We all dream about it â€“ the day we can walk out of work for good and know that we never have to go back. Retirement is something that we work towards all of our lives, and while recent media stories have many people scared that they will have to work long past the traditional retirement age in order to be able to survive, this is not necessarily the case for everyone.
Here we look at just how much money you might need to give up your job on a permanent basis, and what steps you can take to ensure that you will be able to remain comfortable in the years after your career comes to an end.
Calculating Your Own Retirement Provision
The question of how much money you will need to retire really is one that depends very much on your won circumstances and on the lifestyle that you hope to be able to lead. For example those who have paid off their mortgages and own their own homes outright will need to make a smaller provision for housing costs than those who are still paying off debts secured on their home or renting properties from social housing providers or the private sector. If you live a frugal and less extravagant lifestyle, you may feel it is possible to retire and be comfortable on a smaller income, while those who are accustomed to being able to spend lavishly on luxury experiences and costly hobbies will need to put together a bigger nest egg before they can comfortably step out of employment.
Building a Retirement Fund
There are a number of ways in which people put money away towards their eventual retirement including:
Pensions: A pension is the cornerstone of any retirement plan. Without a pension you may have to continue working, or live a severely reduced lifestyle dependent on state benefits. Pensions can be private â€“ you can purchase your own pension plan from a licensed financial services provider or can join a work pension scheme if you are employed, with you employer topping up your own contributions. These days there are even opportunities for those who work for themselves to enjoy the benefits of bigger group pension schemes, which are offered by some contractor payroll companies.
Savings: Putting away money towards retirement is always a good idea and if you plan to lock your savings away for a long time then you are more likely to be able to receive a higher rate of interest than a traditional and more readily accessible savings account. Calculate what percentage of your disposable earnings you can spare each month and set up a direct debit.
Investments: Whether it is stocks and shares or property, putting your money into solid investments can help towards retirement. A property portfolio can even replace a pension scheme in since a buy to let income is likely to yield returns for years to come.
If you are hoping to be able to quit the rat race as soon as possible it takes a concerted effort and you may need to make sacrifices in order to secure this future. Look at investments that will offer stable long-term yields and focus your spending on these in place of purchasing consumables and luxuries.