When I was in college, one of our professors asked us to document the life we had prior to college and the dreams we have for our future. In a recent gathering with my classmates, I was reminded of one of the goals I wrote – to retire by age 45.
This month, I turn a year older– closer to that desired retirement age and I am nowhere near that goal. The mindset of living in the now accompanied by a few missteps along the way set me back a couple of years from reaching that goal later than I would have wanted. But then again, it’s never too late to start over as long as you have a plan.
Whatever your age may be, here’s a decade by decade game plan I’ve put together from my readings to help you start building a more secured future:
In Your 20s: Create a conscious spending plan by allocating your salary to specific categories – 20% for savings, 50% for essential expenses and the remaining 30% for lifestyle expenses can be a good start. So it’s easier to track your spending, download an app like Insular Life’s Finance Manager on your android or IOS phone.
In Your 30s: Start building an emergency fund by replenishing your savings or time deposit accounts once it has been used or depleted. The ideal emergency fund is 6x your monthly budget. You can start saving and investing for important milestones (like getting married or buying a house) by exploring financial assets like securities, stocks or bonds. Investment-linked life insurance plans are ideal tools at this stage.
In Your 40s: Ensure your future income by securing additional life insurance plans which can provide a continuous income stream for your family should something happen to you. Similarly, though you may have government-provided and/or employer healthcare care benefits, getting HMO coverage or hospital income plans may be of good help, too.
In Your 50s: If you haven’t started preparing for your retirement, doing it at this stage is a MUST. Assess how much you will need to sustain your lifestyle and to pay for potential medication. Consider your life span and inflation. Save for that target amount by setting aside a higher percentage of your salary, as needed.
In Your 60s: Start planning for the preservation of your estate. You don’t want your accumulated belongings falling into others’ hands, just because your family cannot pay for the taxes related to wealth and asset transfers.
While I already purchased some policies for myself, I realized it is not enough. I will have to push back my plan a bit and retire later than 45 to give me more time to prepare for my dream retirement lifestyle.
(Originally written by Marla C. Rama at http://www.savingstips.com.ph)
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