Introduction to planning for retirement
It pays to plan for your retirement as early as possible. Find out what planning for retirement means, and the effects that time and inflation have on your savings.
- Planning ahead allows you to better enjoy your retirement.
- Starting early gives you more time to reap the benefits of compounding interest.
- Inflation has a big effect on cost of living in the future.
What is retirement?
Retirement is about being able to choose whether to work. You are in a better position to make that decision if you start retirement planning early. Here are some indicators of whether it’s time to consider the retirement option:
- Have a roof over your head (that is fully paid for)
- Are free of debt obligations
- Have adequate health insurance cover for medical expenses
- Have enough savings or passive income to pay for your retirement lifestyle
When should I start?
For many people, retirement is regarded as a life event that’s too far away to start planning for. But this mindset hinders the goal of being able to retire.
Those who do not act early on planning for retirement say it requires too much discipline and sacrifice. Or that it is still early. Some point to their CPF savings to provide for their retirement needs.
Those who do, however, may be saving too little, or know too little about how to go about accumulating and preserving their wealth.
Many people are uncertain of achieving a comfortable retirement, because of these common doubts:
- How much would be enough?
- What happens if I outlive my savings?
- With inflation, will the retirement funds I have amassed be enough for the lifestyle I want?
Why it pays to start early
While it is never too late to start saving and planning for retirement, the earlier you start, the better. Starting earlier means more time for your savings to benefit from the effects of compounding returns.
Conversely, the longer you wait, the less time you have for your money to grow and the harder you’ll have to work to reach your retirement goals.
Just how much of a difference does it make to start early?
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