Travel? New hobby? Whatever it may be, you're gonna need a plan to get there. Read on to get started.
If you already have a monthly budget, good for you, you’ve just made your life easier, even a loose budget will do. If not, you should consider starting one. To project future income needs, the first place to look is at your current spending. Now, grab a pen and paper or use a spreadsheet. In the first column, enter your typical monthly expenses. Then, take some time to think about each of your expenses. Will they stay the same, grow or disappear?
Next, in the second column, enter your best estimate of what each of those expenses will be. Maybe by then, you’ll have paid off your housing loan or your transportation costs will decrease since you won’t have the expanse of traveling to work. Add on possible new expenses like traveling, golf, or redecorating the house, basically anything that you may want to spend your money on later.
Finally, add all your future expenses for a rough idea of your future monthly spending needs, then multiply by 12 to get your yearly income needs. Compare that figure to your current income to know how much income you should aim to replace in retirement.
Now that you have a rough estimate of how much retirement money you’ll need, you can start planning or taking steps to build your funds and work towards your retirement goals. Yes, at first glance the figure may seem out of your reach but don’t be discouraged by it. The sooner you start planning, the better.
An investment cum protection plan or parking your savings in fixed deposits are just a couple of ways that you could consider when planning to grow your retirement funds. Remember that your life situation and circumstances change over time. Your retirement needs will change too. That’s why it’s important to revisit your retirement plans regularly and make adjustments in accordance with those changes.
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