Stocks and Shares - Planning Your Retirement?According to the Motley Fool we should all be taking a close look at our retirement investing, for the simple reason that we might not have enough money by the time we retire.
The reason for this is that we are too haphazard in our retirement planning, we don't bother to do the sums. As a result retirement might well turn out to be grim for a lot of us.
To make your savings last, you need to plan conservatively during retirement as you will need to use up at least 4% of your savings each year (adjusted for inflation).
For example, you may have a pot of $400,000 under your mattress for retirement. 4% of that is $16,000 i.e. $1333 per month plus perhaps some money from the state pension so you may have $2000 a month in total or $24,000 per year. Hardly enough to finance a golden retirement.
You Need More Money !
In fact you need to aim for $1,000,000 - 4% of that will give you $40,000 plus maybe $5,000 a year from the state to make $45,000 a year.
In retirement, you can live on less than when you were workingL-
No commuting costs, less clothes costs, less lunch costs.
Your taxes will be lower.
Your mortgage might be paid off.
You hopefully won't be supporting dependents.
You won't be saving for retirement !
You may get discounts for being older.
You will probably have more health costs.
Inflation may erode your purchasing power.
You may want to play golf or travel.
Hopefully it's not too late to put things right. Things you can do:-
Start saving and investing more for your retirement.
Double the amount you are saving for retirement.
Consider postponing your retirement date by a few years, this may add hundreds of thousands to your savings.
Consider moving more of your assets into the stock market - higher risk of course, but choose solid earners, growers, and dividend payers. Check out Warren Buffett 's unvestments in this respect.
Shares generally average around 10% a year - that means that $30,000 over 20 years will turn into $200,000 !
So start your retirement planning now and set yourself a goal of $1 million by the time you actually retire.
Check out here - retirement investing - for concrete tips
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