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Focusing on three key factors can help you reach your retirement goals
Retiring a millionaire is something everyone can aspire to. It’s something I’m extremely positive about and that I believe is possible by focusing on three fundamental factors: saving, investing and being
One of the most important, if not the most important, aspects of determining the amount of income you have in retirement relies on the amount saved every payday during your working life. It is too much of a regular occurrence that saving enough for retirement is taking a back seat for many. While a “live for the moment” attitude can be applauded in many ways, people must also think about their future at the same time.
Look at the figures. For the majority of people, there are only 240 paydays in two decades. As such, an attitude of “let’s worry about retirement when we’re older” could lead to significant unwanted lifestyle changes in retirement. The amount that should be saved each month depends on an individual’s circumstances, age, desired retirement lifestyle and, of course, income.
As a general recommendation, I would suggest people between the ages of 25 and 34 save between 10 and 20 per cent of their income; those between 35 and 44 should save 20-30 per cent, and those aged between 45 to 54 should save 35-50 per cent. The principal reason for the hike is that with every year that goes by, this means less time to save to reach your retirement ambitions.
Clearly, the sooner you start saving the better and easier it will be to accomplish your retirement goals.
In regard to investing, this is something that, to my mind, is imperative if people are serious about accruing wealth for later life. Maintaining a sufficiently diversified portfolio across asset classes, sectors and geographical regions is essential to achieving financial success over the long-term. History has shown that over time, despite financial markets fluctuating, their performance is consistent over the longer-term — they almost always go up.
Another reason for the upward trend in the stock market, generally speaking, is survivor bias. Over time we see failing firms, indeed whole sectors, drop out of an index, but new, profitable companies take their place. This proves the value of the “time in the market, not timing the market” saying.
Not investing means not making the most of the potentially huge returns to boost your retirement pot.
There are a number of bona fide ways to reduce your tax burden, which would amount to substantial savings over a number of years. Of course, nobody wants to pay more tax than is required by law. As such, it’s important to utilise all the legitimate tax-efficient products and financial solutions available to you.
There are, for instance, several products designed specifically for expatriates that can help mitigate taxes.
By focusing and adhering to these three key factors, reaching — and often exceeding — your financial goals in retirement need not be a dream. On the contrary, retiring a millionaire can be very much a wonderful reality.
The writer is founder and CEO of deVere Group
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