Finances for your Retirement

Retirement should be a time to relax and contemplate your life’s achievements. But for many people, the thought of retirement is frightening, in particular the financial aspects. How will I survive? How much do I need to maintain my standard of living – and how can I secure my future?

There’s no doubt about it, the earlier you start to plan for your retirement, the less you’ll have to worry as the time approaches. But what is the best way to handle the problem?

There are many conflicting answers to this problem. Some experts claim that you need a million dollars to be able to relax in your retirement. Others will tell you this is not nearly enough. Yet others will say a million is too much. Confusing? You bet.

But regardless as to how much you think you will need to live comfortably in retirement, there is one thing on which experts agree. How much of your income you need to save for your retirement depends on your age when you start saving – the earlier you begin, the better off you’ll be.

If you are between 20 and 30, you should be looking at saving between 10% and 15% of your income each year. Between 30 and 40, the figure rises to 15% to 25%, 40 to 50 calls for 25% to 35% and if you’re over 50, then the figure rises dramatically.

You can add to your retirement funds by making sure you contribute to your employer’s provident or pension fund. Contributions will normally be drawn from your salary, so it can be considered as a form of hidden savings – what you don’t see, you don’t miss.

If you plan to invest your savings, make sure that you are paid compound interest – this way you will be paid interest on your capital funds, as well as interest on the interest earned. Simple interest, as the name implies, simply pays interest on your capital.

Times can get tough, even before you retire. Don’t be tempted to draw on your savings to tide you over unless it is absolutely essential for survival. A short time of tightened belts is vastly preferable to eating away those valuable savings.

And a final point of caution. Don’t be tempted to rely on your partner’s retirement plan, particularly if you are a woman. Plan for your own retirement and make your own savings commitment.