RETIREMENT SAVINGS SUCCESS!
Having read some of your earlier columns I really feel but I have to take action on retirement savings. I’ve never saved a regular basis before, what you advise?
As retirement nears many boomers are coming face-to-face with the fact their nest egg might not provide them with enough income to last through retirement. In fact more than 40% of the baby boomers, those born between 1950 and 1965, are at risk of not even having enough retirement income to cover even basic retirement expenses like living and healthcare costs. It seems clear that whatever we are doing to save for retirement isn’t always working. So what does work?
While there’s no magic bullet, some strategies tend to lead to greater retirement savings and others. I have three tips:
- 1. Use a Consistent, Long-Term Savings and Investment Strategy. This might seem like a no-brainer, but let’s face it a lot of people simply don’t have a disciplined approach to long-term savings and investing, this is the most powerful factor in determining the size of our nest eggs regardless of income level. A recent survey revealed that the people who seemed most able to replace their current income in retirement – those who are on track to replace 100% or more of their current income – and the people who seemed least able – those who were on track to replace less than 45% – had the same average household income! So the difference appears to be behaviour around savings not income. So, how to do it: at regular intervals say once a month put away a percentage of your salary, I recommend at least 10% of your income into your retirement fund. Then, LEAVE IT ALONE!
- 2. Work with a Financial Adviser: those with a financial adviser have an 82% chance of replacing all their current income in retirement, while those without only a 61% chance. This holds true across all income levels. Advisers make people save more! This is partly due to the fact that people who are likely to save more are more diligent and are also more likely to seek out advisers!
- 3. Save money in your workplace retirement plan: out here in Bahrain not many companies run retirement plans though some of us who work here as financial planners are engaged in a campaign to persuade some of the more responsible employers to look at providing retirement plans for their employees. Workplace retirement plans often contain a level of contribution from the employer and is an excellent way for workers to dramatically increase their pension benefits upon retirement.
Whilst you might feel that my tips are not exactly earth shattering they do serve as a gentle reminder that taking simple steps like contributing regularly into a financial plan with an adviser can make a big difference to your bottom line in retirement.
Your money is compiled by Bahrain Financial Planning Consultant Brian Davis
Brian@AssetProtectUK.com
