Practical tips for your retirement will help you to save, invest and prepare for the end of your working life in a changing retirement landscape.
Populations are ageing, health costs are rising, and investment returns are low, which raises concerns about how people will be able to fund their retirement.
Will governments be able to afford aged pensions and Medicare support for the much larger aged population?
Are workers able to save and invest enough money for a comfortable retirement?
And how do we know what the world is going to look like by the time we retire? How do we know how much retirement savings we need in the future?
Planning for retirement has never been more difficult and uncertain. So read this article to understand practical actions than you can take now to help you plan for a better retirement.
How Much Income Do You Need in Retirement?
Most financial advisers and accountants would advise that we need to save and invest enough money to reach our retirement goal. That goal is flexible and depends on your personal lifestyle choices. Do you want to live simply or have a luxury lifestyle in retirement?
Generally, in retirement most people will live on an income substantially less than they had while working. Logically, you won’t need as much income because you will have paid off your mortgage and only need to pay for living costs. Most banks allow persons to borrow money that requires a maximum of up to 35% or 40% of income to repay the debt. In retirement, assuming you have no mortgage, you won’t need to earn that income.
However, inflation will increase the cost of living and you will need an investment strategy to keep up with rising costs.
Calculate how much income you need today to live without paying a mortgage and that’s the level of income you will need in today’s dollars in retirement.
If you don’t own a home in retirement you will need to earn enough income to cover rent. This increases the amount of retirement savings.
Realistic Retirement Income
To achieve a reasonable standard of living in retirement most people will need to save more than the current national average retirement saving rate.
Unless you have started your retirement saving at a very early age and aggressively invested in high growth stocks or real estate, you may need to increase the saving rate or work longer.
Many people now believe that millennials will live longer than the current aged population. Millennials will need to work longer, save more, invest for longer to afford to retire for a longer period.
Rising medical costs for elderly could make retirement more expensive.
It’s difficult to know for sure how much money you will need in retirement. The best course of action is to save as much as possible to make sure you have a comfortable retirement. However, no one can tell you exactly how much money you will need.
How to Invest for a Better Retirement
Many pension funds only invest your money in cash, fixed interest & stocks.
One of our practical tips for your retirement is to think about investing in residential property.
As the world’s population continues to grow and immigration increases into first world nations, there will be increased demand for homes. And increased demand means property prices will increase.
But how do you invest your retirement savings into real estate?
Ask an Accountant about establishing a self-administered pension fund or creating a private fund with other family or friends. When you pool your retirement funds with others you will have sufficient money to invest in residential real estate.
How to Purchase the Right Property
How to Deal with Economic Volatility
We never know when the property or stock market is going to boom or bust. Trying to guess what markets are doing in the future is tantamount to gambling. And you don’t want to gamble with your retirement savings!
Many people say they would continue working if their retirement savings did not provide enough income to provide a reasonable standard of living in retirement.
But when you’re old, are you going to be able to keep working?
Will your body still be able to do the physical work?
Another of our practical tips for your retirement is to realize that the only option we have to deal with economic volatility is to invest for the long term. Investing money over 30 or more years virtually guarantees that we will make sufficient investment returns to get ahead of inflation.
Start young and keep investing for your retirement. Eventually, market ups and downs will even out and your money will grow into a good nest egg.
Retiring Seniors May Adversely Impact the Economy
Use Retirement Planning Tools
One of our practical tips for your retirement is to try using an online investment calculator to determine how much money you need to save on a regular basis to reach your retirement goals.
This technology makes it much easier to calculate your accumulated retirement balance.
The trick is to keep using the investment calculators every few years to ensure your retirement savings is still on target. You may have to adjust your savings rate or investments to remain on target.
If you engage the services of a financial planner, that person will use a financial planning investment calculator to work out how much you need to save to reach your retirement goals.