While many aim to live in the moment, diverting 100% of our attention to the "now" isn’t always the best idea. Sooner or later, the future will roll around, and without any retirement planning, your personal finances might not be as secure as they could be.
Creating a retirement fund often gets forgotten, as old age feels, well, ages away! However, preparing in the present moment is the best way to get ahead. Plus, your future self will thank you for setting some money aside.
In this blog, we’re looking at the top tips for starting a retirement fund. From creating a budget to investing early, these tips can be used today. Scroll down to learn more.
Why Should You Create A Retirement Fund?
Creating a retirement fund might not be at the top of your to-do list. So, why should you get started now?
Building a retirement fund allows you to take control of your future and ensure financial stability after you stop working. Though many of us love our careers, we won’t work forever. And many won’t want to rely entirely on the state pension. Therefore, creating an extra fund gives you more financial freedom once you retire.
How To Prepare For Retirement
Interested in starting your retirement fund? Here are some actionable tips you can use to get the ball rolling. Bookmark this page to ensure you can come back to the list!
Create A Retirement-Friendly Budget
Budgets are one of our favourite topics. From using a budget to save for holidays to simply organising your finances, a financial plan helps you stay in control.
A retirement-friendly budget looks very similar to a standard money-saving budget. You have your expenses, income and saving goals. However, you'll need to set aside some income for your retirement alongside any specific saving goals and emergency fund savings.
Invest Early & Wisely
Investments can help you build up larger retirement savings. This includes putting money into bonds, stocks and other investment accounts that generate returns over long periods of time. When investing for the future, the earlier you invest, the better. However, it’s never too late to start.
Pro Tip: If you’re unsure, a financial advisor can help you select the right investment plan for you.
Consider Retirement Accounts
Savings accounts come in all shapes and sizes, including specific retirement savings accounts.
These specialised accounts are designed to help you save money for later in life and are equipped with tax advantages to help you save. Some even invest your money into bonds and stocks, which can help you invest easily — ideal if you’re interested in the previous tip but don’t know where to start.
Workout How Much You Need To Retire
Finally, take some time to sit down with your finances and figure out how much money you need to retire.
A retirement fund should be based on your current expenses and how much these will change in retirement. For example, you’ll want to cover your daily expenses plus any holiday or emergency home or car maintenance expenses.
Many aim to have 70% to 90% of their pre-retirement income via personal savings and state pension payments. But, of course, this can look different for everyone.
Taking The Future Into Your Hands
Saving for the future is something you should consider sooner rather than later. Hopefully, these tips have inspired you to act now to prepare for retirement. You’ll be glad you did!
Want more personal finance inspiration? Visit the Cash Asap blog today.
