Saving for Retirement
Although retirement may not be on your radar right now, it is critical to begin saving as soon as possible. The more time you give yourself to save for retirement, the easier it will be to pursue your financial objectives and invest in the future.
According to studies, just 7% of young workers have a monthly savings plan. While it’s easy to put retirement planning on the back burner, developing the practice of saving money has several benefits and aids in the preservation of your funds’ purchasing power.
In this post, we’ll look at three crucial areas of retirement planning:
- Making a habit of putting money aside
- Save to keep your money’s purchasing power.
- Making money available for investment
Building a Habit of Saving
It’s easy to think of saving for retirement as something you can start whenever you choose, especially if retirement seems far away. As a result, many people begin their retirement savings plan too late, or when retirement is already upon them. If you start saving money closer to retirement, you will miss out on a plethora of possibilities to multiply your savings.
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Retirement funds take decades to accumulate, therefore it is ideal to start saving for retirement as soon as possible. While financial experts recommend saving 10-15% of your salary for retirement planning, the precise number you need to set aside depends on your future requirements. Your present age, the age at which you intend to retire, how much you intend to spend in retirement, your sources of retirement income, and events beyond your control (e.g., worsening health) all play a role.
Save to keep your money’s purchasing power
Once you’ve established the practice of putting money aside for retirement planning, the next step is to protect its value. Inflation is more than simply a rise in market prices; it also reduces the buying power of your money. For example, if you had PHP 1,000 five years ago, you could purchase a week’s worth of groceries. Today, it may just be enough to purchase you hygiene and food for four to five days.
In other words, you didn’t lose any money. Inflation has caused your money to lose value. As a result, developing a retirement savings habit is only the first step in retirement planning. If your retirement strategy is based only on money, you’re on the wrong track. You must preserve the purchasing power of your savings in order to effectively prepare your finances for wealth creation.
Making money available for investment.
The money you set away for retirement savings does not have to reside in a regular bank account. If you leave your money in a savings account, the interest you earn will be insufficient to combat inflation. Unevenly growing prices will certainly lower your money’s purchasing power in the future.
If you want to prepare money for wealth creation, you should take advantage of as many possibilities as possible to expand your finances. Among the most successful strategies are:
- UITFs – Put your money in a fund and let specialists handle it for you.
- Time Deposit – You leave your money alone for a set length of time and earn guaranteed interest on it. Time deposit rates are greater than standard savings account interest rates because money are held for a certain length of time, allowing banks to reinvest or lend the funds for larger profits.
The above-mentioned financial products allow you to deposit money that you can withdraw after its value has improved. UITFs, for example, are designed to allow you to redeem your investment at any time. If you redeem during the 7-day holding period, you will be charged an early redemption fee. UITFs can either be short or long term, depending on the fund’s underlying assets or where it is invested. It is advised that you stay engaged in them for a suitable amount of time in order to optimize their earning potential.
Create Wealth Today by Investing in Retirement Savings Today
Having a big retirement fund will be empowering, but saving is only the first step in planning for a financially successful retirement. Saving for retirement does not imply that you are now developing wealth; rather, you are preparing money for future wealth-generating initiatives that will protect the value of your hard-earned retirement assets.
Keep in mind that retirement planning is a lengthy process. It’s a marathon, not a sprint. If you begin today, you will make your money work for you and outlive your retirement savings and riches – not the other way around.
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