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How to Save for Retirement

    retired couple going for swimming

    “The question isn’t at what age I want to retire, it’s at what income.” – George Foreman

    Gone are the days when you could retire comfortably on a pension after being loyal to a company for decades. These days, companies hire and fire without any qualms.

    The biggest companies are so focused on profit that they’ll retrench their staff and outsource the work to other countries where labor is far cheaper. They’re looking out for themselves… and you should look out for yourself.

    This is the harsh truth. Times change and you must be astute enough to adapt accordingly.

    How comfortably you retire will depend on how much money you have saved up. If you’re wealthy, retirement will be much easier. For people with moderate means, retirement planning is crucial.

    It will NOT happen by accident. This is what you need to do…

    • Plan a budget

    Decide how much money you’ll need every month when you retire. Aim for 82 years of age. This is a generous estimate, but it’ll keep you on the safe side of things. It’s better to have excess savings than to run short.

    Remember to factor in inflation when calculating your retirement fund.

    • Create short term goals

    The earlier you start planning for retirement, the better. You’ll have more time to grow your money. Once you have a number (after your budgeting), break it down into smaller goals.

    How much money will you need to save each month? Can you put aside that money? Do you have too much debt currently?

    By asking these questions, you’ll know your current situation and what you’ll need to do to meet your goals. For some people, it may mean paying off debt.

    For others, it may mean learning new skills so that they can increase their income and save more for retirement.

    • Increase your income

    You can do this by either starting a side hustle or you might choose to rent out one of the rooms in your house. Make sure the renter is reliable and trustworthy. Check their references.

    Alternatively, you may choose to refinance your mortgage if you can get a more attractive rate. While this might not seem like you’re ‘earning’ money in the traditional sense, always remember that a penny saved is a penny earned… and we’re talking way more than pennies here.

    • Escalate your savings over time

    The first goal is to pay off debt on credit cards, lines of credit, etc. Then start saving what you normally used to settle your monthly debt payments. As your income increases over time, aim to save more.

    • Automate it

    You’ll want to set up an arrangement with the bank to automatically deduct a monthly sum from your checking account and move it to a savings account (retirement account). This will ensure that you save without forgetting and you’ll also be less likely to spend off all your money without having anything to save.

    Monitor your savings account. Once it meets a sizeable sum, you may wish to put the funds in a certificate of deposit (CD) so that it earns a higher interest rate. Let your money make more money.

    • Be organized

    The best way to save money will be to have a budget and stick to it. You may wish to open up separate bank accounts to save for investing, expenses, big purchases and vacations… and retirement.

    By having separate accounts, you’ll know exactly how much you have to spend in the different categories. If you lump it all in one account, it’ll be very difficult to stay organized.

    Saving for retirement will not only require time and consistency, but will also require you to be disciplined and delay gratification. Expensive designer items may seem fun and trendy now, but when you’re older, you’ll wish you had the money and the follies of your youth will weigh heavily on you if your finances are tight.

    So, plan cautiously and save whatever you can for your retirement. Like the saying goes, “Good retirement planning will decide whether you buy the burger or serve it.” Plan well. Save well.