Can you remember when you first really thought or heard about the subject of Retirement? Chances are, it was when you were in your 20s, maybe you were just offered your first part-time job and the subject of retirement was touted around amongst the permanent much-matured employees yet for you it was so far in the future that you hardly gave it much thought and just put it on the back burner.
You gave no attention to something that would happen some forty or more years into the future when there are so many pleasures and pressures happening at the moment. Your mindset was probably something along the lines of “I’ll handle that when the time comes!”
You will retire better if your investments suit you
By now you know that saving and investing for retirement ideally should start the moment you start your first real job (which is dying slowly) or when you start your own business and continue well into later life.
You also know that life happens and that your investment strategy is not static and will be different throughout every stage and age of your life.
It is important to keep all the factors that might affect your investment strategy in mind. These factors determine how your retirement savings are invested which will affect how much you have in retirement for years to come as humans live longer than in the past.
Age and Stages
In your 20’s and 30’s
By the time you were in your 30s, you may have been married and perhaps had children, a home, family responsibilities, and a career underway. You may have been watching your parents go through the retirement phase of their lives.
Chances are, they had benefited from having a corporate pension to supplement their retirement age pension fund.
You may have been reassured that those kinds of “perks” were standard and you came to expect that you, too, would have such a cushion when you retired.
From a mindset perspective, you didn’t worry much as you told yourself that time was on your side and your expectations pretty much remained intact. In that era, money was not so much a priority as it is right now, and again, the products, goods, and services were not as expensive as they are today, so the perspective was justified.
However, you can consider becoming more aggressive with your investment approach because your advantage is that you still have many years on your side to grow and weather the ups and downs of storms. Bear in mind that now, with the advent of the Internet, you can shorten the years it would take as there are investment types that can deliver much quicker results than 5, 10, or 20 years ago.
then came the 40’s…
Then, into your 40s, a few new words, like downsizing and outsourcing made their way into your vocabulary. More and more companies changed their benefit plans and eliminated pensions in favor of 401 (k) plans and other programs that encouraged and were more based on employee contribution.
Hopefully, you survived this era with your retirement plan intact, but only a few did. Skepticism and general uneasiness symbolized your mindset then. You began to move cautiously when making career moves as you negotiate your salary package.
Consider using the growth and income investment approach to help balance retirement planning and other larger financial commitments such as your children’s future tertiary education. You still have enough time to maneuver and grow your nest egg.
Into your 50’s
In your 50s, an outright dynamic change occurred in the retirement planning industry. Gone away were the pension plans of yesteryear, and the emphasis has become how to grow your tax-advantaged savings to build a sizable nest egg for retirement.
But, of course, by that time you were probably caught up in a credit card, and loan debt spiral, had more than one house and expansive balloon payment for the cars and toys than you needed, in fact, banks were lending money like there was no tomorrow and it was increasingly difficult to put anything extra away for retirement savings.
Denial could be a good term for the mindset of your 50s. You knew you had a problem, but without the cash to do something, you just put any discussion of retirement planning on the back burner and carried on enjoying life.
As you approach your 60s and beyond
Now, as you approach your 60s, panic has set to some extent! Our government surveys tell us that 75% of people reaching age 60 have saved less than $100,000 toward their retirement!
There’s a whole lot of political discussion about adequate retirement rules, but nobody is talking about increasing benefits or lowering the full retirement age. No, quite the opposite is happening where senior citizens are now required to purchase Retirement Annuities to supplement their retirement income in the future which means the government will no longer take care of them. You are on your own!
Now you are approaching what you think is your retirement Red Zone starting 5 years before retirement where a company may ask you to take early retirement at 65 years of age and you could still keep your pension intact.
Unless you are among the very fortunate that have a sizable nest egg secured, you are faced with working longer into your 60s or 70s before you can retire and you can only hope that your health holds out that long. If you have the energy, you and/or your spouse are considering a second job to help the retirement cause. Read on and check out below some ideas you can implement it is not the end of the road.
Baby Boomers are in a panic mode
Well, you are not alone! There are millions of Baby Boomers who are about to turn 62 and hit retirement age. Many, many of them have the same savings deficit that you do. Our society is changing and it is doing so very rapidly. You can differentiate yourself from the masses by actually doing something about your retirement savings shortfall. And, you can start doing it today!
Mortality rates indicate that women outlive men and are expected to live longer. Therefore it is prudent that they need to save and invest more for a longer period.
The normal retirement age in South Africa is 65 years, but most people retire earlier which means that they will need more money to retire and live on.
The number and the age of dependants you have before retirement affect the amount of capital you will be able to have saved in retirement age. Bearing in mind inflation, the value of your currency, legal changes on retirement, and political stability – all of these factors affect the post-retirement age and how long you live.
The more you have saved outside of your retirement fund (diversified investment), the less you need to have or less dependent on your retirement fund (do not keep all your eggs in one basket), or the more conservative you can be with your retirement fund investment choices.
Smart tips on investing wisely and not working harder
- Choose different options
When you invest your money, you need to choose between many different complicated investment options. Some of them have slow yet conservative growth, and others offer faster returns but with more risk. It is your money, after all, and only you can decide where it should go and how much risk you are willing to take.
- Choose wisely, make a smart decision
Understand what is happening in the economy, while you can rely on a good financial advisor or planner to take care of your investments, it is also a great idea to watch the news and read papers or financial news sites on the Internet. The more you are clued up about what is happening both in the local and global economy the more empowered you are to make smart decisions about your money. For example, when an economy is struggling, bonds tend to rise whereas when an economy is booming, look to stocks and commodities as good investments.
- Stay calm
As you know, the local and global economies change all the time. A bad day in Europe or the USA may mean a great day in Africa and vice versa. If the markets where your portfolio investments are invested have a bad day, do not panic. There will always be highs and lows, ride them, stay informed, and talk to your financial advisor or planner if you want to adjust your portfolio.
- Discipline is key
You must commit a specific amount monthly and consistently. Setting a target ensures that you will be forced to invest. The sooner you start, the larger your investment fund can be in the future.
- Do your homework
Before investing, make sure you learn and understand how the investing game works, but do not be scared. If you are willing to learn and make mistakes and recover from those mistakes, then you are already winning over a person who has not even moved from the starting lineup. Remember, it is a marathon to build wealth steadily and slowly, not a sprint.
Age of information – The Internet
The age of the Internet has provided us with an awesome opportunity and an amazing communication tool. You can now explore and take advantage of the Internet, at a very modest cost, to provide some needed extra cash for your retirement plan. All it takes is an investment of time on your part!
You see, over the course of your life, you have amassed a wealth of knowledge on a variety of topics. That knowledge and your experiences make you quite unique. If you can refine, codify, and package your specific knowledge, there is a way to earn an income online by sharing that information.
You see, there are millions of people performing searches on the Internet every day trying to find information on a wild array of topics. You can bet that there are lots of searches every day on the topic that you know so much about!
There are mechanisms in place on the Internet to help you share your knowledge, wisdom, and information with others and, in return, establish a steady source of income to supplement your retirement. So why don’t you jump on the bandwagon and start generating income online?
You DO NOT have to spend a lot of money to accomplish this. Many people are doing this every day anywhere in the world anyway!
Retirement is a function of an idea, a figment of a person’s imagination. You are as old or as young as you feel and think and have nothing to do with retiring. As long as you have breath and are still alive, you can achieve anything if you put your mind to it.
You can still start a business at any age. Just take a look at Colonel Saunders at age 65. After he faced so many rejections with his chicken recipe business idea (Kentucky Fried Chicken), he finally started it, and he never gave up and he never looked back. As they say, the rest is history.
Thank you for taking the time to read this blog, as a retiree what are some of the challenges you had to face during your career life, and what are doing now to generate a steady source of income on the Internet, please leave a comment below. Thank you once again for gracing us with your presence.