When it comes to retirement seafarers always think the other way around. They always say what they want to do (as a retirement job) after retiring from the work at sea. But if you look at the dictionary the meaning of retirement is the opposite.”Retirement is the act of ending your working professional career – Merriam-Webster”, so now which is true about retirement.
When is the right time for retirement? Does age really is the measuring point when to retire?
Retirement should be done with careful planning and consideration. Remember that if you fail to plan, you are planning to fail. The worst of all is that if you have no clue what you should plan about for your retirement.
1. Set a clear goal.
What are your plans when you retire? What do you dream to do during your retirement? These are the starting point for your planning. Write down what you want to do when you retire and quantify it. Know how much you need to sustain those needs, 15 to 20 years more if you are to retire at an old age.
2. Make a good accounting of your current finances.
Look at your expenses; compare it with your income. Can your goal be achieved based on your current financial lifestyle and earnings?
If no, you have to consider removing the unnecessary expenses or increase your salary. That way, you will be able to work your way through your end goal.
It is not the money that you have in your savings, that is hindering you to retire early, most of the time it is the money that you spent that is hindering you.
You see, if you write it in a spreadsheet, you’ll be surprised that you have spent more than what you have earned. You just didn’t notice it because it is either hidden through credit cards, loans, and other means of debts.
3. Consider reducing your lifestyle.
Make a lifestyle check (it also includes your spending habit), can you sustain your current lifestyle when you retire? If you stop living the lifestyle that you have now, will you be still happy when you retire with a much simpler life.
If your answer is no, then you have a serious problem. You will have to pay a bigger tax for your house, tax for your car, hobbies that you cannot get rid of, and restaurants you need to visit twice a week.
It is better to start living simpler now so you’ll get used to it earlier rather than get rid of it when you already retire.
4. Start estate planning immediately.
People raise their eyebrows when they hear about estate planning, but it is the most essential action in your life that you need to address immediately. Everything that you have acquired from now until the future is subject to tax.
Your family will not be able to own them immediately if they cannot pay the appropriate tax. Literally, the government owns you. Even the lot that they will bury you, must be bought and tax must be paid (it also includes the coffin). It is inevitable and if you don’t realize it early, your family will have problem in the end.
5. You must know where to invest.
I suggest you find a financial planner that you can talk to, when it comes to making decisions in investing and planning. But the basic idea is, diversify your investment.
Invest in liquid assets (mutual funds, bonds, money market, etc.), and in solid assets (apartments, real estate, business, etc.). This lessens the risk of your money being in one basket. But remember, estate planning is always related to investing.
So whenever you invest on these financial services, make sure you keep it in line with your estate plan.
6. Spend money wisely.
Your current spending habit affects your saving habit.
- If you spend more than you earn,
- if you spend more than you save,
- and if you spend everything you have without considering your emergency expenses, the chance of bankruptcy is upon you.
If you realize it earlier and change, then you have a chance of saving for retirement. But if you realize it at your late 50’s, sad to say you have a serious problem during your retirement.
Just to remind you, a person who retires at old age has plenty of health related problems that needs medical attention and maintenance, which requires money to maintain a good health.
7. Determine what age you want to retire.
If you can force yourself to save more rather than spend more, I think the best way is to motivate yourself to retire at a young age. This forces you to think that you are time constrained and you need to save a lot now so that you will benefit later.
Eventually it is about you, being a good steward of your finances.
If you understand that your work will kill you slowly, you’ll probably decide to retire early to live longer.
If you know where to begin planning then you can accomplish a lot of your financial planning for your retirement.
You must have a clear age when you should retire. Time is your friend if you understand that preparing for retirement, you need to start planning now.
But, time can be your enemy if you realize late in your age that you need to save for your retirement.
Have your take on this article and share it in the comment below. Let us talk about it and let others share in the conversation.