When should you start saving for retirement?
Quite simply, the answer to this question is ‘as early as possible’.
Retirement for the younger generations is often regarded as something not worth thinking about. Young people feel invincible, they feel their 20s will never end. However, as we all know, everything eventually comes to an end at some point.
This blog will be kept brief as to retain your attention as we navigate the subject at hand.
First of all… The basics, why do we need to save?
Well as obvious as this question may seem, it’s important to address the different costs you may not yet have thought about. The following factors apply especially to those currently overseas or planning to retire abroad.
Depending on where you live, health care can be very expensive and in your old age, getting the best treatment is important.
Basic living costs will continually become more expensive through inflation and it’s important to remember your basic state pension will likely not cover these costs in full and depending on the lifestyle you want to lead, may not even come close. There is nothing wrong with playing the odd game of bingo, but I’m sure most people would like the option to play that game in perhaps, the Bahamas.
Helping your children at this stage of your life is something many future retirees will wish to be able to do. This can be in the form of helping with a deposit on a house, to paying school fees for grandchildren, whatever the case, this cost should be planned for.
Finally, everyone’s favourite word; tax. Your income in retirement is still subject to tax, a key part of the planning process is working through the different ways to minimise the effects of this unwanted burden. People are living a lot longer! Most people don’t leave the coal mine at 55 and die at 60 anymore. In fact, many people are living for a long time past their 80’s. Which is great… If you can afford it.
Do you run out of money at the end of a holiday? The normal answer is ‘yes’. Well.. Think of it like this, retirement is the longest holiday of your life. 24 hours a day, 7 days a week, 12 months a year of pure freedom.
Ok so now we’ve established the fact you need to save. How and when should you start? Well, the truth is, the sooner you start, the easier your life may be in retirement.