The best time to start saving for retirement is when you’re still young. Here are a few ways to do it.

Consider your time horizon

A retirement plan is a financial strategy of savings, investments and distributing money that’s meant to sustain you during retirement. To get started, think about your current age and expected retirement age. This period creates the foundation of your retirement strategy. It also informs you about the kinds of risks you can afford to take when investing or saving towards your retirement. As a young person, you may have a lot of things that you’d like to accomplish. Just remember that, every financial decision you make now can influence the kind of retirement life you’re able to save up for.

Create a retirement goal

Sit down with a pen and paper and envision what you want your future lifestyle to be like. Your retirement goals should include everything that concerns your day-to-day living. Consider things like health insurance, monthly upkeep, home bonds, car/travel expenses etc. These are your expected retirement spending needs. Be realistic about when considering what your retirement spending will be like. Remember the cost of living is increasing yearly. Make sure you’ll be able to save enough to afford to spend, according to your retirement goals.

Choose an investment option

Once you’ve come up with a realistic retirement plan and considered the time you have to fulfil these goals, its time to explore your investment options. Pension fund- this would form part of your employment benefits (compulsory). The company you work for usually pays a part of the monthly contribution, and you’ll need to pay the rest. Provident fund- This is like a pension fund and similarly (compulsory), you and your employer contribute to the fund. Preservation fund- A preservation fund enables you to keep your retirement savings, should you leave your company’s pension or provident fund. You can transfer your retirement savings to this fund, but you can’t make any additional contributions to it. Retirement Annuity (RA) - This is a personal pension plan. It’s ideal for people whose company doesn’t offer benefits as part of their employment package.

Remember that everyone’s situation is different. Your retirement plan and decision should always be based on your needs and current circumstances. It’s always a good idea to be more aggressive with your savings, especially when you’re obligated to use your company’s retirement fund. Do your research and get in touch with a wealth manager for more information.

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