How To Plan For Retirement As A Couple
With so much going on in your life, it can often be hard to plan ahead for the next month, let alone for years into the future. However, your retirement, although it feels like a long way off, will most likely creep up on you in what feels like little more than the blink of an eye. Saving as a couple will ensure that when you both stop working, you can still enjoy life, free from financial worry and constraints. But where to start? And how do you prioritise, with so many other bills and responsibilities? Wealth and wellness expert Rasheda Khatun Khan is back with her latest post for the BCME expert panel, which provides invaluable advice that you can act upon today. Read on for more details of how to plan for your financial future, together.
Don’t wait for retirement to plan for retirement, get started now.
As newly weds you have so much to financially plan for; a house, holidays, monthly budgets and children, not to mention the things that crop up in between. Quite often retirement is the last thing we think about, if at all at this stage, and yet it is in fact the biggest ‘bill’ you will ever have. Yes, consider retirement as a bill or an expense. It’s you paying for your future income when you stop working for it and paying for it for the rest of your days. To put it in perspective, on average people need about USD1,000,000 to pay for their income for at least 20 years.
Just think about this for a moment: on average people want to retire by the age of 60 or 65. Amongst expats, most want to retire at 55 or at least have the option to work or not at that age. The average life expectancy is 80-85, with people living longer than ever before. That means on average there is at least 20 years of income that needs to be funded by you. Now the question is, how long do you have left to build up around 20 years of paying yourself your own income? Right now it’s probably around 25 years. Think about how much income you would want or need to live on, at age 60, on a monthly basis? Then multiply that by 12 for the yearly income, before multiplying it by 20 years to get the total amount of income you will need to pay yourself over those golden years. Big amount? Sounds scary?
It certainly can be scary especially for those who do not consider planning for retirement until it’s too late. The good news for you is that you have sufficient time from now to start, little by little, building up the funds you need for this bill.
So, where to start? Once you have both settled into your new routine with your regular monthly household expenses and have discussed your short, medium and long-term goals as a couple, you are in a good position to start thinking about ultimate financial freedom: your retirement. Now whether you actually retire is another thing, but what you are saving for is the financial freedom to choose whether you work or not.
Here is your simple plan of action:
1) Set a goal. Some people have clear goals of where and when they want to retire. If you do, great. Most people haven’t thought about it. Remember what you’re saving for is to have the available funds so you can make the choices you want – where you end up and exactly when you retire is often decided much nearer the time. So your goals would be a list of the choices you would want to make.
2) Work out a monthly budget that you can start with. Saving as little as USD500 (AED1,840) over 20-25 years will make a big impact to your end result.
3) Find a financial adviser that has been recommended and go through your “pension” options. Make sure you fully understand the investment vehicle. Stay in control – nobody cares as much about your money than you do.
Financial planning is not rocket science; the key is to save consistently.