Want to retire comfortably? Not sure when to start? Worried about how to ensure a comfortable retirement? Explore some simple and effective ways to successfully save for your retirement.
Have you ever heard of the famous quote, “Early to bed and early to rise - makes a man healthy, wealthy, and wise”? Going to bed early may make a man or woman healthy, wealthy, and wise - starting to save early for your retirement also ensures that you can remain wealthy, be considered wise, and stay in the best financial health!
Many people wonder just when they should start saving for retirement. However, if you’re thinking about saving up for a comfortable retirement, you need to consider not just when you should start saving, but also just how you should save for your retirement. Let’s look at some of the ways you can enjoy a financially comfortable retirement instead of struggling to make ends meet in your later years.
When should you start saving to retire comfortably? The short answer is as soon as you can. Ideally, you should start saving for your retirement in your twenties. This is a good point to begin thinking about your long-term goals and plan for them accordingly. The earlier you start the better! When you’re in your twenties, retirement is still a while away. Thus, you can afford to save simply a little every month or year. These smaller amounts will add up over the years as they keep compounding. In contrast, if you were to start in your forties, you would have that much less time before you retire. If you want to retire comfortably, you would have to ensure that you’re putting away a lot more than you'd if you’d started saving twenty years ago. Starting to save for your retirement early allows you to enjoy life in the present and for years to come. Like the early bird that gets all the perks, if you start saving for your retirement early, you can enjoy your daily latte and still retire comfortably!
When you think of saving for your retirement, do you think of simply hoarding all your cash or making regular deposits into your savings account? While you would need to keep aside some funds, saving for retirement involves a lot of strategic financial planning. You need to clearly think about the kind of lifestyle you would like to enjoy after retirement and ensure that you amass enough wealth to be able to maintain or improve your lifestyle, even taking into consideration factors such as inflation.
Remember, the key to preparing to retire comfortably is to increase your assets, invest carefully and for the long term, and let your money work for you. Don’t just depend on your salary, diversification is crucial. How do you do this? For starters, you can start creating fixed deposits that allow you to earn interest on your savings. Next, you can explore different types of investments such as bonds, mutual funds, stocks, etc. Beyond that, you can also start to acquire assets such as real estate that will earn you returns in the long run.
Let’s look at an example to illustrate this point better. Nick and Tom both started saving $5 every week when they were 25. Nick deposited all his money in his bank savings account. Tom deposited $2 in his savings account. Of the remaining $3, he put $1 in some investments and used $2 to buy an asset. Years pass and Nick and Tom continue to prepare for their retirement in their own ways. Nick earned some interest on his savings. Tom earned some interest on his savings too. But beyond that, he also earned some capital gains and dividends on his investments. In addition, his assets appreciated, and he was able to sell them at a great profit. Who would be able to live a comfortable retired life? If you guessed it would be Tom, you would be right!
Bear in mind, that before you jump into making any investments, we recommend speaking with a wealth advisor. They can not only help you to map out your financial plans for a comfortable retirement, but also give you expert advice on the kind of investments you should make depending on your specific situation.
Stay on Track
So, you’ve calculated how much wealth you need to retire comfortably. And, you’ve created a plan for how you would accumulate that amount. You even have an idea of how much you should save every year. All of this is great in theory. When it comes to the practical aspect of saving for your retirement, you may find it a little tough to implement. This is because daily demands may divert you from your goal of saving for retirement. Sometimes, retirement may seem like such a distant prospect that you want to put off saving for it. However, as we’ve said above, it’s better to start immediately than wait - if only to lessen your own future burden.
An easy way to stay on track is to pay yourself first and deposit those savings for retirement before you get a chance to spend them. Opt for automatic recurring deposits to put towards investments. Also be sure to try to conduct an annual self-audit to ensure that the amount you said you would put towards retirement is kept away. And last, schedule those regular meetings with your financial advisor! They will not only help to keep you on track but steer you back to the right path and help you course correct as required.
As you can see, saving for your retirement doesn’t need to be stressful. Just start early, strategize, and stay on track! Contact one of our Wealth Management professionals to help you get started today.
Mutual funds and related financial planning services are offered through Credential Asset Management Inc. Mutual funds, other securities and securities related financial planning services are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc. Financial planning services are available only from advisors who hold financial planning accreditation from applicable regulatory authorities.