While retirement seems like a distant goal, it’s good to start planning for it early. Whether you’re 20, 30 or 50, there are steps you can take now that will pay off down the line. If you’re not sure where to begin, ask yourself these questions:
- Do I have savings?
- How can I budget to have retirement savings?
- Do I have any debts to pay off?
- How can I plan for my future healthcare costs?
Saving early is the key to retirement.
In retirement, your income and expenses are likely to be lower than today. You may want to retire early because you are in poor health and cannot work any longer, or because it is the right time for you to leave your job.
If you haven’t started saving for retirement yet, start now! The sooner you start saving, the more money you will have when it comes time for retirement.
You may speak with a financial adviser to help calculate how much you savings you need for retirement. Your retirement savings goal will be mainly determined by the lifestyle you want to live after you retire, the living expenses you may have, and possible health conditions you need to prepare money for.
Make a budget and stick to it
The first step to creating a retirement plan is to create a budget that includes all of your expenses, including food, transportation, clothing and entertainment. Your budget should also include any outstanding debt you have such as credit cards or student loans. You can use an online budgeting tool like our SaverAsia budgeting tool to track your spending habits and make sure you’re sticking to the amount that you’ve allocated for yourself each month.
For example: If you want $1,500 per month for groceries and gas but know that on average each week you spend $300 more than that on gas alone, then setting aside $2,900 ($1,500 + 300) will cover all of your anticipated costs while leaving some extra money in the bank at the end of each month ($300). The same applies for savings. You set aside how much you need to save each month after you’ve set money aside for important expenses.
Pay off debt
If you’re carrying debt, it’s important to pay it off. Debt can be a big drag on your retirement savings, as well as your quality of life and the lives of those around you.
Paying off debt means that instead of paying interest on a loan or credit card, you spend your money on things that make your life better—like vacations with family or upgrading the furniture in your living room.
There are many ways to pay off debt. Some people focus on one type of debt at a time; others choose to tackle multiple debts at once by combining them into one payment plan. Regardless of which method works for you—or whether you want to do anything about the situation at all—the first thing is identifying what needs attention most urgently:
Plan for healthcare costs
The rising cost of healthcare has become a major concern for many people as they plan for retirement. This is especially true if you’re not covered by Medicare or other insurance, and will have to pay out-of-pocket for your care. Consider using a health savings account (HSA) to help offset these costs, as the money you contribute to it grows tax-free and is withdrawn tax-free to pay for qualified medical expenses. Check your country’s available health-savings options and public health insurance.
As you plan for retirement, remember that the best way to save money is by spending less and earning more. Take a look at where you can cut back on expenses, so that you can put more towards your savings goals. And try to increase your income by finding ways to make more money from your current job or even starting a side hustle!