Can’t afford to Retire?
These are the Facts
A shocking research reveals millions of elderly people approaching retirement have no pension, no savings and large debts. It’s a worrying picture for senior citizens who cant afford to retire, with some elderly folk eking out an existence on £25 a day. The major study, from insurance giant Aviva, found one in five people over the age of 55 still had a mortgage.They have a home loan of £60,440 which will probably eat into their monthly income. The situation is even worse for people over 75 according to the report about 4 percent are still paying off a mortgage with £100.000 outstanding.
According to Clive Bolton, the director of Aviva said that as a nation more needs to be done to save for retirement, He says that it is vital to put aside a small amount of money every month otherwise, we risk a life of struggle in our golden years surviving on a measly income.
The report highlighted the fact that there is a huge divide between people with gold-plated nest egg savings and we talking about pensions, investments, bonds etc as compared to those who have no savings or investments at all. Another survey reported that a further 29% have less than £2,000 which could be wiped out by a sudden say expense, for example, a new car.
A growing number of people have to touch these savings because the interest paid is so little. Only a small minority of shrewd investors have savings of £100,000. The biggest challenge for people to save is having children late in life which means their children depend on them for financial support throughout the school years and higher education when the parents are reaching retirement age. See report
How to save for Retirement
According to financial experts, rising inflation is expected to erode your buying power, learn how to save money, learn how to invest for retirement, and hopefully this article will help you plan to save for your retirement.
I would suggest that you seek professional advice from financial advisors, you will need every dollar to make your savings grow. It’s a very ambitious undertaking it will take knowledge, patience, and skill.Every skill is learnable.Getting proper advice does not cost you a penny, there are lots of information on the internet about retirement and savings for your perusal.
Resource your public library for more information, I normally check financial reviews, a word of caution be careful of the scammers and don’t sign up for anything. Take a free online financial class from Coursera.org and MIT Open CourseWare. Your local college may also offer financial classes.Get free financial advice before thinking about investments. Speak to your financial adviser at your bank
Learn how to budget
Save as much money as possible avoid unnecessary spending. Have a cast iron savings plan aim for 50% of your taxable earnings. Cut down on luxuries do not spend money every time you see something.Be absolutely aggressive with your savings. Spend your money only on essentials food, transportation, household utilities etc.Shop around for the best prices buy things that will appreciate in value.
Read books or watch basic television channels instead of paying for cable television, cook your own food instead of dining in restaurants, quit smoking.
Learn to live simply on modest means, and always look for free or economical alternatives. Always think of opportunity cost: the dollar you spend now could have turned into many dollars by the time you retire. Smart spending will provide the foundation for saving money for retirement.
If you live in the USA, you may be able to avail yourself of the 401(k) account. 401k plans are the most popular employer-sponsored defined contribution plans available today. Every contribution that an employee makes to the plan entitles an employee to a tax deduction. 401kcontributions that are taken directly from your paycheck are free from income taxes.
But, with employer matching your funds, you can double your investment immediately, and then hopefully your fund investment will increase in value. 401(k) accounts also offer tax advantages; inquire and read about them. You may be required to contribute at least a minimum amount to qualify for employer matching (to save about 10-30% of your income).
Remember that 401k’s are taxed upon distribution; so try to estimate what the tax rate will be when you take your money out. Estimate your tax before using withdrawn money; you need to hold back enough for paying those taxes.
Develop an investment plan known as a portfolio for your saved money.
A portion of your money should be delegated to stocks, another portion to bonds, perhaps another portion to commodities like gold and silver, also have a savings account. The reason for diversification is to reduce risks and maximize returns. By not having all assets in a single asset, you are less affected, if the value of one component of your portfolio crashes.
Diversify within each asset class of your portfolio by assigning a weight to each sub-class. Buy stocks both domestic and foreign, from every sector, and of any market cap. Buy both government and corporate bonds. As for gold and silver, buy physical metals to take possession. Don’t trust others to store your valuables for you that you bought at high costs. Don’t buy gold and silver more than 10-15% over spot, or else they would have to appreciate a lot for you not to lose money when you need to cash out. Gold and silver coins over 100 years old may be considered better than bullion because they have numismatic value in addition to their intrinsic metal values.
Consider changing your assets into a form such as life annuity where you could not lose it, if you are sued whether you have too much to lose or just enough to tempt a swindler. You can be certain that some people like to try to pick pockets that have discoverable assets. Attorneys of anyone who may sue you will use compulsory discovery processes and you can be required reveal your assets. Avoid seeing your life savings go to others accounts. Also, purchasing “umbrella” liability insurance for more protection may be a good plan. Your insurance agent will tell you your options and how much your should get.
Reduce risk when nearing retirement.
Reduce risk when you are nearing retirement by avoiding high-risk investment. Reduce the portion in your portfolio delegated to risks such as stocks and increase the portion in safe investments including municipal bonds and cash. Chances are, the market will decline or even may crash when you need to be taking out your money. What can go wrong includes not having time or opportunity to recoup losses from dire events in the market, and you might have to postpone retirement — if you did not reduce your risks to the minimum.
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