How to Plan Your Retirement Before It’s Too Late

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Retirement

The fear of ending up penniless in a dilapidated retirement home with nobody to count on is a nightmare that haunts the living daylights out of all of us. In spite of this, people tend to take their retirement very lightly and underestimate the value of their youth and time while they still have it. If the clichéd story of the ant and the grasshopper is any indication, we should work while we still can and earn enough money so that we can retire happily ever after, although this task is easier said than done.

Here are some rules from Agriculture Mortgages UK to follow before you even remotely dream of retiring

Investing

They say the best way to have money is by making money work for you instead of the other way around and the primary way of achieving this is by making sound investment decisions.

Now, I am not talking about earning money as interest from your savings account since everybody does that. I am speaking in terms of the actual financial stock market where you can earn great returns

Some of the best instruments for this purpose are:

Mutual funds

Mutual funds are investment instruments that pool the investments from various shares, bonds etc into one big fund. This gives the investors enormous leverage and often diversification, thus reducing their overall risk. Nevertheless, it is important that you do your due diligence before making any decisions

Options

Options are financial contracts that allow the user to buy or sell an asset, like shares of stock, at a predetermined price without being obligated to do so. In layman terms, if you play your cards right you can possibly buy shares at a discount or sell them at a premium of their current market price.

Options are an attractive investment to anybody, and they are not as complicated as they look and you can structure the option to only lose the amount you spend to buy the contract, which is usually a small fraction of the price you would pay to actually buy those shares of stock.

Annuities

This is a must have for anyone who is willing to throw in the towel and retire. Under this financial contract, the payee will receive a constant and fixed stream of payments for which could amount to a very large period of time. However, like insurance, you may need to pay a significant amount of money in premiums/fees.  So, like the mutual fund, make sure you do your due diligence.

These investments are recommended for people who have less patience with risk, however and there are tons of other options available for people depending upon their risk tolerance. But always make sure that you invest not mindlessly gamble for large returns.

Saving

Now that you learned a thing or two about investing, let us get back to managing the money we actually have right now. The sad truth is that a lot of people do not really know how to save money, either out of denial or ignorance, thus filling them with shock and terror after they face a financial setback.

These are some of the most overlooked ways of reducing the hole in your wallet

Debit cards

Unlike their credit counterparts, when you pay with a debit card, you are paying with the money you actually have, thus you will not owe any money to anybody by the end of the month. I recommend using a debit card over a credit card if you do not have a spending plan.  You are only allowed to use the credit card if you pay it off in full every month.

Cutting costs

Before approaching retirement you need to learn to live on a budget.  After you set up your spending plan and track all your expenses.  You will probably have to cut costs.  This is easier said than done.  Start your costs cutting on things you do not care about and go from there.  Also, before you spend money on anything, always take the time to reconsider and decide whether you will really need it.

Tax savings

I am not encouraging anybody to evade paying taxes. I believe that taxes are what we pay to live in a civilized society.  But, I do not believe one should pay more taxes than they need to.  Adequate tax planning before retirement is a must. You can learn more about this via the help of a professional or via self study.  Remember tax avoidance is  perfectly legal.

So in a nutshell, by prudent saving and investment, you can kick back and retire with  peace of mind. But, it is imperative that you only retire unless you can do so comfortably.  To ensure that you  retire at the age you want you should start retirement planning now!

What are you doing today to ensure that you can retire comfortably?