Retirement is a word that is dreaded by so many. The reason is that their regular source of income will be discontinued and this will definitely affect their standard of living. What can you do to guarantee your lifestyle is sustained after retirement?
In one word, planning! It is never too early or too late to start planning for retirement. In fact, it has been proven by numerous researchers that the earlier you start to give thought to how you want your retirement to look the better. Start by asking yourself these questions:
- How much money do I need at retirement? Whether you are working or not, there are expenses that will always be there. And you must meet them to have peace of mind. Experts estimate that you will need 70% of your present income in retirement. In making plans for retirement, this amount must come first and will influence your other decisions.
- How long will you live in retirement? In view of the advances in medical science and the consequent increase in life expectancy around the world, have an income plan that will cover the whole duration of your life. What this means is, assuming you retire at 65 years, and using the highest life expectancy in the world for 2015 (China) of 87, you will need an income that will continue over 22 years.
- What plan does your employer have in place for pension? If your employer has an employee pension plan, check to see if you are covered by the plan and understand how it works. Regularly request and review your individual benefit statement to see what your benefit is worth. Learn what benefits you may have from a previous employer and how this can be transferred into your present pension plan.
- What additional sum will be required? The truth is that your monthly pension cannot cover 70% of your present income required for your retirement life. If in doubt, kindly ask those presently retired how much they get and its regularity. This brings back the reason you should be deliberate about putting aside at least 20% of your present income in savings, loan repayment and investment.