No matter your place in life, it’s important to start planning for retirement
Setting aside some cash for retirement usually conjures up a whole range of excuses. This is probably because for most people retirement seems like a long way off and only becomes a stark reality when it looms close. However it is never too early or too late to start saving for your retirement and the earlier you do so, the better your retirement will be for you. Unfortunately for some the realisation that they have not saved towards their retirement may come too late and the last few years of work become a desperate race to save as much as possible for retirement. So no matter your place in life, it is imperative to begin changing your mind set and begin to incorporate this important life plan into your financial standpoint. Here are the 10 excuses I often find myself making (and I wonder if any of you do them too!). So to avoid getting in that sticky situation, let me share with you the most common things I tell myself to avoid saving for retirement. Oh where do I start?
I’m too young
A twenty six year old who starts saving for retirement will have amassed double of what somebody will amass beginning from age thirty. So you see the earlier you start the better. It does not matter that entry level jobs don’t earn you a high income, what matters is to save a little at a time and cultivate a culture of putting something aside every month for your retirement.
Here are a few tips for when you are just starting out in your career and want to save towards your retirement.
Live cheaply – Because your expenses are not many, be frugal and lice cheaply. It’s not important to dine in expensive restaurants or to buy expensive gadgets. Balance and cut expenses where you can.
Automate your retirement savings – this way there will be no excuses of forgetting to save. A few years from now you will be impressed at how your nest egg has grown without you monitoring t every month.
It’s too late
The other end of the spectrum is the person who suddenly realises at age forty that they haven’t put anything towards their retirement. It is not too late. Even at this stage you can aggressively save for your retirement and you will be surprised that in a few years you will have amassed a tidy sum. The later you leave it however the more money you will need to save from your income to put towards this savings. Below are a few tips for the late saver.
Delay your social security – When you delay collecting your social security be even five years, the monthly amount you receive will increase significantly.
Save aggressively – Keep in mind that you are a latecomer in the savings game and be ready to sacrifice a lot of expenditure which may be unnecessary. This sacrifice will pay off when your savings reach your target.
Investing is complicated
You are not alone, many people have no idea that’s why there are investment companies whose job is to advise you on retirement and other investment plans. If your company as most do, offers investment education programs, do take it up, as it will help you in choosing the right investment and retirement schemes that suit your circumstances. If not you can shop for a financial planner yourself from recommendations of friends or colleagues. Below are tips to help you when investing.
Consider simple investment principles– Like putting your investments in different investments to reduce risk and also to increase your returns.
Don’t withdraw your retirement savings – Be aware that if you do so it will mean that you will lose your interest and you may have to pay penalties.
Research and ask questions – Over time you will learn a lot about investments and you will be in a better position to know which direction you will take to diversify your investments.
I don’t plan to retire
Some people’s excuse for not saving for retirement is that they don’t want to retire or don’t plan on retiring. That may be so however your body may not feel that way. A reality of growing older is aches and pains that may interfere with your plans to keep working. And what if you live to be a hundred, what are the chances of being able to continue working. Even if retirement is not part of your grand plan, here are some reasons to save for it any way.
You might change your mind – Who is to say how you will feel twenty or thirty years from now? You may be tired or demotivated so it’s best to have a plan for this eventuality.
Forced retirement – Your employer may not want to employ you well into your seventies or eighties when there are younger people who can do the job better than you.
Part time work – perhaps you may not want to retire but you may want to reduce your hours and work part time. You may also want to have the option of taking long periods away from work to perhaps pursue your other hobbies.
Change of goals – Goals change and later in lif you may have different goals than you do now. For example you may want to travel or write a book. Save for retirement to ensure that you have the flexibility of changing your goals.
I have no income, I’m a stay-at-home parent
Even if you are a stay-at-home parent you should still prioritize your retirement savings. It will be a challenge but it can be done. Here are a few tips to ensure that you still save for your retirement even if you are at home.
Save on insurance – Shop around for better insurance cover and you will be surprised by how much you can save. Ensure that what you save goes into your retirement fund.
Utilities – This is another area where you can make a lot of savings for example you can ensure that you only run your washing machine or dish washer when you have a full load, or lower your thermostat, switch off electrical appliances that are not in use. Be mindful of where you can reduce your bills and do so.
Part time – In this day of the Internet, there are very many work options for stay-at-home-parents. You can earn as you take care of the children and the home. Examples of such jobs are freelance jobs in your area of skill, data entry jobs, customer service jobs based at home, blogging, consultation jobs and many more.
I will only live once
Some people’s excuse is that they only live once and they want to have as much fun as possible without worrying about tedious things like retirement. The thing to note here is that fun and saving for retirement are not mutually exclusive. You can do both, in fact the fun bit will be even better when you know that you are still saving for your retirement. Another thing to note here is that when you have a retirement plan you will enjoy yourself more secure in the knowledge that you are taking responsibility for your future plans.
My house is my retirement
Please note that your home is an asset not a retirement plan. Supposing you plan to sell your home and live the rest of your life from the proceeds of the sale, here are a few to consider that may just make you change your mind.
Where you live – Once you sell your house you will have to think of alternative housing for yourself. Most people as they grown older take comfort in the familiarity of their surroundings, so selling your house may not be the attraction then that it is now.
House prices can depreciate – It has happened before and it can happen again. Just as you are getting ready to cash in on your house the economy dips and the value of house plummets, what then? What is the plan B?
Retirement savings require that you diversify your investments, therefore you need to invest in other retirement plans to cushion yourself.
I don’t have the discipline to save for retirement
Very few people have the discipline but they do acquire discipline over time. Besides once you decide to save up for your retirement, you don’t really need much discipline because you have already committed yourself. People do it and so can you.
You only need to set up an automated system and there you have started saving towards your retirement and not much discipline is required.
The economy makes it difficult to save
This is the one reason to secure your retirement. The economy may get worse in the future instead of better so the time to put something away for the future is now.
I can’t access my retirement fund when I need it in emergencies
For many people the retirement fund is the only savings that they have and the get panicky that they cannot access it. What you must remember is that rules are there to ensure that when the time comes you will have money when you need and a comfortable life.
* Note: This is illustrative and is not reflective of guaranteed profits over time. Actual results may fluctuate based on market conditions and other variabilities.