Being able to retire in a financially secure position is a feat that few people attain. Searching for statistics on the percentage of the population who are able to retire comfortably is a scary exercise. It is possible though and here are some retirement strategies to start implement soonest!
It doesn’t matter whether you plan to retire at 65 or sooner. What matters is your plan and strategy and the day-to-day steps you take to achieve your goal. The traditional retirement strategy of simply saving a lump sum each month is unfortunately proving to not be sufficient, unless of course you are a high-income earner and can invest a large portion of your salary each month. The average Joe however can only save 10% – 15% of their salary each month (if that). Doing that however is not sufficient. Growth, economy, fees and administrative costs, inflation, dependents, etc all have an effect and it is very easy to find yourself in a position where simply cannot afford to retire.
If you plan to retire comfortably, ensure that your overall plan includes at least these 3 retirement strategies.
Reduce living expenses
Reducing your living expenses has two interesting effects. Firstly, it allows you to save more towards your retirement (and possibly help you to retire sooner). Secondly, it reduces the amount that you need during retirement. Once you are accustomed to living with less, and you have been living on a reduced budget for many years, doing so during retirement will follow naturally. Thus again, perhaps this will assist you to retire sooner as you don’t necessarily need as much money (and stuff) as you think you do.
Reducing your expenses is an ongoing experiment whereby you figure out what is important to you and what isn’t. The process starts with a budget and assessment of all your expenses, and then over time you can work out what you need to do.
Check out the Budgeting 101 series.
Replace your current income
Many people talk about Passive Income, Side Hustles, Stocks, Investments and whatever other names are used. There are literally thousands of ideas and websites about what to do and what works best. I’m not going to make any suggestions on what you should do, but rather emphasize the need to do something to replace your income.
This new income that you generate should be something that will continue even when you stop working at it. Thus it really needs to be passive income. There is no shortcut or magic secret to generating such income, but hard work, determination, and a sound strategy can certainly assist.
As this additional income is only one part of your strategy, you only need to build it to a level that fits in with the rest of your strategy. Basing calculations on your current salary you earn from employment, perhaps you only need to generate the equivalent of 30% – 40% per month from your side hustle. This will differ from person to person depending on your goals and overall retirement strategy. Work out what the figure is and then start planning to achieve it.
See the for a better idea of how much you need to retire.
Invest in your future
Invest in a traditional pension or retirement fund. This should form an important part of your strategy especially considering that most companies contribute towards your fund as part of your salary package. In most cases you have no choice so you really should take full advantage of this.
If you do not have a company-based Retirement or Pension Fund you may opt to invest in Unit Trusts, RA or some other form of investment. A Tax Free Savings Account is also a great option and a combination of these investments may do well. Don’t however overcomplicate things and try a bit of everything. Rather speak to a professional about your retirement plan.
Planning for your retirement is one of the biggest and scariest plans you will ever have to make. You will never know how much is enough or how your circumstances may change. There is also the risk of getting so caught up in the planning and saving that you miss out on life in the present. You need to find balance and enjoy every moment of life – the present and the future.
Define your retirement planning strategies now and start working towards a financially secure future.