We all hope for financial security during our later years.
However, a comfortable retirement cannot always be taken for granted. To protect your financial future, it's important to take proactive steps while you're still working and earning. Remember, it's never too early to start planning.
The first step is to decide exactly when you want to retire. Do you want to do it early, or does your job come with a set retirement age you have to follow?
This question forms the foundation for your retirement planning and you should take this into account when deciding how to invest or handle your finances.
Don't forget:
It's important to know how much time there is between now and your planned retirement date. This will affect what you invest in and also how you invest.
You also need to think about how much spending money you'll need when the time comes.
You should consider what you'll be spending your money on after you retire, and how you plan to allocate this expenditure.
You also need to get a clear picture of what your financial situation is now, as well as what it will look like in the future.
Here are some questions to ask yourself when you map out how much you'll need to support the retirement lifestyle you want to lead:
This can help you understand your financial position better - and work out your needs once you hit retirement.
Next, you should take stock of your financial standing.
What investments or savings do you have that have been set aside specifically for your retirement?
If you don't already have a retirement portfolio, now's the time to explore your options.
You need to understand your risk appetite before you decide what to include in your portfolio or whether you need to make any changes to those investments,
All investment strategies come with the risk that you may earn back less than you initially put in. Your risk profile reflects how much risk you're willing to take to get higher rewards.
Broadly speaking, you're less likely to suffer heavy financial losses with a low-risk investment strategy. However, your potential for profit is also more modest compared to a higher-risk plan.
Your risk tolerance can depend on a number of personal and financial factors. Thinking about when you want to retire and how much you'll need is a good way to start working out what your tolerance is.
Finally, take some time to review what you have now:
All these things could be part of your retirement portfolio, so don't leave anything out.
Our retirement calculator is a useful tool that can help you look at your future goals and see what you'll need to save in order to achieve them.
