Once upon a time, retirement was something that was cast to the back of most minds until we reached those middle-age years – or possibly later.
Now, it is well and truly taken seriously. Want some hard and fast numbers? If recent reports are to be believed, one out of every six people who retire will do so as a millionaire. Suffice to say; this isn’t by chance – there’s a lot of planning that goes into this. This is exactly what today’s article is going to focus on. We will now take a look at four things that you can do in your life to increase the chances of a wealthy retirement.
Expect the unexpected
By this first piece of advice, we’re referring to unexpected expenses. In other words, brace yourself for later-life expenses that never even crossed your mind.
Want some examples? Funeral care is one, while the cost of paying for elderly care is another. Both of these can eat away at your finances, and mean that you burn through any nest egg much quicker than you initially planned.
Turn to index funds
Sure, some investors will suggest that you try and beat the market, but on the most part, this is asking for trouble. Let’s not forget that you still have a day job, and you aren’t a professional investor by any stretch of the imagination. It means that you need to exercise some caution, which is where index funds enter the picture.
The beauty of these is that they follow the market. Sure, it might sometimes result in you losing out through inflation, but on the whole, index-funds can be a terrific backbone for any retirement strategy.
Keep an emergency savings fund
In some ways, this relates to the first point we spoke about – expecting the unexpected. This time, it’s about following such advice in the here and now.
Emergencies do happen, whether it’s the boiler breaking down, or the same happening to the car. Without any sort of emergency fund, you need to turn to your “investment pots” and potentially set yourself back years. What’s a comfortable emergency fund? Some people suggest that three months’ worth of salary is, while others might turn to six.
Take full advantage of your pension
Well, we can’t lead with the headline of free money, but in some ways, a pension can provide you with this. It sounds ridiculous, but how company pensions work means that most people are just fritting away money.
On the most part, companies will match your contribution to your pension. It means that if you contribute 5% of your salary to your pension, your company will contribute a further 5%. Sure, you will take the hit with the initial money you are taking from your salary, but let’s not forget that this isn’t taxed and this makes it a no-brainer for anyone who wants to make the most of their retirement.
In trying to implement some of these strategies, you can rest easy knowing you can enjoy your retirement when it comes.