Best Reasons to Start Saving Now For Retirement
For most of us the decision of when to start saving for retirement and how much is a confusing one. The answer is its never to early or to late to start saving and how much depends on the lifestyle you see yourself living in retirement. Of course the earlier you start saving the better because of the effects of compound interest, meaning the earlier you start saving the more your money start making money for you because you will be earning income on your savings while still investing more money. The goal is to eventually be able to live of the income your retirement savings generates.
Importance of Saving for Retirement
Although there are many people out there who have company sponsored pension plans many of do not. My company does not have any sort of retirement savings plan other than the mandatory government retirement plan that they are required to remit contributions to so its all up to me to secure my own retirement future.
How Much Money Do I Need to Save?
Generally if you have a company pension plan then the rule is that your pension plan should cover at least 50% of your retirement needs and government plans another 20-30% leaving you needing to save about 20-30%. However if you do not have a company sponsored plan you will need to save 70-80% of your retirement income on your own. Also keep in mind that there have many instances where companies have reduced employee pension benefits or sometimes even bankrupted the pension plan entirely. Therefore it is up to you to start saving to give you peace of mind.
Saving for Retirement in Your 20s
Of course the earlier you start saving the better but for most people in their 20s they are busy paying down student loans and trying to save for the down payment on their first home. Keep in mind that something is always better than nothing and even if you are only contributing a small amount that you are still getting into the routine and discipline of making weekly, monthly or annual contributions. For example if you were to save $50 per month at the age of 20 which is about $25 per pay cheque you would have approximately $8500 at the age of 29. Now you might say that you certainly aren’t going to retire on $8500 but its $8500 that you wouldn’t have had in that account if you had completely ignored saving for retirement while trying to pay off those school loans.
Saving for Retirement in Your 30s
Saving for retirement in your 30s can be just as difficult as saving in your 30s because you often aren’t quite established in your career and the financial burden of starting a family is also taking its toll. Again its important to “pay yourself first” and make sure you’ve set aside money each month or pay cheque to deposit to your retirement account. Using the above example if you started with $8500 at age 29 and saved $150 each month you would have approximately $41,500 by the time you reach age 39. This amount alone without any further contributions would grow to approximately $151,750 by the time you reach age 59 or $225,000 if you continued to make those $150 per month contributions.
Retirement Planning
It is important to start early and outline a retirement plan for yourself. At what age do you plan on retiring? Will you work part time in retirement? Do you plan to travel or start new hobbies? If so how much per year is this going to cost you?
It is important to quantify your yearly retirement needs now so that you can stay on track to save enough for your dream retirement. You don’t want to get to age 55 or 65 and all of a sudden realize that you aren’t going to be able to take all those trips you’ve been dreaming about right? Plan now for your retirement future.
Saving for Retirement Calculator
There are dozens of online retirement calculators that can help you determine how much you will need to save and how often.
For Canadians the best retirement calculator to use is the one found on the Service Canada web page. It will give you a detailed breakdown of all your sources of retirement income including your estimated government pension benefits.
For US citizens FINRA has a great Retirement Calculator that you can use to estimate how much you will need to contribute annually based on your current retirement account balance, your current age, the age you wish to retire and so on.
So start investing now to secure your retirement future, we all want independence and security in our retirement and only you can make that happen for yourself. Remember the saying “pay yourself first” so that there is never an excuse that there just wasn’t enough money left at the end of the month or pay cheque.
Filed under retirement savings | Comment (0)Say Goodbye to the Conventional Ways: Modern Tips to Save Money
Planning on reducing your expenses and saving some hard-earned money? That is really a good thing to do, especially now that the world is experiencing a financial crisis. Cutting up your expenses and keeping more money at the same time will produce massive benefits not only for your pockets but also for your behavior. Doing some money saving techniques can even improve your attitude towards things, as you become more watchful of your spending habits.
So much for the benefits, here are the ways in which you can effectively save some money without using those age-old habits quite inappropriate these days. Bid farewell to your cute piggy banks and save a great amount of cash with the following tips to save money:
· Control your expenses and spend less than you earn.
This is the key in ensuring that you will really save money. Examine all the things where your money goes and decide whether you still need them or not. Abandon your addiction to expensive clothes, cars, or shoes, since they may well be the main reason that your money is frequently used up. Also, start using or buying the alternatives for those things you need. This may boost your savings as well as your resourcefulness.
· Take advantage of sales.
Purchasing from sales is the perfect way to buy your dream item at a lower cost.
· Save, save, save!
Saving is really the best thing you could do. You can set aside some money for your savings regularly. You will not even notice how big your savings will be!
· Give attention to your mortgages.
Mortgages contribute a lot to your debt and expenses. It is very important to settle them early so that they will not incur further interests which could be a threat to your savings.
· Credit Cards
Credit cards often account for your large debts. Just pay all the incurred balances and make sure that you will never spend more than you can pay next time.
Retire to Central America for twice the lifestyle at half the price
Are you feeling adventurous? Are you tempted to broaden your perspective beyond US borders? Then read on. A growing number of North Americans are reinventing themselves overseas. They’re leaving their current world and embracing a new one. Here’s what they’re finding in their new life aboard.
1) The cost of living across Central America is well below what most people are used to at home. Nicaragua is the cheapest destination according to PPP data from the IMF, but Belize, Costa Rica and Panama all offer a luxurious lifestyle (with a full time maid if you wish) for far less than it would cost in the US.
2) You get to choose you climate zone. Some retirees love the coast and their dream is to find an beach-side home to call their own. Others retreat to the hills for cooler temperatures, and seek out Boquete real estate in Panama, the Central Valley of Costa Rica or the highlands of Matagalpa in Nicaragua.
3) No longer do you have to bump along bad roads to remote areas miles away from shopping and entertainment. Now you’ll find real estate in central locations with vibrant expatriate communities and all the services you need. Top picks for us would be real estate in San Jan del Sur, Nicaragua or, for a touch of the Caribbean, Ambergris Caye real estate in Belize.
4) A new culture awaits. When you move abroad you’ll be entering a new culture and a new community. Everywhere in Central America, except Belize, Spanish is the main language. You’ll find things more laid back and, yes, slower.
5) A wide range of benefits and incentives are available for retirees who qualify for special retiree programs. Central America is keen to attract retirees so some of the benefits are very tempting and result in large savings. The details are different country by country but most offer household import tax and property tax exemptions.
Overseas living may not be for everyone. You may miss some of the conveniences or feel frustrated by the slower bureaucracy. So if you’re at all tempted, a great idea is to rent first and test the lifestyle before you take the plunge.
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