Planning and saving for retirement is essential if you want to enjoy a stable and prosperous financial life into your later years. And, with more people living longer than ever before, you will most likely enjoy a much longer retirement than previous generations – a retirement in which you will not be working and generating an income. Hence, the need for retirement planning and the wisdom behind the advice that it is never too early to start planning for retirement.
But what if you’re no longer a young adult and haven’t thought about retirement planning before now? Due to the power of compound interest, it is true that the sooner you start, the better. Regardless, you have to start somewhere and better late than never.
The first port of call? A reputable financial adviser. Speak to your adviser about your current financial situation and what you can do to catch up on your retirement savings and secure your financial future. In this post, we’re going to offer you a few strategies to discuss and consider.
Ways to catch up on your retirement savings
When was the last time you updated your budget and financial plan? Do you really know how much you spend each month? Where your money goes? And how it could be put to better use? For example, you might be able to find a way to immediately save more through delayed gratification or paused spending.
2. Know your tax benefits
You might benefit from tax deductions for RAs and certain investments. SARS actually offers generous tax deductions when you make contributions to your RA, pension or provident fund.
As soon as they are working, your adult children should be managing their own financial journey. There is no point sacrificing your financial stability by continuing to fund their lifestyles while your retirement suffers. And this will probably result in you becoming a financial burden on them at some stage in your later years. Take the money you used to spend on your children when they needed it and redirect it into retirement savings. Trust us – both parties benefit in the long run.
4. Replace debt payments with savings
Just paid off a big debt like your car? Instead of using that money for pleasure or less profitable reasons, continue to pay it but, this time, into your savings. You’ll be surprised at how quickly money will disappear into the non-essential if you haven’t made a plan for it once you are debt-free.
5. Make retirement-style life changes
Do you really need that big house now that your children have left home? Need to eat out as often as you do? Make lifestyle changes as if you were retired – such as relocating, downsizing, or reducing expensive everyday habits, and then try living on a monthly income amount that you would expect to be living on once you’ve retired. You’ll save more and get a true indication of whether you are able to retire at your planned retirement age.
Whatever your age or financial situation, retirement planning is an absolute must for every individual. Getting expert help to manage this process as part of your wealth journey is a smart move - speak to an independent financial adviser about how to balance essential financial steps like retirement saving with your individual needs. For insurance and investment guidance tailored for each stage of your life journey, speak to TRG today.