What are the secret ingredients of a happy retirement? Of course, good health and financial security are the two most crucial elements, but you need a few more things to make your golden years really sweet. Most of you would agree that hobbies, networking with your contemporaries, and volunteering for some good cause are the three factors that can spice up your retirement years. Know what? A sound financial planning helps to create the path to a happy transition. However, it may take some time and perhaps the professional assistance of financial consultants to draw out a sound investment strategy for a worry-free retirement.
While devising a plan for your golden years, you should always keep one point in mind — you cannot afford to run out of money, and this is what adds to the challenge. On the one hand, you need to grow your nest eggs to hedge the possible inflation over the upcoming years and on the other hand, you’ll need to proceed very cautiously to ensure that your nest eggs do not crack in the midway. Therefore, the key is to strike a balance between the two. It can be as hard or as easy as you want it to be. There is a trick that you may consider using to reconcile the two conflicting goals irrespective of market conditions.
Embrace an Incremental Saving Plan to Offset Market Risk
For several people, saving is equal to income minus expenditure. But some interpret the concept differently. For them, spending equals the amount that they get in hands after moving a part of their earnings to their savings account. This is the beauty of an automated saving plan. The compulsory, automatic deduction of a fixed amount makes saving less difficult for you.
How to Opt an Automated Saving Plan
The best way to embrace an automated saving plan would be to sign up for one of your company’s 401(k) plans that come with the provision of automatic yearly increases in your contribution rates. Approximately one-third of the US population currently subscribe to this plan.
If your company doesn’t offer such a plan yet, sign up for a similar program that allows you to increase your savings on a particular date of the year, like your annual salary revision day.
This apparently simple step can actually set you on the track to a comfortable retirement. According to Rob Austin, Director of Retirement Research at Aon Hewitt, more than 70 percent of happy retirees opted for plans that allowed the automatic increase in their contributions. His firm maintained that this small step could help you save 11 times of your salary by 65 years of age. And that can be substantial.
What’s the Takeaway
Save more, and you will be in a position to hedge your capital against bad markets and inflation. Save less, and you will have to hope against hope that your capital will keep growing in a bull market. But what if the opposite happens? The compulsory automated saving plan protects you from this uncertainty. It teaches one valuable life lesson— adjust your lifestyle to your savings, not your savings to your way of life.
You can never predict what lies ahead. For many people, retirement brings unforeseen expenditure resulting from the health care costs. But that does not mean that you will not attempt to stay prepared. Take baby steps to map out your future today. Consider hiring a competent financial adviser to assist you in chalking out your investment strategies for retirement. You have a lot to gain by embracing the right strategies. Mental peace is one of them.