2017 May 16
The Early Bird gets the Worm: make your retirement plan TODAY!
Retirement is a significant milestone in all our lives.Whilst we would all prefer to live a comfortable, stress-free life after retiring, finances play a major role in making this dream a reality.
Retirement planning is, therefore, crucial to ensure financial stability in our golden years.
What is retirement planning?
Retirement planning, in a financial context, refers to the allocation of savings or revenue for use after retirement.
Who should be considering a retirement plan?
“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”
– Bill Gates
It is harder than you think (try impossible!) to prepare for retirement in your final year in the workforce, and easier than you think to plan for your retirement over the course of a few years, or better yet, decades.
If you’re in your youthful, carefree years, understandably, retirement is probably the last thing on your mind. However, the key to a happy retirement is to start planning early; basically, the earlier you start your retirement plan, the more independent and comfortable your retired life will be. So anyone with a source of income can start planning for their retirement – the earlier the better!
Retirement plans bring with them a mountain of benefits:
Adequate savings for a comfortable, independent retirement
With the increase in the life expectancy of Sri Lanka from 72 to 78 years, you are likely to live about 18 years post-retirement. Given the uphill trend followed by the cost of living, a meagre pension or EPF/ETF is probably not going to suffice. Old age also brings with it increased health complications and as a consequence increased medical expenses. Furthermore, there may be a few things on your bucket list that you want to cross off once you retire, like an overseas pilgrimage, which may require financial liquidity. It is also unwise to neglect unforeseen circumstances – curveballs life will throw at you in the form of natural disasters, thefts or accidents. It is, therefore, important to ensure a steady flow of income in your post-retirement years that will enable you to live an independent, well-sustained life.
Returns in regular instalments
Another benefit of retirement planning is the returns you receive monthly in regular instalments. It’s an assurance that if something were to happen to you, your spouse would still have a steady inflow of income to support himself/herself. This is arguably better than a lump-sum return. Sure, it’s a large disbursement of money, but what if you can’t convert the lump sum into a steady flow of income to sustain you throughout your retired life? What if you splurge and buy a car with the entirety of the sum?
Peace of mind
The confidence that you have a plan for your future, the assurance that your retired life is taken care of, the knowledge that no matter what the future holds, you and your dependents will be able to sustain anything in a financial capacity is sure to give you peace of mind, the peace of mind you need to enjoy your golden years in a relaxed manner.
So do you think you’re ready to retire?
Retirement planning can seem like a daunting activity. In order to demystify the process of retirement planning, start by answering these questions to estimate how prepared you are for retirement:
- How long do you have till you retire?
To calculate this, subtract your current age from the age you hope to retire. E.g. if you’re now 30 years of age and you hope to retire at the age of 60, you have 30 years more till you retire.
2. How much funding will you need for your retirement?
This is a projected sum of money needed, taking into account emergencies, inflation and lifestyle.
3. How much have you saved for your retirement?
Calculate how much of your current savings can be utilised to meet your retirement requirements.
4. What is the GAP?
The GAP is the difference between your retirement savings and your planned retirement fund. This is how much more is required by you for your retirement.
The GAP is what you need to bridge in the time you have till you retire.
Ceylinco Life offers an array of well-structured retirement plans customised to meet YOUR specific needs.
True to their saying, “It is never too early or too late to start planning for your retirement”, Ceylinco Life has structured different retirement plans to target different age groups. So even if you missed out on making plans for your retirement in your early years and you’re nearing retirement now, you can still find a retirement plan that suits you.
For more information on their retirement plans, visit http://www.ceylincolife.com
Here are some tips from Ceylinco Life to successfully plan for your retirement:
- Don’t procrastinate – start today!
- Calculate your future expenses as per inflation
- Leave a margin for unexpected expenses
- Get advice from a financial advisor
In both a financial and personal context, a comfortable retirement will take strategic planning, execution, and persistence. Retirement planning can seem like a tedious task, but with a head-start, it can be achieved with less arduousness and minimal stress. So stop procrastinating, and start planning!
(Part One of a Two-Part Article)