Retirement planning is often not prioritised during our first few years of employment.
However, what we fail to realise is that starting your retirement plans early will yield positive results over the long term.
“People tend to delay their retirement plans with the hope that they will catch up at a later stage in their life,” says Preenay Sathu, head of Financial Advisory at FNB.
“The reality is that it might be difficult to catch up once you commit yourself to other financial obligations such as buying a house or a car,” adds Sathu.
“It is advisable to start your retirement journey as soon as you get your first pay cheque so that it becomes a financial habit.”
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Consider these tips:
Start early
People who achieve a healthy retirement start their retirement journey as soon as they earn an income. The advantage is that you will get to benefit from compounding interests which will help strengthen your retirement savings.
Contribute monthly
Monthly contributions to your retirement are great, however, one needs to ensure that contributions increase annually by at least above the inflation figure.
Monitor returns
It is advisable to review your retirement savings at least once a year to ensure that your savings grow. Changes in the economy can have an impact on your savings, therefore always monitor the performance of the funds you are invested in. This will help ensure that you achieve your long-term financial goal.
Do not withdraw savings
Avoid the temptation of withdrawing from your retirement savings for rainy days. Instead, create an emergency fund that will help you deal with unexpected expenses such as a car breaking down or medical expenses.
Consult professionals
It is advisable to consult a certified financial planner who will guide you to structure your retirement in accordance with your lifestyle and needs. Furthermore, financial planners will give you guidance in terms of how much you need to contribute monthly in order to achieve a healthy retirement.
“The road to achieving a healthy retirement will require a great deal of compromise and practising good financial habits. Retirement planning should be on our priority list when planning our finances,” concludes Sathu.
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