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Retirement Planning – Why? When? and How?
Having a retirement savings plan means that you have a map that will guide you through the different stages in your life, with the end goal of being that to live comfortably once you stop working.
Every single person’s aim will be different, but the road to the finish line is the same. Saving and Investing.
These are the two words that can create fear and confusion in the hearts of everyone from the most to the least educated of the lot. Whatever the excuse, there's no way of getting around the fact that saving and investing are the two keys critical to your future financial security. It used to be that people worked hard at their careers for 40+ years, put a little money aside, and then retired comfortably off their savings, Social Security and maybe a pension at the age of 61. Today people live longer, need more money to maintain their lifestyle as they age, and yet save less. The reality is that you'll need to make your hard-earned savings work for you by investing that money wisely, with both your short and long-term financial goals in mind. Saving and investing will give you the upper hand when faced with unexpected problems. It can cushion the emotional and economic blow of a divorce or accident. It will enable you to take advantage of opportunities you may otherwise have missed out on, like actually taking that second honeymoon instead of just talking about it. In a word, saving and investment gives you options.
If you're feeling guilty or panicked for not already having a personal financial plan in place, rest assured that you are not alone. It would also help you to know that most people who haven't begun saving and investing for their future have the same excuses for not doing so.
Most people claim that now they are in that time of their life that starting now would not make sense as they are already late to start saving. Nonsense. IT IS NEVER TOO LATE to start planning for your retirement. Having some money to retire is better than having nothing at all. Sure, your investment options will vary, depending on when you begin taking charge of your financial future. For example, it would not be wise to invest in a 100 % equity based investment, whereas it would be much wiser that your choice of investment would be that of a low risk investment, such as bond funds, managed funds, with profit funds or even better, guaranteed products.
With a possible life expectancy of 80-85 years, the chances are that you still have a lot of life to look forward to, and hence to save for. So don’t wait another month or year. Start now, because the sooner you start saving, the more time your money has to grow.
There are different types of investment vehicles that one can use to set aside money for retirement .The most simple maybe being that of a normal bank savings account, or investments in cash funds, to the new, more innovative and now widely available unit linked savings plans.
Whilst when saving using a bank account or a similar cash fund, has very low risk if any at all, the unit linked saving schemes may be that little bit more riskier. But then again, it goes without saying that the higher the risk, the higher the possibility of return.
This is the main reason, why these types of savings are aimed for the long term, that is more than 15 years. The longer you maintain a savings plan the better, so again, it is never too early to start.
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