The problem that I have is rather fundamental. Most well written retirement planning
books that I have read start out with a simple question; what is your
retirement going to look like? You
take what you want to be doing during retirement, and assign a dollar value to
it. Then you figure out where you
are in your savings and make a plan to get from where you are to where you want
to be. Simple right?
The problem is I don’t know what my retirement will look
like. I don’t know if I’ll have a
spouse or kids, or where I’ll live.
I’m not even certain at what age I want to retire. I can come up with where I am but even
the working years don’t have a plan.
I don’t know if I’ll work for the same company for my career, I don’t
know if I’ll end up with a pension.
I don’t even know at what rate my pay will increase.
That said I am a big believer in saving early on, so I’m
saving for retirement anyways. I
set aside about $350 a month for retirement savings. That is 10% of my take home pay, which is generally the recommendation
from experts (such as the author of “The Wealthy Barber” and Gail Vaz-Oxlade). While I could save
more, for the next 5 years I am concentrating on making my mortgage disappear.
In the meantime $350 a month is being added to the $22,000
that I am to receive instead of a pension for my military service. If I continue to save at my current
rate and assume 7% return on investments; then at 55 I will have $708,000 in
retirement savings, and $1,484,000 if I wait until I’m 65. (Actually probably a bit more because
my 10% contribution will increase as my pay increases and I plan to reinvest
any tax benefits.)
That said I fully expect my plan to be revised as my life
changes. The first point of revision
will be in 5 years time when my mortgage is paid off. At that point I can adjust my plan and step up savings if I
want since losing my mortgage payments will free up $1,500 a month.
Have you got a retirement plan worked out?
nice post......
ReplyDeletesharing information about retirement planning
Hi, Elizabeth. We’re on opposite sides of the spectrum when it comes to thinking about starting a retirement fund – it’s the technical stuff that boggles my mind. Good call on saving early, though. At least when you finally figure out something concrete, you’ve got a head start and have a better idea on what adjustments to make with your finances.
ReplyDeleteThanks! I've got my parents to thank for my early saving habits. (They made me start saving for university/college when I was about 5.) If you're looking for a good resource on the technical aspects of investing I would recommend reading "Free at 45" by Timothy Stobbs. It gives you the generals and then a list of references at the back for information on more specifics.
DeleteCheers
I am half way agree with your proceedings. One must keep a back up retirement plan as well. Don't put all your eggs in one basket. Anyways, nice study. You are a keen observer, Elizabeth.
ReplyDeleteNot all of my eggs are in the same basket I invest in a broad range of index funds (some that hold stock and some that hold bonds). I am also diversified in different markets Canada, US and international. My eggs are in many baskets.
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