One thing that one must prioritized once they get a job is to secure their retirement. Not everyone of us would prefer to work until they grow old. One major reason is that our physical health deteriorates at the same time. Our physical task will be limited as we all grow older, because of that, there’s also a limited opportunity for everyone. I know that everyone of us prefer to enjoy their life after so many years of working. It’s like a present for our selves from all the hardships we’d been through.
For those who are financially literate enough, they usually have more freedom to do anything that they want since they have enough savings to cover their lifestyle choices. This is perhaps due to the following reasons:
With these following reasons above, one can simply have more financial freedom. But ofcourse not all of us will be in that same situation. Everything varies in one’s current life, but if we consider our priorities in every decision we’ll make, for sure we will also have a chance to live our life to the fullest. We all have a chance and the perfect time to do something about it is NOW. Push yourself to save any amount that you can, even it won’t be consistent at first, you only need to start it at least. This will help you to remind yourself the need for you to go on with this savings. If you’ll keep letting your excuses win over, you’ll never have a way to start it.
The initial phase will always be very hard but this is the important part in establishing a goal.
If you’re still skeptical to start this, here are some key points to remember why you need to consider starting saving in your retirement fund:
Upon deciding, think of this big step for you to help yourself and at the same time the people around you. You’ll never fail doing this and promise that it will be worth it. So as you know the importance and at the same time the need for you to have this fund, let’s tackle some other important thing that you should consider on doing so that you can prepare the best retirement fund plan for yourself!
For you to identify your ideal amount of retirement and the years to accomplish it, first thing that you need to consider is the expenses that you’ll have. This is for you to know how much income that you need to have (monthly or yearly) to cover all of your expenses. By determining a sample budget of your expenses, it will help you to derived in the specific amount that you need.
NOTE: Before planning a budget, you can first think of where you will live In the future because it plays a big role in determining your expenses.
Here is a sample mock budget of expenses that you can also use depends on your chosen lifestyle:
As you can see in this table, it shows only the common household expenses of a person with a family. You can simply change the amounts or add any expenses that you may think you’ll be having in the future. Like for example car loans, taxes, debt and many more.
NOTE: Your lifestyle choices can make a big impact in your budget.
Once you established your mock future budget, you can now start to determine the target amount of your retirement and the years for you to achieve it.
In any savings it is very important to know your target amount so you can identify the steps on how you can easily achieve it. Once you are really decided to start saving for this fund, after making a mock budget, it will be very easy for you now to identify the exact amount that you need. Before coming up to the exact amount, there are things that you need to consider which are:
Until when I can work? The earlier you start the more convenient it will be. Since younger age tends to have less responsibility, it will be a best option to save more. As we grow older, the opportunities also will be limited specially if the nature of your work is physically required. In this situation, you need to assess yourself on what age you can still work or can make money.
Can I still save from my current income? Your capability to save depends on the amount of income that you currently have and at the same time your attitude towards spending. If you usually don’t follow any budget rules, this will be the right time for you to do it. Here’s a blog that can help you with it:
SAVE TO BE SAFE: Ideal Budget Rule For You!
What are the expenses I have right now? Your current expenses play a big role on how much you can save. The more you tend to spend, the less you can save. If you have current obligations or responsibilities that you still shouldering like debts, you should first settle it first so that you can maximize your savings capability.
What should I prioritize first? In savings, it is very important if you are equipped with the knowledge before engaging on the things that you plan. Like for example, if you choose to pursue a retirement fund without having an insurance and emergency fund, the tendency is you can easily use that savings for those. To prevent it from happening, you simply first established the priority funds such as emergency fund & insurance fund so you can ensure that your retirement fund will be safe.
Where I can save it? Having the right outlet where you can maximize the growth of your money plays a big part in establishing your retirement fund. Since this savings is for your future, you can simply put it in long term savings account so that you can ensure that while working for it, your money will work as well for you. You can check the following blogs to get some idea on where you can save you retirement fund.
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[Save to be Safe] Budget Strategies for Breadwinners
Once you are ready to determine the ideal amount that you need to save, you can start to compute it and plan a strategy on how you can achieve it. Here’s a sample computation based on the mock budget above:
After identifying your mock budget and a target amount to cover your expenses once you retired, you can easily determine the age that you can retire. Just take note that anything may vary depends on your savings capacity and amount that you want to achieve. By knowing this, it will help you to be more inspired and motivated to achieve it since everything is well planned. Once you have a specific in your mind, everything will eventually follow. This will be more effective if you specified everything from long term to short term. Point out what you can do now and the amounts you need to have in a monthly basis so that it will be easy for you to achieve the retirement amount that you’re planning.
Here’s some of the illustrations that will help you for you to come up in a best plan suitable for you!
In planning your retirement fund, one thing that you need to consider is its coverage. This will be based on your needs and also your wants. Some of the ideas are in the illustration below:
Health Emergency: If you already secure your health insurance, you don’t need to think of considering this in your retirement fund. Since we also need to give importance to our health, it will be best if you have separate fund only for your health finances.
Day to Day Expenses: Food, Grocery, Utilities, Loans etc., here are the things that you need to consider in identifying your need monthly income. Once you have a mock budget, it will be easy for you to sort out your future responsibilities.
Children’s Education: If you failed to save for your children’s education before retiring, this will make your budget more limited for other things that you planned on doing. The strategy here is, you can avail an Insurance + Investment payable for 10 years so you can ensure that once they’ll be in college, there’s an intended savings that you can use for them.
Taxes: No one can stay away from taxes because It’s everyone’s responsibility. This is also one of the things that you really need to consider in your budget.
Leisure: One of everyone’s aim for retirement is to enjoy their remaining life. By having enough savings, for sure everyone can achieve this goal
One’s lifestyle plays a big role in managing finances. This determines the spending and savings capabilities of an individual. If you tend to spend more than you can save, this is the right time for you to change your mindset. As early as possible, you should know the things that you need to prioritize. You won’t be young forever, so it’s better not to live in regrets and start to do something that your future self will thank you for it.
Live in the present but consider what your future will be as well. There’s no issue in prioritizing things where you can greatly benefit from it. Win over your excuses and start having a change in your life.
Aim for an ideal savings! You can make it happen!
In savings, one of the things that one’s must consider is the right outlet to save. You need to consider this for you to save time and maximize your savings capacity. If you don’t have any idea where to save, you need to ask yourself first the following:
Where I can save for a long-term investment?
There are different kinds of savings bank that anyone can choose from. Once you identify the amount you can save and the years you can pay, you can easily determine the right one for you. You can first check the ideal funds for you in different investment companies such as Philam, Sunlife, Manulife and many more. This insurance & investment companies offer different plans suitable for one’s priorities.
Another option is to invest your savings in business which can help you to build passive income. A regular cash flow will help you establish your capabilities to save. It can also be your source of income in your latter life once you choose to retire.
What is the suitable savings account for me?
The suitable savings type for you are all based on your capacity to save and until when you can do it. You need to consider the resources that you currently have before saving it in a long-term investment fund. Since this fund usually have a holding time of 5-10 years, you must make sure that you can able to pay for it on time and within that period. If ever you invest it in a business, you just need to be ready since profits will not be consistent. You need to be financially ready in any ups and downs that your business will face.
Is my savings safe and guaranteed?
Never invest on something you don’t understand. In terms of money, we need to be very cautious on how we will use it. Don’t rely on something that you feel like “it’s too good to be true” rather have a background check and a review first. If you decided to save your retirement fund in an investment company, have your personal check on your chosen establishment. If that company is well established and been in the industry for so long, then you can assure that it will be ok to save there.
The answer in this question relies to you. Don’t ever save on something that will make you wary. Do your own research on everything!
One of the important things you need to consider in savings is your disciplined and consistency. You need to control your spending habits and stick to your plans. Once you set your mindset in the priorities that you need, everything will go well. Always remember that every efforts you have will not be wasted especially if you invest it for yourself.
I know you can make it!
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