Perhaps you lost a huge chunk of your pension during the economic crisis or have just recently decided to relocate abroad for that tax-free expat salary. Being in your early fifties and closer to the end of your career than the start, it is difficult to recoup retirement losses or get earnest about your retirement savings.
Remember that social security pensions will only cover a portion of your retirement expenses.
A recent study by gobankingrates.com found that 64% of workers had less than $10 000 saved up for retirement and 40% aged 55 and over had no retirement savings.
There is still time to do something about it. With a ten-year plan in place, you can get your retirement back on track.
- Assess your current situation – you need to assess how much you have accumulated between your company pensions and private retirement savings to determine the shortfall and get a plan in place to make up for it.
- Identify sources of income – for a complete picture of your retirement, you need to look at alternative sources of income during retirement e.g. social security, income from rentals or income from a part time job in retirement.
- Consider your retirement goals – this is very important, as someone who wants to downsize and live a quiet life somewhere, will have different financial needs than someone who wants to travel extensively. Set a monthly budget of your expenses during retirement including, basic housing, food, healthcare etc. to determine your financial needs.
- Set a target retirement age – some people might be 45 and wanting to retire at 55 whilst others are already 60. Remember that people are living longer, and retirement could be 30 years or longer. A retirement of 30-40 years looks very different from one that lasts half that time. Your retirement age and your spending habits will determine how much you need.
- Confront any shortfall - if your retirement assets will be less than your expected requirements, then you need to cover the gap.
- Cut down on unnecessary spending
- Increase your savings contributions – direct debits on bank accounts or upping pension contributions is a good way to increase your pension pot.
- Get your debt paid off – the biggest expense being credit cards and loans.
- Assess your risk tolerance – The closer you get to retirement the lower your risk profile should be. This is of course depended on your personal circumstances.
- Consult a financial adviser – This is perhaps the most important step. Your adviser has all the knowledge and tools to help you get a 10-year plan in place. (Investopedia.com)
If you have had a retirement set back or the reality of pending retirement has set in, then contact your deVere Acuma adviser for a consultation. [email protected]
Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere Acuma adviser for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.