by Rhiannon Williamson
Retirement - A New Beginning
Whatever your retirement dream - from a home in
the sun, a boat by the sea, or simply pottering about in the garden -
all of these things are possible with careful financial planning.
But have you ever wondered why so many of us
constantly push the practicalities of retirement planning to the back
of our minds while rushing through our lives complaining about the
pressures of work and dreaming of the day when we can finally put our
feet up?
What is it that causes this contradiction in us?
I think that most of us would agree the two main
causes are lack of time and reluctance.
And yet each and every one of us knows how
important it is to plan and save for our retirement!
After all we are quite literally bombarded by the
media week in week out with facts about the pension time bomb and the
fact that many of us will apparently struggle for the price of a cup of
tea let alone a beautiful villa in the sun when we get to 65!
So, with all that information taken on board what
can we do to make our retirement a happy one?
Read on for some practical tips to ensure that you
retire Wealthy and Healthy!
Wealthy - Financial Wellbeing in Retirement
Financially speaking, the ‘cost of delay’ in terms
of retirement planning can be illustrated like this - if a 25 year old
and a 35 year old were to start saving today for retirement at age 55
and the 25 year old invested £300 a month towards retirement, the
35 year old would have to increase his contributions to £803 a
month to achieve the same potential returns!
I know, I know, talking about money – especially
pensions - is the fastest way to send anyone to sleep. But seriously,
it’s never too soon to take charge of the financial aspects of
retirement planning!
And if you’re still not convinced, according to
research out of 100 young people now aged 25, 1 will be rich in
retirement, 4 will be financially independent, 5 will still be working,
12 will be completely broke, 29 will be dead, and 49 will be dependent
on their friends, family and charity. That means that of those who live
to retirement, 93% will be dependant on friends, relatives and charity!
Furthermore, birth rates are dropping as none of
us can afford to stop working and have children but at the same time
we’re living longer meaning that soon there will be no one young enough
and in the work place to pay the taxes necessary to keep us in
retirement. 40% of us are failing to save enough for retirement,
retirement income is set to drop by 30% over the next 30 years, the
American Social Security system is apparently heading for bankruptcy,
the average age for retirement is going to have to rise from 62 to 70
with some experts predicting that 86 is actually a more realistic age
and what are we doing about it? On the whole, NOTHING!
But, of all the facts, figures, statistical
information and scary predictions one fact and one fact alone is 100%
truth - the only person you can rely on to provide for you and your
family in retirement is…YOU!
So, now that you’re ready to start your retirement
financial planning (!) here are some important aspects that you need to
consider.
Your own personal circumstances are unique: you
should always seek professional and personalised independent financial
advice before taking action – and you must do so as soon as possible.
Be realistic about how much you should be
contributing towards your retirement – based on your age now, the age
at which you hope to retire, and the lifestyle you hope to achieve in
retirement. One statistic bandied about is that you should save a
percentage of your income equal to half your age. So if you’re 40 you
should be saving 20% of your income towards retirement. Whether that is
enough, possible or necessary for you is something that your adviser
can help you decide.
Another good way of calculating how much money you
will need in retirement is, assuming you were to retire tomorrow, how
much in today’s money would you need to live on comfortably for the
next 12 months? From this, we can calculate the pot of money you will
need to provide your income in retirement.
Increase your contributions as your income
increases and pay in as much as you can afford while you’re earning. If
you have a pension plan already in place but are unhappy with it or
wish to change it, know that pension surrender or early encashment are
rarely the best options available to you.
As you get older, consider topping up your
retirement savings. Compounded returns and the years you have invested
can make all the difference. Offshore, you can generally access funds
from the an early age, but of course it goes without saying that the
longer you save, the longer your fund has to mature and the more likely
you are to get better returns on your investment.
Find out about your State pension entitlements and
plan when you want to start receiving your private pension income.
Stories in the news every day remind us that state benefits are being
reduced, and by the time you retire these may be worth next to nothing.
Can you really rely on the state by the time you retire? I doubt it!
Never forget that the value of an investment can
go down as well as up! So if you invest a little extra now the worst
case scenario is you will have more money in retirement, never a bad
thing.
If you’re British and you choose to retire in a
country not classed as being within the European Economic Area your
State pension (such as it might be) will not necessarily increase in
line with inflation.
Seeking professional advice is the first step in
the right direction to finding the right financial solution – it will
save you time and money in the long run and reduce your cost of delay
significantly! If you have the expatriate advantage – namely the
ability to utilise offshore investments – you will be in a far more
privileged position than many of your peers and you would be foolish to
pass up the offshore opportunities afforded you.
To find out more today, contact us and we’ll show
you the right way to invest for your future.
Is it too late for me?
Some people reading this article will agree with
what I’ve written so far and then say - “Great, but I’m 55 years old
already, is it too late for me?”
The simple answer is that it’s never too late!
You just have to plan differently.
Being realistic is essential - if you don’t have a
private pension, if you have little in the bank and have had no great
luck on the lottery recently then it may be wise to shelve the yacht
plans.
But never give up on your retirement aspirations -
just massage them to fit your financial capabilities! Undergo a full
financial health check, get best advice, find out the options that are
available to you.
What have you got to lose? About an hour out of
your day. What have you got to gain? Peace of mind, financial security,
a comfortable future. Hmmmm, worth thinking about!
Healthy - Physical Wellbeing in Retirement
Every single day of our lives we grow, we mature,
we develop…and we grow older.
And when we’re very young we sometimes view
retirement as something that equates to old age. We have images of old
people in rocking chairs with blankets over withering legs rocking away
the last days of their lives! No need to plan then - just throw me a
blanket and I can do the rest myself!
But as we mature and grow older we soon come to
appreciate that there can be a considerable amount of time between
finishing our working lives and needing to settle into that rocking
chair - and that that time is ours to enjoy to the full!
And while it is true that the body ages and that
no man can turn back the tides of time, none of us has to get old
unless we choose to do so!
Our bodies may age but we don’t have to.
So, there are really two considerations when it
comes to the ageing process and welfare in retirement – namely the
physical aspect and the emotional aspect.
The Physical Aspect
As ill health can smite any one of us at any age,
we should consider our physical wellbeing throughout our lives; both
from the point of view of prevention and the point of view of cure.
Prevention
When we actively take steps to encourage good
health we are far more likely to enjoy longevity; and in taking such
action we could make the difference between a happy healthy retirement
and an old age blighted by failing health.
Keep active. Many of us have sedentary lives; we
drive to work, sit in an office, drive home and then sit down to watch
the telly. But keeping active should really be seen as a mandatory part
of our lives, right through and into retirement.
While busy lives may make it difficult to find
time for set exercise, there are always things we can do to improve our
overall fitness. Consider parking your car two streets away from the
office and walking the last ½ mile, take the dog for a long walk
(he’ll love you!), buy a bike, go on a walking weekend or weed the
garden. Simply by adding a little physical activity into our daily
lives now, we will be pushing back the years and ensuring that we are
able to fully enjoy the freedom that retirement will afford us when the
time comes.
Maintain a healthy lifestyle. Enjoy nutritious
food, adequate sleep, avoid nicotine and keep alcohol consumption
within sensible limits.
Reduce stress. Everyone suffers from stress
sometimes, and we are all well aware of the long term damage stress can
do to our health. So, do everything within your power to reduce your
stress levels. And if it is beyond your control to remove the stresses
affecting your life, never feel embarrassed or afraid to seek help. If
you can identify the primary reason for your stress maybe you can begin
to see what you need to do to fix it. I know this is so often easier
said than done - but please remember it is your health and your
happiness at stake here and that has to be your priority.
Be Proactive. You know your own body better than
any one else. Listen to it, and react accordingly when it is trying to
tell you something. Don’t ignore potential symptoms, recognise them and
get them treated.
Cure
In recent years health care costs have risen
between two and three times faster than inflation and naturally enough
health insurance has become more costly at the same time making it seem
altogether too unattractive an option for some people.
But while the vast majority of us would never
dream of driving our car uninsured or living without household
insurance, we do exactly that with our own bodies! We trust our health
to luck and good fortune!
Consider, if you will, the following facts: -
- The British National Health Service is stretched
to its limits with up to a million people on waiting lists at any one
time - If you’re a British expatriate you can’t fly back to the UK and
take advantage of the NHS as eligibility for NHS care is based upon
residence in the UK. - Few other countries in the world offer any form
of ‘free’ medical treatment, if you are thinking of retiring abroad or
remaining expatriated you must bear this in mind. - In retirement most
people live on a fixed income which does not allow for exorbitant and
ever increasing health care costs. - As we get older our bodies need
more TLC and fine tuning, and age makes us more susceptible to ill
health and increases average recovery and recuperation times.
These facts show why it is important to consider
health care costs when it comes to retirement planning. And in
considering health care costs and retirement, factor in increasing
health insurance premiums if you have insurance. Factor in health care
costs if you are relocating abroad without insurance. Factor in the
potential need for private treatment ‘back home’ for serious
conditions, and also consider the fact that you or your spouse may need
long term, full time care later in life.
But don’t panic!
At this point many people panic and decide to do
nothing. (Guilty?) They can only see a potentially huge cost that they
simply can’t or won’t afford. But health insurance comes in many forms,
and while you may not be able to or want to afford the ‘platinum 5 star
package’ you may still be able to afford a little peace of mind and an
acceptable level of care should you need it. The Emotional Aspect
How come some people seem old at 40, while other
people can exude youth, life and vitality that belies their age?
Presuming good health, I can only assume that
mental attitude is at play here!
So how can we make sure we’re the ones full of
beans in our 80s rather than the ones on tranquillisers in our 40s?
Learn to love life! Life knocks us all about
sometimes - and at times we’ve probably all felt like we’ve gone a few
rounds with Mike Tyson. However take some time to consider the good
things about your life. Make an effort to reflect upon the positive;
enjoy life’s simple pleasures and create a balance that always leans
towards the positive and not the negative.
Keep your mind active! Keep learning and
developing throughout life. Never feel that you’re too old to learn new
skills - it’s simply not true that you can’t teach old dogs new tricks!
Focus on positive emotions rather than negative
ones! Negative emotions bring mental and physical disharmony and ill
health. If you dwell on regrets, disappointments or resentment you will
be weighed down with bitterness and miss out on life. People who can
forgive and love will remain youthful simply because they will have
anticipation and excitement in their lives. And if you don’t love or
feel loved you’ll quickly start to age and feel lonely.
Don’t stop dreaming and hoping and longing! Stay
future focused. You will find that your motivation, desire and
anticipation for the future and the realisation of your dreams will
keep you positive and active and that your stamina will be boosted,
your energy levels heightened and your mental attitude will stay young.
Rhiannon Williamson is a freelance writer whose
articles about buying investment property abroad, offshore investment
and living life as an expatriate have appeared in many investment and
finance publications throughout the world. You can find more of her
articles at:- http://www.shelteroffshore.com/
Rhiannon Williamson may be contacted at http://www.shelteroffshore.com
or rhiannon@shelteroffshore.com
