Planning for retirement is a long and involved process. What most people want above all else is to have a comfortable retirement. This often means having enough money saved so that they have a comfortable, fun and stress-free retirement. However, saving enough to have a comfortable retirement is often harder than a lot of people think, but by following a few tips and strategies, it is possible to save for your retirement without too much stress.
Start Cutting Back Today
A common mistake people make is thinking that retirement is a long way off. 30 or 35 years might seem like a long time but when you are working and raising a family, that time can pass very quickly. This is why it is so important to start thinking about retirement today instead of putting it off for the future.
A good place to start is by cutting back on your expenses. If you spend all your money as you make it, you will have nothing to save or invest for your retirement. Start by finding areas of your life where there are excesses and cut down on those. Things like eating out or owning two cars when you do not need them drastically reduce the amount of money you can save.
Set a Number and Stick to It
Once you find areas where you can cut back, it is time to set the amount of your gross income that you will save monthly or yearly and stick to it. You should find a comfortable number that does not lead you to struggle with everyday needs but that is still sufficient for a retirement fund. For most people, 15-20% of their gross income is a good place to start.
Understand the Power of Compound Interest
The power of compound interest is very real and if you understand it, it can make a massive difference in how much you retire with. If you start saving as early as possible, you get to enjoy the benefits of compound interest for longer, which means you retire with more in your savings.
Get Investment and Pension Advice
If you have a pension scheme, it is always a good idea to talk to a qualified advisor to help you make the most out of it. FCA approved firms such as Portafina are your best option in this case because there is no risk associated with letting them offer you advice about your pension. You could also seek pension guidance from Pension Wise.
Saving for a comfortable retirement can be challenging, but it is not impossible. The main things to keep in mind are saving early to take advantage of compound interest, deciding how much you want to save, and getting the right investment advice so you keep growing your retirement fund.