At some point in time in our lives, we all come to a stage when we would like to give up our regular “9 to 5” jobs and retire. This could be because you are starting a business, want to spend more time with family, catching up with an old hobby, or just travelling to the famous parts of the world.
Retirement is that phase of life where you’d like to feel independent, financially or otherwise. But, how life takes shape after your retirement depends a lot on how you plan it while you are dependent on your employment.
To achieve all your dreams when you retire, whether 5 or 30 years down the lineyou need to set a carefully drafted plan in motion as soon as possible. Knowing your goal better, and understanding your needs in retired life, will help you plan to invest in your goal confidently.
Questions You Should Ask?
Have you made the right investments that can determine your present financial and personal freedom?
Are you prepared for the worst-case emergencies?
Can you handle the highs and lows that life brings with it?
If your answer is ‘Yes,’ you are, perhaps, in for perfect retired life.
However, if you find yourself doubting any of the answers, it’s time to give your investment plan a closer look.
Here is are some of the important factors to focus on for your early retirement goal:
The earlier you start investing in life,the earlier you will be able to accumulate more savings. So, you will require to develop and implement an effective investing plan, which ensures that your excess cash (amount leftover after all expenses are met) is put to good use. Remember that your goal is to invest as much as you can, as soon as possible, and as often as can be done.
Most people fail to follow this first and foremost investment step, which is why they end up without any financial support post retirement years. The thumb rule is to keep away 10% of your salary for retirement goal right from the moment you start earning.
Budget A Little More than Essentials
According to a 2015 study, it was found that people spend more post their retirement, at least during the initial years. This leaves retirees with the risk of not having enough income to cover their retirement living costs, especially if they happen to leave their jobs early. Hence, you need to have a realistic plan about what you are likely to spend.
The best way to do that is to create a detailed retirement budget that separates essential living expenses from the discretionary ones so that you can easily estimate how much room you will have to cut expenses if necessary in the future without eliminating necessary expenditures.
Take Calculated Risks
Employing a calculated risk-taking strategy for a successful retirement plan requires the use of wisdom, the study of resources, and good judgment. It’s not something that is going to happen on its own. You require viewing financial markets from a logical and rational viewpoint.
Understand and assess the market with the help of ratios and indicators. If you find these market strategies difficult to understand, take the help of a financial expert who will give you the right advice.
Pension Plans & Retirement Goal
Pension plans have traditionally been the preferred retirement saving investments. Old pension plans used to invest only in government securities and offer a fixed rate or return, like bank FDs.
However, with young investors becoming more aggressive modern pension plans have also started offering a lot more thanfixed but low rate of return. Modern pension plans from life insurance companies, give options to choose higher risk investments. For example, life insurers now offer the following investment options with pension plans:
- Aggressive – Equity Based Funds
- Balanced Funds – a mix of Equity and Safe Return Funds
- Liquid Funds – Very low risk, stable return investment option
You can invest in any of the three options or create a mixed basket. More than that, you can switch among the funds to lower your investment risks as you get closer to your goal.
Automate Your Investment Process
Many people struggle to save enough money from their earnings for their retirement. The chances are that by the time you can take out some funds to save for your retirement it is already spent.
However, you can always avoid this from happening by automating your retirement investment savings. Doing so will automatically transfer small amounts of money from your savings account into an investment account on a chosen date of the month.
This will ensure that some amount will always be stacked away, not allowing you to waste it on other things instead.
The final word is to keep your goal intact no matter what it takes so that you can have the financial freedom you deserve even without a job. Stay in the company of like-minded people with similar financial goals so that you are not diverted from yours. Create visual reminders for your workplace as well as your home so that you do not lose your path.
Your financial goals may seem difficult to accomplish, but when you see your wealth accumulating slowly in time, and yourself moving forward to your goal, it will give the satisfaction of being successful. Most importantly, do not allow your investment decisions to be driven by present trends. Make choices that are right for your life and personal circumstances.