We all know life is short and most of us become more acutely aware of this the older we get. But our working lives are even shorter. Just how much longer you have to work will depend on your age and at what age you plan to retire but, whatever the case, I bet you have fewer paydays left than you imagine.<\/p>\n
Considering your financial situation in these terms is another way to frame your saving goals for your retirement fund. And precision is where it\u2019s at. In my experience, far too many people set the retirement goal of \u2018saving as much as I can\u2019. While the sentiment may be good, in reality this is a terrible goal because it is impossible to measure and you will never know if you have achieved it. Basing precise goals on the number of paydays you have left can help you ascertain exactly how much you need to save each month.<\/p>\n
Let\u2019s say you are paid monthly, aged 50 and planning to retire at 65. That means that you have just 180 paydays left. The way to start putting a figure on your total retirement saving is to work out how big a pot you want\/need to have at your disposal taking into account the amount you already have saved into a pension fund, potential passive income in retirement (for example from rent) and any assets you might sell to free up cash in retirement, such as downsizing your home.<\/p>\n
Of course it is great to have these options available but you need to be realistic and take into account potential issues such as the housing market not being in your favour when you want to sell. It\u2019s important to reassess the situation frequently to take into account how your situation is changing due to factors within or outside your control.<\/p>\n
Once you have a definitive figure you need to save, divide it by the number of paydays you have left and that will give you the exact amount you need to be putting aside each month.<\/p>\n
If you have been diligently saving throughout your working life you may be on target to reach your retirement savings goal, but what if you aren\u2019t? If you have too little time to amass the pot you need given your salary and retirement timeframe then you will have to make some difficult choices: work out a way to be able to save more money each month, compromise on your lifestyle goals in retirement or work for longer. Or maybe you can invest smarter to gain a better return on your savings?<\/p>\n
If you feel that you are not on track or are baffled by the maths required to put a figure on target retirement savings then now is the time to see a financial adviser. They will have the knowledge, expertise and tools to run through different scenarios and the options available to you to help you put in place a retirement plan which is unique to you and your personal situation.<\/p>\n
You have a limited number of paydays left until retirement and these are slowly counting down. If this feels like a ticking timebomb, whatever you do, don\u2019t panic. But don\u2019t delay any further. Tackling the issue head on will give you a sense of control over your own destiny and peace of mind that you are doing all you can to address the situation and secure yourself the retirement you deserve.<\/p>\n