- July 8, 2019
Photo source: Instagram-@missjillscott
Jill Scott said it best, “I’m living my life like it’s golden.”
Are you ready to live your life like its golden?
Are you ready to sit back, relax and enjoy your heart’s desire?
These are the years we’ve been waiting for; to leave the workforce and finally start living life on our terms. For some, this is an exciting time, but there are those of us - perhaps late 40s/early 50s - who aren’t so sure those years will indeed be golden.
You may feel in all the years you’ve worked, there is simply no way to ‘play catch up’. But know that all is not lost, and it’s certainly not too late if you start planning today.
If you want to get started now, keep reading.
If you want to put your golden years on hold, save this article for a rainy day.
Either way, there are some easy ways for you to achieve the best of your life years down the line.
Determine How Much You Need In Retirement
In retirement, there may be expenses you no longer have to worry about such as kids school fees and mortgage payments, but there are expenses you will have to cover such as home maintenance, out-of-pocket health costs, etc. You may even decide to take the grandkids on an annual trip for bonding time. Whatever it is, it comes at a price which you will have to absorb at a time when you aren’t actively working. It has been said, “Retirement is not an age; it’s a financial number”. Many financial experts caution that 70-80% of your present income will likely be needed for each year in retirement. So you’ve determined that $500,000 is your number. Let’s say you’re 50 years of age and placed $5,000 in a mutual fund earning an average of 5% compounded annually. You then continue to add $1,900 per month; you can easily reach your goal by 65. It may require a lifestyle change to achieve your goal, but start looking for ways to cut back now.
To calculate how much you need, check out the retirement calculator in the below link.
https://www.rfgroup.com/barbados/services/pension/pension-calculators/
Rid Yourself Of Lingering Debt
Write a list of all outstanding credit cards, consumer loan, mortgages, etc. and start paying them off using the “snowball method”. There are a few strategies for paying off debt; however, the snowball method has been effective for many because of the small wins and momentum it provides. So you’re thinking, “what is the snowball method?”. The snowball method takes a list of all debt from smallest to largest in amount, regardless of interest rates; then it pays the minimum amount on all debt while adding additional funds to the smallest debt. Once that’s paid off, you repeat the steps until done.
Increase Retirement Contributions
The best revenge for starting late, due to life’s curveballs, is to start aggressively saving and increasing your retirement contributions. If you are enrolled in a company defined contribution pension plan, and only place 5% of your salary in it, then consider increasing that amount to 10%, then 15% and so on. Another option is to take additional funds and place it monthly in a low-risk mutual fund, which is likely to preserve capital while providing steady income. Learn more about mutual funds here and then contribute, contribute, contribute! The sacrifice now will pay off later.
Line Up Extra Income
Remember the sun does not rise and set on your anticipated NIB benefit as this is merely supplemental income. With this in mind start thinking about additional ways you can generate extra income consistently. There is nothing quite like having money coming while you’re in retirement, even though you’ve built a nest egg.
Your decision to start now is the only thing stopping you from living comfortably in retirement. It’s your life and it should be lived like it’s golden!