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Nine retirement savings tips for those who haven’t started

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For many people, the idea of saving for a time that’s decades away is difficult to fathom. Saving for retirement is often viewed as a grudge expense, the ‘I don’t need to save now, I’m young and still have plenty of time to save’ mentality takes over one’s mindset.

Yes, there is more time, but there will come a point where it can become too late to fully reap the rewards of compound interest on your investment, which lessens the chances of you being financially independent after you retire.

If you feel you may have fallen into this precarious situation, don’t worry. Here are nine tips that will help you on your way to financial independence once you’ve retired.

1. Start saving as soon as possible

Time is the key to reaching your financial objectives. The earlier you begin to save, the more time you have to fully benefit from compound interest. If you wait too long, your monthly contributions may have to be increased and it’s also possible that you may be forced to retire later than you anticipated.

 2. Increase monthly contributions

The later you start saving, the higher your contributions will need to be in order to catch up and this can be very stressful; you would pay less if you started earlier.

Your best starting point is to decide firstly on your financial objectives, and secondly, when you would like to retire. Now, you have a solid foundation on which you can calculate your monthly contributions. If it seems like the contributions are unachievable, it is worthwhile contemplating whether you should retire later and, in the meantime, pursue investments that offer higher returns – although that will mean taking on more risk.

3. Postponing retirement

Delaying your retirement isn’t an appealing option by any means, but it will give you more time to save; moreover, you’ll be lessening the amount of time you need to provide for your retirement. Working a bit longer is also a good idea, because it’s not always easy to start working again after retirement.

4. Make retirement a priority

It’s very tempting to spend money and jazz up your lifestyle, but instant gratification will never beat saving for the future. It’s beneficial to find a balance between the two options so that you can live comfortably and know that your funds are stable.

5. Choose the right retirement products

It’s important to understand that it’s best to consider the product options that are available – don’t commit blindly; this could damage your financial objectives. For example, it may be in your best interest to supplement a retirement annuity with a tax-free investment or unit trusts such as in a balanced fund.

6. Don’t be too conservative

 When time is not on your side, it’s not practical to be too conservative with your investment decisions. It’s worth noting that shares generally perform better than cash or bonds. There is a possibility that your returns will experience fluctuation, but over the long term, it tends to even out.

Deciding in which asset classes to invest can be daunting, and therefore the best thing is to put these decisions into the hands of an investment manager. He/she will be able to find a combination that suits your goals.

7. Remain levelheaded

 Investment success relies largely on how you react to situations. During periods of fluctuation, investors can make emotional decisions, possibly leading to switching at the wrong time which can lock in losses.

8. Rethink your priorities

 If you are struggling to fund your current lifestyle, it may be time to reassess your priorities. This may mean cutting back on a few luxuries, which may seem like a massive loss right now, but you’ll see the benefits in the future.

9. Consult a financial advisor

If you find yourself a bit overwhelmed then it’s recommended that you consult a reputable, independent financial advisor. He/she will help you draw up an effective plan that will guide you in order to meet your financial objectives.




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