Most of us probably haven’t given a second thought to retirement, as it’s usually too far into the future to consider. That said, retirement is an enjoyable time, because you have the opportunity to take up new activities and spend time on your hobbies and interests without work being in the way.
However, it’s not as straightforward as we’d like it to be – as a recent article by The Guardian points out, as many as half of Americans aged 55 and over have no retirement savings at all.
With people living longer, it’s never been more important to make sure that you’re prepared for retirement. Here are four pillars that will keep a secure retirement foundation in place.
Pillar #1 – Well Devised Plan
It seems this tip has been reused over and over in many other articles and blog posts online and from the lips of financial advisers and pundits.
But it comes with good reason. Having a well-devised retirement plan is actually half the battle. The other half is allocated to execution. After all, a well-devised plan serves no purpose if you can’t execute it properly.
A good retirement plan should account for both constants and variables. List what you know and can expect with decent accuracy.
Prepare for variables by saving a percentage of your monthly income. This way, you’ll have an emergency fund to tap into when an unforeseeable crisis emerges.
Make sure to include even the minutest detail, including funeral arrangements, which can be a major cost. In the UK, there is a funeral payments fund to help people on a low income cover these costs, which has an around 66,000 applications every year.
Putting a will in place is also a good idea, so that your family members know how to allocate your assets after you pass. Once again, this probably isn’t something that you’re thinking about right now, since very few people want to think about their own passing, but it is vital that you have one done.
Keep in mind that wills must be completed properly to ensure that they are legally binding when you do pass away. If you don’t accomplish this, you could end up creating further problems with your assets.
Pillar #2 – Proper Mindset
Having the right mindset empowers you to reach the targets you’ve set yourself. If your body and mind aren’t in tune with your goals to save money for retirement, you will likely fail, or succeed in stressful and inefficient fashion.
Pillar #3 – Peak Awareness
This pillar is about accumulating data. Financial security during your retirement years relies on complete awareness of underlying economic factors.
What’s the likelihood of the value of your currency decreasing over the next few years? What changes in healthcare policy or pension fund payouts will occur?
How much can you expect to spend on healthcare once you reach retirement? You may not be able to answer these questions just yet, but keep them in mind and keep track of these factors.
This will allow you to effectively plan and react around them.
Pillar #4 – Good Investment Portfolio
Let’s face facts – most people just can’t save enough money for retirement with their bare annual net income, especially if they start saving in their 40s or 50s.
You need an investment portfolio that will grow your savings and multiply them. Invest in stocks that have long-term potential and low risk, such as energy companies like Exxon Mobil and industry-leading brands like Microsoft and Apple.
Seek financial advice from investment experts and consultants if you have minimal to no experience in investing. They will cost a fee, but they will also make sure your hard-earned money isn’t exposed to too much risk and is poised to make decent returns on investment.