What does retirement mean to you?
Will it be when you have worked your fingers to the bone, having saved as much money as possible to fulfill your ‘bucket list’ of dreams?
Sadly for many people, that is all but a glorious illusion.
On both side of the Atlantic there is a similarity is the attitudes of the working people who are approaching nearing retirement. The concept of retiring at 65 is fast becoming a myth.
According to a survey carried out by The Transamerica Centre for Retirement Studies –
82% of workers in their 60’s are working past the age of 65 and don’t intend to stop
59% of workers in their 50’s, and 60% of workers in their 40’s, have no intention of retiring before age 65 or at all
52% of people currently working, plan to work while in retirement to because they feel they need the income
According to a survey by AXA Self Investor
14% of Britons are not undertaking any financial preparations to plan for their retirement
Research done by Nielsen shows that 37% have no plans to put any monies aside
20% of working British people haven’t made any savings in the past 3 years
On an average British salary of £28,000.00 per year, most people are saving less than £25.00 per month towards their pension.
It is still not too late to make a commitment in providing for your golden years.
If you are fortunate, your company will provide a pension scheme and contribute towards your pension pot.
However, if you are self-employed or with a company that does not have a pension scheme, you need to take the following steps:-
1. Calculate how many working years you have until the normal retirement age of 65 years
2. Work out your average expenditure over a year (Probably easier if you do this on a month’s basis x12) .When calculating this, factor in average holiday’s costs, vehicle maintenance or purchase, medical insurances (including dental and optical care), mortgage or rent costs, emergency flights back to your home country, hobby purchases or participations, social entertainment e.g. concerts, restaurant meal, etc.
3. Everybody needs a ‘rainy day fund’ – the fund should equate to an average of three months’ salary. If you haven’t got one you will need to create one immediately.
4. Once you have estimated your annual living costs, remember that males on average live to 87 years which gives (assuming a retirement age of 67), 20 years in retirement. Then multiply the figure by 20 years and this will give you an idea of how much you need to save. Be aware your pension savings need to beat – say 5% – annual inflation costs.
To keep on track, liaise with your financial advisor and keep re-evaluating every year to ensure that you are still on track or if there is any change in your circumstances, to amend where necessary.
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