed income and secure your income. You will get fewer benefits, but you will run fewer risks.
In any case, it is always advisable to allocate a portion of your savings to a product with guaranteed profitability, for which long-term savings insurance is an ideal instrument.
Check it annually.
There are many variables that can influence the planning that you have considered, so it is essential that you annually review how your forecasts evolve.
Do not forget that you have a part of your future in your savings plan, every year examine how it went and decide the next steps you will take to continue increasing ‘your mattress’.
This content is sponsored by Mark Valley.