Retirement planning is never easy, but the best advice is to start as soon as possible. The longer you spend planning for retirement, the more financially stable you will be when you retire. How should you plan for this part of your life? Well, here are three things you should consider doing:
Set up a retirement fund
Retirement funds are funds that are specifically geared towards people retiring. In essence, you pay money into your fund at regular intervals, and the fund provider also gives you money. You can find retirement funds all over the place, but the best way to get one is through your employer. They put some of your wages into a pension fund and top it off with some of their won money.
If you’re self-employed, you need to find a personal retirement fund, which is available online from different providers. It works the same way, and it can also be beneficial for employed people to have a personal one alongside their employer’s one, just for additional savings. The difference between retirement funds and savings accounts is that the money is locked away until you reach a certain age.
Buy a house
Planning for retirement is a lot easier when you have a house. The sooner you can safely get on the property ladder, the better. Having a house means you own something that you can sell. It is an asset that’s worth a lot of money, giving you something to fall back on in retirement. Effectively, it’s one of the best investments you can make.
Think about it, if you buy a house in your twenties or thirties, you will have it for a few decades before it’s time to retire. At which point, you can sell the property and downsize to something smaller and more suitable for retirement living. You get a lot of usable cash from your house, so start planning ahead and looking at mortgage quotes or figuring out how much you need to save to afford one. Many investments can be used to help raise funds for retirement, but few can generate as much cash as a house.
Generate passive income
Passive income is income that comes to you with little or no effort at all. You sit back and relax, and the money comes into your account. When planning for retirement, you should try to generate avenues of passive income. This will let you retire, yet still earn money without doing much at all.
There are loads of different ways you can generate a passive income, and it’s up to you to have a look and see which ways are the best for you.
Setting up your retirement fund helps you save money for your retirement years. Buying a house is another way of saving money, only through an investment that you can sell when you retire. As for generating a passive income, well, that can help you make more money while you work – letting you save more – and it can also help you bring in a regular source of income when you stop working. All in all, you’ll be in a fantastic financial position where money isn’t something to worry about.
Federico is an electronics engineer, financial blogger, insurance agent, and a certified investment solicitor. A multi-awarded financial advisor with clients ranging from lawyers, doctors, engineers, accountants, business owners, company directors, and OFWs to minimum wage earners had sought advice from him in achieving lifetime financial freedom.