5 Reasons Why You Might Never Retire
Everyone dreams of retiring at 65 to a stress-free financial life. The irony, however, is that some might never be able to retire as they have yet to put things in place for this stage. The lack of proper preparation for this in the late 40s stems from the lack of appropriate savings.
The only key to retiring is having total control of your finances. This entails you prioritising your savings and investment portfolios ahead of this stage. Remember, you cannot work forever. Since these are amiss, here are some pointers to why you might never retire.
You didn’t start a saving portfolio early
Retirement is predicated on savings. No savings, there is no retirement. The importance of this cannot be overemphasised, as saving as early as in your 20s gives you enough time to earn more before clocking 65. The compound interest rule helps you ensure returns over a long period.
Michael Baker, a certified financial planner, supported this idea of saving early and said, “One of the biggest mistakes people make when planning for retirement is underestimating the power of time.” This mistake has made retiring a dreadful thought that some people do not want to discuss. Though the error has been made, you can correct it by starting today.
An expensive lifestyle
Some people are accustomed to a particular lifestyle courtesy of their monthly income. While there is nothing wrong with living a comfortable life, it is good to checkmate it. This is to aid an easy transition to a less expensive standard of living and prepare yourself mentally and financially when you retire.
This transition is, however, hard on some people. Since they are accustomed to it, they find it difficult to adjust and retire. Those who cannot sustain living standards from their saved assets when they retire perform poorly financially as they need their paycheck to maintain the same standard.
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Debt is the primary reason some people might never retire, as they are neck-deep in it. This makes the idea of retiring dreadful as the only source of support is their monthly earnings. This ranges from medical debt to auto loans.
According to David Walters, a certified financial planner and portfolio manager, “Large amounts of debt will severely strain your savings once you retire.” So if your goal is to retire with no worries for the future, restructure your income, expenses, and savings to quickly repay your loans before retiring.
You don’t have an individual retirement plan
One of the things that is expected of a monthly earner to have is a retirement plan. In the case your employer does not have one for employees, the best thing is to open an individual retirement account (IRA) for yourself. If you are also self-employed, you can open one for yourself and have a specific amount you will pay daily, weekly, or monthly.
This depends on the rate you generate your income. The importance of having this type of account is that it is tax-free. Steve Doucette, a certified financial planner, said, “One of the easiest ways to accumulate wealth is always to take advantage of tax-deductible and tax-deferred savings vehicles.”
Scared of retirement
While retirement is good, it scares some people who have yet to save for the period. Being scared, however, is not the solution, but planning towards it. Though not enough, you still have enough time to attain some of your retirement goals.
You can start by keeping a detailed record of your retirement income. This will give you an idea of where to begin your planning. Also, a financial planner or retirement calculator can help you determine the best step to take and make feasible projections of the outcomes.
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