Quick Retirement Guide

Planning your retirement isn’t something that has to wait until you’re past middle age. You could start in your 20’s and—with the power of time and compound interest—you’d have a very comfortable retirement indeed.

What you can’t afford to do however is to not plan at all. Life expectancies are much higher than they were even five years ago, and if you want to retire at 60, you better be prepared to live another 25 or even 30 or more years longer on the savings you’ve accumulated over your lifetime.

The truth is, no matter how old you currently are, you ought to be considering saving up for your retirement. We all have different goals about what we want retirement to look like. Some of us have grand expectations of traveling and seeing the world. Others simply want to own their own home and feel comfortable in their golden years. While this article isn’t going to cover retirement goals, it does give you an idea of what you need to be doing at different points in your life.

Saving for Retirement in Your Twenties

We don’t know many 20-somethings that are thinking about retirement. Many of them have debts to pay off, or have jobs that pay only a living wage. On top of that, they have nothing but time ahead of them, and would rather spend their extra cash on the here and now than save it for later on down the road.

But saving for retirement in your 20’s could be the smartest thing you ever do. That’s because someone in their 20’s has the power of time. The money they add to retirement in their 20’s, combined with 30 or even 40 years of compound interest, can dramatically improve their final balance once they reach retirement age.

Of course, it may not be prudent to save up quite yet. The UAE Money Expert recommends that before anything else, a 20-something should be working to pay off his or her debts. If debt is minimal, then opening a savings account and adding in spare cash is an excellent idea.

Important points to remember:

  • Paying off your debts should take priority
  • If your debts are cleared, consider opening up a savings account and adding a set amount every year
  • With the power of compound interest, even small amounts can greatly increase your retirement fund over the course of 30 or 40 years

 

Saving for Retirement in Your Thirties

It’s easy to get lost in the financial responsibilities of your 30’s. Odds are you’ll make some large purchases in this time frame, including cars and quite possibly a home. You may get married and have children. And it’s probable that you’ll locate a stable job during this time frame as well, which is critical to the success of your retirement fund.

Retirement may not seem like the best area to save money for. You could be saving for an emergency fund, or a down payment on a new home. You may consider starting a kid college fund. Perhaps you’re still paying off your own student loans. In any case, these are all very worth savings goals, and we agree you should pursue them.

That said, it’s important that you don’t ignore your retirement at this age. You still have plenty of time before retirement in your 30’s, which will allow compound interest to increase that fund exponentially. Adding in a set amount every month is paramount to a healthy retirement fund.

You’ll also want to revisit the retirement plan offered by your employer. Do they have one? How does it work? What do you currently have in there now, and how much do you expect it to grow during your time with the company?

Important points to remember:

  • Start saving, even if it’s not as much as you’d like. This may not be easy for a new family, but it’s doable with the right planning
  • Taking some risks with your retirement fund is appropriate at this age
  • Take a good look at all of your outstanding debt, find out what you can pay off quickly and be done with for good.

 

Saving for Retirement in Your Forties

Your 40’s are essential from a retirement planning standpoint. You’ll likely have a stable income, have most debts paid off, and are working to own some larger purchases such as a house or cars. A retirement nest egg should have been formed as well, either through your employer or by your own initiative.

If you’re in your 40’s and haven’t started saving for retirement, it’s critical that you start doing so now. It isn’t too late to begin a retirement fund at this age, but the longer you wait, the more likely it is you’ll outlive your retirement fund.

Your 40’s are a good place to play catch up with a retirement fund because your earnings should be peaking. Add the max amount of funds you can every year, and continue to do so throughout your 40’s. Meanwhile, perform an annual assessment of all your retirement funds. These could be a mixture of government, employer, and personal funds. Speak with a financial advisor about how much to expect total in the next 20-25 years.

Important points to remember:

  • Get saving now if you haven’t done so yet. It’s not too late!
  • Use that steady income to max out your retirement contributions every year
  • Check with a financial advisor yearly to see where all of your retirement accounts stand

 

Saving for Retirement in Your Fifties

You’ve reached your 50’s. You’re at the top of your game in terms of a career and income. Your debt should be limited to your mortgage or car payments, and even those are getting close to being tied off. Nothing is stopping you from adding the max contribution to any retirement plan that you have. Note also that many retirement plans have an increased contribution limit at this age. If you were a bit late to get started on retirement, it’s time to ramp it up now.

Another important consideration is risk. You’ll want to start limiting your exposure to stocks and equities. At a younger age, some risk would have been worth it. In your 50’s however, you need to begin protecting what you have, or a major stock shift could wipe out your entire life’s savings in the blink of an eye, with no way to get it back.

If you’re lucky enough to have an extensive pension fund, you may want to maximize your control over it with a Bond. Revisit all of your other retirement funds and determine how much money you’ll have to last you for x years. Remember, we’re living longer than ever before. It may need to last longer than you think.

Important points to remember:

  • Max out those retirement contributions if you haven’t already
  • Discuss your financial position with an advisor
  • Limit your funds to safer retirement plans. Remove risk if possible

 

Saving for Retirement in Your Sixties

You’ll likely be retiring in this decade. Your steady income should almost all be going toward your retirement, especially if your home is paid off.

At this stage in the game, speaking with your financial advisor is paramount. He or she will be able to assess what you’ve saved so far, and identify whether your current fund will be enough to last. You’ll also receive advice on how to access those funds throughout retirement, what annuity options are best for you, and what additional income to expect (either from a government pension or some other fund).

Important points to remember:

  • Revisit all outstanding debt, consider pushing to pay off your mortgage if you haven’t already
  • Speak with a financial advisor as soon as possible. You’ll need his or her expertise during the planning phase of retirement

 

We hope you found this guide useful. As always UAE Money Expert has the ability to help you, whatever stage or financial position you are in. Complete the below form and a Qualified, Regulated Expert will contact you.

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