The omni-present word that would always masquerade in random chit chat topics. As usual, me and my friends were casually chatting and as if there was a hidden force, we were once again on the topic of retirement. This is often said to be life's last goal, but rarely do people know the way or steps to it.
As clueless as I am (probably due to my young age), I have not been through this significant life stage yet. Hence, to be honest, I am just inexperienced to comment on a successful method to retirement. However, I do have a view on how I can achieve mine, after reading and researching into how people attained theirs.
I believe that in order to achieve this goal, most of it has to do with the mentality of the person. If he strongly believes and strives in his life with this goal in his mind, it is highly probable that he would be able to achieve it. This is because of the steps that he has planned out earlier on in his life and the discipline to push it through.
In my opinion, here are the steps which I feel is are necessary:
1. Knowing what retirement entails
"If you fail to plan, then you are planning to fail." - Benjamin Franklin. This quote is a classic and it applies to everything you want to do. In order to retire, you must know what retirement means to you. Everyone has their own standards of living and this varies. Hence, before you start taking any actions, you must first plan how much you must accumulate for a comfortable retirement. This part generally means taking into account your daily expenses and luxuries that you would not want to sacrifice later on in your life. It also includes the duration of retirement. You may want to use a retirement calculator for easier calculation to account for inflation.
2. Protection
You might be thinking, "After planning, shouldn't we start reducing our expenses and look for ways to increase our income via investments?". Well, this is correct but in my opinion, I feel that being adequately protected against future risks are far more important. Furthermore, leveraging on CPF, a compulsory saving scheme, I believe that forms a fundamental basis for retirement. As such, building on adequate protection should be earlier. Well, they always say, a good defence is the best offence.
In this, you should look for insurance policies that can protect you adequately and start saving for a rainy day fund of at least 6 months of expenses.
3. Start accumulating and reduce spending
As all personal finance books advocate, you start reducing your expenditures and start saving up capital for investments. This is especially important as the earlier you start, the better it is. This is due to the principle of compounding.
After accumulating a decent amount of capital, then you can start to look for investment options. This will be based on your investment duration, growth required and risk that you can afford to take. From here on, you can look forward to increasing your asset base and net worth.
We are also collecting responses on how people feel on their retirement. Please help us by filling in the following form: https://docs.google.com/forms/d/1Ve3O7IpI1swxaTb_xp9dAoAl6yNtWAO2DtPgCn32BmA/viewform
The above is just my opinion, if you feel that there are more that can be done, do share it with us and other readers below. You can also simply email us and we can discuss more about it!
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