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By Sia Hasan
Special to the Financial Independence Hub
Retirement should be a time everyone looks forward to embracing. Theoretically, everything becomes easier in time. A retiree doesn’t need to deal with all the pressures of a stressful full-time job. Days can be spent doing more of the things the retiree enjoys. Such imagery, however, may only reflect the most idealized version of retirement years. Relaxation in retirement remains heavily dependent on how much money has been saved for those golden years.
Saving for retirement has to be about more than just putting a set percentage of income away. Careful thinking and planning are required to make sure retirement assets become adequate enough to cover leisure and necessary expenses. The changing future landscape of retirement further necessitates better planning.
Longer Life Spans and Retirement Savings
Increased life spans definitely impact the way people save for retirement. Thanks to insights into healthier living and great strides in healthcare, a larger percentage of people live much longer. Living to the age of 100 may even be possible for a significant number of people. Better retirement planning definitely works to the benefit of someone who lives a very long life.
Working during early Retirement years
Upon retiring at age 70, maybe it would be wise to look for another job. Working a full-time job might not be necessary, but earning a small stream of income from a part-time job could prove very helpful. $10,000 earned from a part-time job covers $10,000 worth of expenses. Working a part-time job until age 75 leads to $50,000 in income. Earning additional money eliminates the need withdrawing an equitable amount of funds from a savings account or social security deposits.
Money saved may draw more interest and be set aside for use during very elder years. After looking at things from this perspective, making plans for a retirement job becomes an important priority.
Examine Annuity Income
Annuity investments are designed to pay a sum of money to an investor per year. Conservative investment vehicles designed to preserve the initial investment amount probably would be preferable to a retiree. A decent and consistent annual payment amount can supplement a social security check for someone well into his/her 80’s and beyond. The annuity becomes another revenue stream that allows a retiree to leave a portion his/her savings accounts alone.
Focusing on Retirement Funds
Noting retirement savings plans should be the focus of someone planning on saving for retirement may not actually be stating the obvious. Someone may choose to put savings into volatile investments hoping the potentially high return leads to more money during retirement years. Such a strategy can be a risky one. The “retirement money” could be lost if a volatile, risky investment crashes. Retirement plans such as a 401(k) or conservative bond fund come with far less risk. Even when a conservative investment pays low amounts of interest, many years of compounded interest could still yield a nice final amount.
Pre-Planning for Retirement
Those asking “How does a self directed IRA work?” or “Are treasury bonds decent hedges against a volatile market?” seek valuable knowledge. Such knowledge becomes even more valuable and beneficial when asked early in life. The sooner someone knows about retirement planning and investing, the sooner he/she can put a proper retirement plan into action.
Putting 5% of your income away from age 40 to age 60 does build up a nest egg. Putting that same 5% away starting at age 30 puts even more money away. Plus, you attain gain even more compounded interest on the savings. That how the simple math works. Following such a simple plan could prove tremendously helpful at an advanced age.
Sia Hasan is a tech entrepreneur by day, and a freelance writer by night. Her passion lies in business technology, efficient and sleek programming, and customer relationship management. When she doesn’t have her nose pressed against her computer screen, you can find her spending time with the loves of her life, her two dogs, Pixel and Vector.
