Retirement
is one of the most important events in a person’s life. Enjoying a comfortable
lifestyle once we reach our golden years is what most of us dream of. With
this, early planning is the key in achieving your retirement goals, such as
aspiring to retire in a house with a beachfront view or a farmland backdrop.
When it comes to retirement, the question
of the amount of savings you have accumulated, or the income you need to
maintain your standard of living. But there’s another subject that can be just
as critical – the age of retirement. According to the latest Retirement Savings
Assessment in the US, the average age at which people said they plan to retire
was 64.5 years of age. More than
one-third of those surveyed expect to work until 80 years old.
Deciding when to retire depends on a
complex mix of lifestyle preferences, changes in circumstances (such as annulment
or widowhood), health considerations and financial readiness. To help pick your
date, make the most of benefits to which you’re entitled and run the numbers to
see whether your expenses will match up with your income. Research shows that
the act of calculating what you need for retirement improves your chances of
achieving retirement.
If you plan to retire at age 60 and
hoping to live 20 more years after retirement, you should start saving and
building your fund at 40 years old. Take note though that the idea is to save
as much as you can for your retirement fund, so starting earlier than 40 years
old obviously has its advantage.
You also need to consider that the average
life expectancy is getting longer as we all take vitamins, exercise, eat
better, and learn how to control the diseases of aging like diabetes, blood
pressure, and heart disease. The average man who is in good health today at age
50 can expect to still be here at 82. The average woman lives longer than man.
Preserving wealth is about your own
retirement. You can’t wait until you’re 50 or even 40 to think about this
period of life. This is one of the most important period of your life, but if
you don’t take it seriously and include it in your long-term plans, reaching 70
could be financially painful and unpleasant.
Here are the steps that you will put on
tract to retire when you want:
- Set saving goals. Try to consistently save 10% to 15% of your salary in your retirement account. Starting early and saving regularly not only gives you the boost of compounding. GSIS and SSS retirement are some means to save, but you can’t rely on it since retirement benefits may be less with your desired spending amount upon retirement. Most retirement planners recommend that you save enough to replace about 70% to 80% of your preretirement household income to cover expenses to support your standard of living. Just keep in mind the effects of inflation in the purchasing power of your money in the future.
- Keep a balanced portfolio. Your retirement fund should include a diversified mix of stocks and a fixed-income component of bonds and cash. Stocks provide the growth to bolster your saving and combat inflation; the fixed-income investments protect against market losses. If you’re in your twenties, you can afford to allocate 80% of your portfolio to stocks. As you get closer to retirement, you’ll want to pare that side of your portfolio to 40% to 60%, depending on your risk tolerance, leaving the rest in bonds and cash. At least once a year, review and rebalance your portfolio so you have a proper proportion of cash, stocks and bonds.
Here is a story of how an old-age person
changes his/her new retirement lifestyles. Imagine you are the one here:
“At
71, Juan has buried his wife, Juana, and decided that that their two-story,
three-bedroom house was finally too much for him to maintain on his own. Juan
was a rich man. Although Juan still enjoys a round of golf once a week and
attends health club to go swimming a couple of times a week, the isolation of
living alone has led to depression. With his diabetes and arthritis, he has
found it hard and expensive to continue to live alone. His two sons, now
married with children, no longer live in the same city and are not able to
provide a comfortable living space for him. Nor does Juan want to be a burden
to them. He has decided to sell his home and live in a smaller house.”
The story tells us how hard to live alone
in our twilight years. Life of Juan is simply boring. With his predicament, he
can hardly enjoy even with no financial burden. In 2005 National Bureau of
Economic Research study called “Health and Retirement Study,” results showed
that complete retirement leads to a 5-16% increase in illness conditions and
6-9% decline in mental health, over an average post-retirement period of six
years.
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