Tuesday, April 7, 2009

Can you afford to retire comfortably?

Many of us would stop work between age 55 and 65. If you had started working from age 20 or 25, you would have worked for 30 to 45 years. Upon retirement, your income would come to an end. However, you would want to continue enjoying your golden age, retiring in style as a reward for all these years of hard work. In order to do so, there must be proper planning; to be able to accumulate an estate to provide for your retirement.
Many people delay planning for their retirement until they are about to retire. The major pitfall is that they have less time to accumulate what they need, and will most probably have to bear higher risks in their investment in the hope of getting higher returns. They would not be able to gain from the compounding effect of interest rates from long term investment.
For example, if you start at age 35, investing $2,000 a year with an average rate of return of 6% will give you $167,603 when you reach 65. But this figure will be more than $320,000 if you start at age 25.
Starting too late, putting aside too little, and being overly cautious can be very costly.
From the statistics, the aging population is going to increase tremendously. The younger population would have a very heavy burden of supporting them. Why not make it easier for the next generation by assuring your own financial independence and your own dignity as well. Twenty or thirty years down the road, some people would be financially independent and some would not be. They did not plan to fail, it’s just they failed to plan.
Would you agree that the only person that can take care of the financial needs of the older person we will be someday is the younger person we are now?
Plan today and start building your retirement fund.