Really? We need so much ? Yes! If you choose to retire younger too!
On this age and day, why do we need to struggle hard to earn and save? Is it for a better life in future? Is it to build up your golden egg nest? What is A BETTER LIFE exactly? Retirement with grace can be one of them and this is how. Seriously, last 10 yrs of your life cost more than the first 10 yrs. Be prepared.
Some scary facts about retirement:
- More than 50% of persons do not have enough finances for retirement.
- 25% do not participate in their company’s retirement plan.
- The average person spends 20 years in retirement.
Here are some tips to help you plan correctly:
- Talk to a financial professional. Every few years, it’s a good idea to schedule a meeting with a financial planner to get a ‘check-up’. It’s just like a doctor’s visit, and you should really talk about your present situation and future goals.
- Save, save, and keep on saving. Make it a habit to save as much as you can.
- Learn your retirement needs. Retirement can be expensive. Learn from today how much you need to save for your retirement. Talk to a financial planner, or find an online retirement calculator.
- Take part in your employer’s retirement plans. If your company offers one, it is usually the best tool you can use. Talk to a financial professional for all your options.
- Keep your retirement savings off-limits. Don’t make a withdrawal until you retire, you might incur penalties and it will be a setback for realizing your goals.
- Get your employer to start a plan. If your present job doesn’t offer a retirement plan, ask for one to be started. Many times it isn’t a cost to your employer to start one, and it can help you tremendously.
- Learn about your government’s retirement plans. Every country has different plans some with special tax incentives, so learn what your country offers and plan accordingly.
- Do your own research. Use the Internet, read the newspapers and magazines, talk to your friends, to find out as much as you can about retirement.
I hope that I do not need to squirm and save too much unnecessarily for retirement.
Recently our citizens are getting very concern about their money, their Central Provident Fund (CPF) money. Do we really know enough to make plans for retirement? Do we know what to expect and learn to prevent any pitfalls? This article gave a clearer insight on your money after 55.
By Nancy Mann Jackson
Everyone makes mistakes with money. We don’t save enough, or we spend too much on something frivolous. We sell shares in a stock too soon or not soon enough.
But there are also financial concerns that are unique to different stages of life,” says Joel Ohman, CFP and founder of InsuranceProviders.com . Avoiding them as you go along can save you a lot of stress (and money!) both now and in your next stage of life. As you maneuver through life’s ups and downs, here are the slip-ups to watch out for in each decade.
In your 20s: Spending more than you earn and not saving for retirement
“It’s tempting to travel the world or buy a big car so you can feel like an adult,” says Jeff Reeves of InvestorPlace.com and author of “The Frugal Investor’s Guide to Finding Great Stocks.” “But most people in their 20s don’t earn enough right out of school to afford those things. And if you can’t pay for that stuff up front, you wind up taking on big debts that hold you back for a long time.”
Instead, create a budget, or spending plan, based solely on your current income (excluding what you’re putting into your 401(k) or IRA or CPF) and stick to it. Get used to saving for the things you want with the money you earn and avoid using credit cards except to build credit—and only if you can pay the balance off within the month.
If you’re in your 20s, retirement can seem so far away. But the earlier you start socking away retirement savings, the more you’ll earn with compounding interest and the more comfortable your retirement will be. See if your company has a 401(k) match and make sure to contribute at least that much, says Wendy Weaver, CFP, portfolio manager at FBB Capital Partners. Have the contributions taken out automatically and you may hardly miss it.
In your 30s: Combining your finances and delaying insurance
During this decade, many women make the mistake of combining all of their income, investments and financial accounts with those of their spouse or partner. If those relationships eventually come to an end, they often end up less financially secure than they would have been if they had kept some of their finances separate, Weaver says.
Instead, suggests Weaver: “Keep your own checking account and deposit your income in it. Then you can share expenses out of a joint account into which you both contribute proportionally.” She also recommends keeping any investment you bring into a relationship in your own name.
A second mistake those in their 30s often make is neglecting to protect themselves with insurance. They often pass up the chance to buy life insurance at a low rate and delay the purchase of disability insurance or umbrella liability insurance, says Weaver.
“If you are in good health, buying term life insurance in your 30s is dirt cheap and you can lock in low rates for 20 or 30 years,” Reeves says. “If you have kids, this is a no brainer because it guarantees a big safety net but low premium payments until your children are on their own.”
The same advice goes for disability insurance. According to the Life and Health Insurance Foundation for Education (LIFE), three in 10 workers will suffer a disability lasting three months or longer at some time in their career — and 90% of disabilities occur outside of work (so they’re not covered by Workers’ Compensation). “Your potential to earn a paycheck over your prime working years should be protected, and the younger you sign up for these kinds of insurance policies, the lower your rate is,” says Reeves.
In your 40s: Funding college accounts over retirement accounts and not saving enough
Many people in their 40s are still busy spending money on the things they want right now — vacations, cars, and new houses — and delaying building up their retirement savings. “As the old saying goes, compound interest is the most powerful force in the universe,” Reeves says. “Saving $500 per month for 25 years at a 5% rate of return will net you almost $300,000. The more you can save — and more importantly, the sooner you save it — makes all the difference. Besides, it’s easier to come up with a little bit each month than a lot all at once after you realize you’re almost 60 without any retirement savings socked away.”
And if you have children, it’s a good idea to set up a study plan insurance policy to pay for their college related expenses in future but not at the expense of funding retirement. Too many parents sacrifice their retirement savings in favor of college, says Weaver. Put your retirement needs first, and “do what you can to save for both.”
In your 50s: Cosigning on a loan and getting too defensive with savings
Once upon a time, when people turned about 55, most were worried about simply protecting what they had already saved, Reeves says. Now that many people are living well into their 80s and 90s, they need much more in retirement than they once did. That means simply preserving capital is not a sustainable financial strategy for people in this age group.
“Make sure you keep putting your money to work and make it grow, even in your 50s,” Reeves says. While investing $300,000 in the stock market is risky, she says, “It’s also risky for a 55-year-old woman with $300,000 saved up to do nothing and put that money under her mattress.” Even if she could pay for food, medicine and rent on a meagre $15,000 a year, her bank account would run dry after just 20 years. “So make sure you keep growing your nest egg well into your 50s and beyond.”
If you have children, it can be tempting to be a cosigner to help them with big purchases they want like a car or home. But cosigning on a loan is never a good idea if your intention is simply to lend your name and credit history but not to make the payments, warns Weaver. “Only cosign something you intend to pay.” However, with the recent TDSR rule, there is limited number of things your children can buy without you giving them cash if they are not earning much. Hence,giving them cash is as good as giving money away and not expecting a return. If you are ready for that, go ahead!
In your 60s and beyond: Underestimating the cost of future medical expenses and overlooking your income
Many people focus on building their retirement funds until they retire, and then stop proactively building and simply start living off those funds. But vigilant retirees can continue to maximize their retirement funds and use them to continue earning income.
“The best retirement portfolios are not just giant pots of cash you draw down every time the bills are due,” Reeves says. “Rather, portfolios of income investments like dividend stocks, CDs or bonds offer monthly or quarterly distributions that can act as a paycheck of sorts in retirement as they deliver interest payments to investors. These kinds of income investments stretch your money and make it last longer, rather than force you to slowly bleed your piggy bank dry.”
To do that, Reeves recommends focusing on investments that offer regular payments such as stable stocks that pay dividends, corporate investment-grade bonds and Treasury notes. “These kinds of investments are very low risk and offer a reliable ‘paycheck’ each month, and you don’t have to sell a single share of your investments to get that cash,” Reeves says. “You may not be able to cover all your living expenses, but ensuring your investments deliver a steady income stream can help you better manage your budget and stretch your money farther.”
While they may have planned for regular monthly income during retirement, many women also don’t consider the potential costs of future health care they may need, Ohman says. His recommendation: Incorporate future medical needs into your retirement savings plan and consider purchasing long-term care insurance.