Planning for retirement is something that many people postpone until the last minute. But once the retirement day arrives and the pension is not enough, it is too late. Retirement funding is a key part of retirement planning that should start the moment that you begin to work.
Our society has created an expectation that after working until the age of 60 or 65 we should retire. Many companies actually force their employees to go at this age. But this is a perception that is changing. Life expectancy has increased, and many people remain healthy for many years after these retirement ages have passed.
When I was very young I remember working on a building site during my college vacation. One of the employees was turning 65 and on his birthday he retired. He was fit and strong at the time, but within six months there was a marked deterioration. He didn't even make it to 70.
Perhaps retirement is a concept that we should put behind us. Why should we have to 'give up' at a certain stage of life? Life is to be lived and lived to the full.
Perhaps the thinking process should rather be focussed to changing what we do at various stages of our lives. Having had enough of the rat race I would love to turn to writing as a full time replacement - so I'm busy preparing for that. Just don't give me the idea of giving up on anything because I am a little older!
Retirement brings with it a number of issues. The first that comes to mind is the financial aspect. Will the pension and savings be enough to see us through? What can be done if there isn't enough money? The second - and in many ways as important - is what you will actually do once you have retired. Doing nothing really isn't an option. Giving up your job does not mean giving up everything. Perhaps there is an interest that you have always wanted to pursue but never had the time. It could even be time to start a new business!
The financial aspect is very important. Ideally, you should be in a position to be financially independent by the time you reach retirement age. This is something that doesn't happen by itself. The younger you begin to invest, the better. Fifteen percent of your income should be dedicated towards savings and investments. Retirement funding is good, but should be limited to the amount that can be claimed as a tax deduction. The remainder should be spread in a number of directions - property, equities, and perhaps investment funds of various types. Invest aggressively as early as possible and reap the rewards later. As you near retirement age, the investments should be less risky.
For many people escaping the rat race is a good reason to retire. But giving up work in the formal sector does not mean having to give up living a useful life.
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