After a long and hard career, people look forward for a relaxed retired life observed by Bahaa Abdul Hussein. To enjoy life after retirement, money is the key. Without a regular income, managing finances can be tough. This is why people need a retirement fund to help them lead a comfortable retired life. If you want a sizable retirement fund, then you must plan for it and save money. We tell you how to do it.
Decide your retirement age
Some types of industries fix a retirement age at 60 or 65, while others are flexible. Depending on the industry where you work, you need to decide your retirement age. Working in manufacturing after 60 is not so easy. If you work at a store or are an advisor, you can even work up to 70. So, the retirement age depends on various factors. It also depends on how long you want to work. The first step is to decide when you will retire.
Work out how much money you need
Assuming you won’t be earning any money when you retire, you need a retirement fund. You need to calculate how much money you need for a retired life. You must also account for inflation while doing this calculation. Other factors include your spending habits, whether you prefer to live frugally or prefer a luxurious life, and your life expectancy.
Keeping all these in mind, work out how much money you need to save in a retirement fund. A thumb rule is you need at least 80% of the income you are earning at the time of retirement.
Start retirement planning early
You must start planning for retirement in your 20s and not in your 40s. The earlier you start saving, more in the money you can accumulate. When you start saving as soon as you start earning, you will be able to create a larger retirement fund. Starting late puts pressure on you as you have to save more.
Decide your investment options
Most employers offer a 401(k) plan. You can also have an individual retirement account (IRA). Use these retirement options to save and invest money. Depending on your risk-taking liability, you can choose to invest additional funds in mutual funds or stock. It would help you earn more.
Rebalance your plan
As you age, you can increase your investment in less-risky options. You can also start withdrawing money and move them to a savings account. Plan properly, so you can end up with a nest egg that helps you lead a comfortable retired life.
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