So many of us struggle to picture ourselves as retired. A future which is usually 10–25 years away is difficult to envision now, especially for those of us with young families and high monthly expenses. Warren Ingram describes a different way to view retirement that will help you motivate yourself to save for your retirement, and make sure it is a comfortable retirement. Warren suggests that we should imagine how our life would be if we didn’t have to work for an income. Picture the details of your life, such as where you are living and what you do each day. Once you have done this, you can figure out how much it would cost in today’s money to live this imaginary life. You then multiply your projected annual expenses by 25 to get to your savings goal.
This number might seem almost unattainable, but there are many tools to help you achieve your goal. Tax free savings accounts, low cost pension funds and retirement annuities and exchange traded funds are a few options.
Avoid a few common pitfalls along the way. For example, the worst possible thing you can do when changing jobs is to cash in your pension. This will be an enormous set back on your journey to retirement. In summary, find your own vision for life after retirement, and regularly remind yourself of this. It will help you to avoid falling back into bad spending habits.
Disclaimer: Old Mutual Life Assurance Company (South Africa) Limited is a Licensed Financial Service Provider. This material is not intended as and does not constitute financial advice or any other advice and is neither exhaustive nor prescriptive. It does not take into account your personal financial circumstances. Your financial adviser will assess your financial situation and needs and assist you to draw up a plan to help you achieve your financial goals. The views expressed by the contributor are his or her own (as an independently registered financial services provider, financial adviser or other independent capacity), and not necessarily endorsed by Old Mutual (as a separate financial services provider).
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