Inflation is one factor you don’t have control over, destroying the purchasing power of your money over time. Therefore, you can’t retire rich if you don’t beat inflation, because what seems a decent savings amount at the time you retire may not be able to sustain your lifestyle after retirement. If all this seems a far cry, have a look at how commodity prices have changed historically:
“Retirement shouldn’t be a compromise”
If you’re the kind of person who drives to work in a gas-guzzling power car, will you need to downsize and settle for a more economical electric car once you retire? No. The limitation of your earning power should not mean that you need to cut down your comfortable lifestyle once you retire.
Be it your day-to-day expenses or the luxuries you are accustomed to, you shouldn’t be scaling down just because you don’t earn a salary anymore. Successful retirement planning is all about ensuring that you have enough money to sustain your current lifestyle well after you retire. Want to take your grandchildren on a 9-night Nile Cruise, Rs600,000 per head—you being retired shouldn’t be a concern.
“The longer you live, the more you pay”
Advances in medical technology, coupled with good habits and better awareness mean that people live longer lives. That comes at a cost of having to spend more. Additionally, there is also the disappearance of traditional family structures, implying that it is better for you to be financially independent and able to support yourself as you get older. Therefore, as the post-retirement lifespan increases, you are required to have a larger pool of funds to spend; a significant amount of that would be for health care, which is becoming ever more expensive.
“Your biggest expenses are yet to come”
There is a ‘timing gap’ between your earning years and spending years. This is because most of your earnings will end when you turn 60, but with your current lifestyle, the big-ticket life spending will usually occur after that. These big-ticket items include children going overseas for higher education, getting married, buying your second home or upgrading your car every 5 years. For instance, a Bachelor of Biomedicine at the University of Melbourne will cost $140,000 in 2018, excluding other costs like books and living expenses.
“Plan while you still earn”
Considering all the above factors, you understand that it is important to act during your peak earning years to afford a comfortable retirement. This requires you to identify the cost of retirement, post-retirement income and a strategy to bridge the gap between the two.
“At First Capital we don’t believe that one-size fits all”
We understand that not everybody’s retirement expectations are the same. Different individuals have varied needs that a retirement plan needs to address. That is why our tailor-made plans are formulated to suit your circumstances, your spending and your lifestyle. Being an investment bank, we are exposed to the entire range of financial instruments, allowing us to identify opportunities and source the best investment to grow your retirement fund.
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Talk to us, and we will help you to plan your retirement.