Saving for Retirement- Is it time?

Let’s agree we’d all like to remain youthful forever but the reality is in how fast time flies. Today you’re young, just started work, but before you know it, you’re approaching retirement. Most young people don’t see the need to start saving for retirement early as it seems so farfetched. Sadly, when retirement edges closer, they find themselves with little or no savings.

Why should you plan for retirement?

There are numerous reasons why you should. These include:

  • Financial freedom
  • You can’t work forever
  • Not to burden your family
  • To support your lifestyle
  • Enjoy tax benefits

How do you save up for retirement?

We’ve compiled an easy 7-step process to help you save for your retirement:

  • Decide your retirement age

Most people retire between the age of 55-60yrs. Deciding when you want to retire is important as it gives you a time frame to help you save up and invest before retirement.

  • Start saving early

The earlier you start saving for your retirement the more money you stand to have when you retire. Knowing that you’re sorted when you’re old frees up your mind to concentrate on other things.

  • Determine your retirement corpus

Retirement corpus refers to the amount you require after retirement to maintain your current lifestyle. You’ll have to list down all your monthly expenses and accurately estimate how much you’ll require when you retire. You’ll have to also factor in inflation rate.

  • Calculate the future value of your current savings

Once you’ve estimated how much money you can save towards retirement, you’ll need to determine the return of investment. This is the value of your savings and investment at the time of retirement.

  • Cut down on unnecessary expenses

Since you’ll no longer have a steady source of income. It’s good to cut down on unnecessary things.

  • Plan and create an ideal portfolio

It’s important to have a diversified investment portfolio of the asset classes. Some assets act as equities that offer better inflation adjusted returns that provide safety.

  • Track and review your plan regularly

Things keep changing and so will your retirement plan. You should make sure to monitor your plan at least once a year to ensure you’re still on course.

Make sure to make changes to your retirement plan when your income, expenses or retirement age change.

Retirement should be your fun time. It’s the time to enjoy your hard-earned money, get to do things you’ve dreamt of but didn’t have the time for. You may probably lack the energy but having a retirement plan will definitely give you peace of mind.

Sources: Young Mogul, Kenya Wall Street, personalfn, cytonn, octagon africa, nerd wallet, forbes

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