Ah retirement, that point in your life when you can say goodbye to your normal 9-5 and finally do whatever your heart desires. Of course, if you are lucky enough to do what you love, maybe retirement planning isn’t as important to you, right now. But, wouldn’t it be nice to not have to worry about what kind of lifestyle you will have when you retire? This is why retirement planning is a necessity, at all times of our lives. If you are a regular visitor to our YouTube channel you will know that for every 4 workers, Ireland currently has 1 pensioner. By the time us millennials are at retirement age, this will have dramatically increased.
What do you want to do when you retire? Maybe finally get around to reading that book series that was the hype five years ago, finally learn to bake bread, travel to foreign destinations. Sign me up today! But sadly, the reality bites and we can’t all retire tomorrow to travel the world and bake everything from “The Great British Bake Off”. The advice to everyone, from millennials to the middle-aged workforce, is to get your thinking caps on, look into your retirement planning. There is a reason our Taoiseach; Leo Varadkar announced that all workers will be auto-enrolled into a pension scheme in just over three years’ time. Retirement planning is more important than ever, and you shouldn’t rely on somebody else to start it for you.
One key piece of advice that will make a difference is to be aware of your current finances and work out the math that subsequently goes along with that. Are you wasting finances that could be more beneficial in a savings scheme, investment or ‘rainy day fund’? Time to use some of what you learnt in those maths and business classes! Everyone will need a certain amount to live during their retirement years, some more than others. It’s time to financial proof your future!
The reality is if you are spending all your salary you will more than likely not be able to afford or even consider looking at early retirement. If you are the opposite and somehow manage to spend only the essentials then you should in fact be able to maintain yourself during retirement. Effectively meaning you could retire at an earlier age. This would leave the rest of us slackers to scrape by and slave away longer to survive until we reach retirement age.
A smart fact to keep in the back of your mind is, if you save 50% of your take home pay you could hypothetically retire a lot earlier. Realistically, for most people this would just not be possible. The higher the amount you save the shorter amount of time you must work (if that is what you want, of course).
However, retirement isn’t all sun holidays and turning into the next Mary Berry. There is a little bit of juggling around with your finances and deciding what you really need and nope no one needs a ride on lawnmower than can drive itself!
Think of a pension as an investment that your future self will thank you for. The more you put in now, the more your future you will treat you later. Of course, the younger you start the less you will have to put in month on month, leaving you with more cash to continue enjoying trips away, nights out and unnecessary purchases. Like our previous blog post about pensions in your twenties. It pretty much is the same principle, the sooner the better especially if you want to retire before your hair starts to turn a new shade of grey!
One area that people are confused about at any age is investing and where to invest. Of course, the bank will try and push you towards the high interest rate option of investment. Which unbeknownst to you will be very high rates with a small margin for return. But with a little self-guidance you can find a simple option to invest in and get a better return over a decade rather than years. Alternatively, ask your financial advisor for other options that could suit your needs.
Another form of investing is obviously your home since you will be saving up and then paying off for most of your working life. It is your best asset next to your health. In terms of getting a return on investment the old age saying of ‘spend money to make money’ applies. The same applies to a house; a range of variables will increase and decrease the overall price of your house over time. Like location, schools, area, scenery, public transports and amenities.
Most people don’t realise that if they wanted to they could retire at an earlier age, with a lot of discipline. The main thing you should ask yourself is what lifestyle do you want when you are retired? Do you want to retire early? When you know the answers to your future you can begin the retirement planning. 3Sixty Financial Planning can help with your retirement planning and pension planning at a time that suits you best. For more information and contact details please check our website at www.3sixty.ie.
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