How many of you did actually think of retirement plan? Honestly I never did actually think about it until after working for 6 years. When I first started to work I can barely save any money. Sometimes I even spend more than I earn. After working for about 5 years then only my paid is enough to cover all my expenses. At that point the only retirement plan that I have is the compulsory retirement saving implement by government or so call employment provident fund. That’s the money that you’ll get after you retired. If you’re working for the government, you will still continue to receive partial of your income after you retired. That’s basically the retirement plan you’ll find in my country. So what’s other retirement plan that we should consider and think about?
I saw an article at Yahoo Finance title Retirement Shouldn’t Be Numbers Game which triggers me to write this post. We actually should think and plan our retirement but in a flexible way. There is no rules state that we should plan our retirement early or in a young age. If maintaining current job and situation already takes up all your energy and earning, there is no point thinking about future retirement plan. Focus on improving current job and situation first then only start planning your retirement. Once you’re able to survive now, that gives you the privilege to think about future. Let’s go back to the retirement numbers mention in the article. First is the magic number 70%. That means plan to spend 70% of your current income in retirement. I think it’s not necessary to plan the spending until that much. It will be appropriate to spend the money when it is needed or necessary. It’s always good to have more money in pocket then to spend it. For some people they feel safer and sleep better when they have more than enough money in their pocket. The second magic number is 4%. That means a retiree should spend inflation adjusted 4% of his/her total retirement assets each year. Keep the balance invested with a mix of stocks and bonds. This is probably the best and safest suggestion that I can agree on. But still the question is how much money you need to make in order to achieve enough of the 4% required for spending. The fist amount of money that comes to my mind when I read this statement is 1 million or above. I suppose that’s only enough to cover daily expenditure. The third magic number is 62. That means the earliest age that one can start collecting social security benefits. If you don’t need it and still able to work, then there is no rush to collect it. Besides the longer your work, the better the benefits you’ll get. Finally is the magic number 1 million. That means the amount of retirement saving goal. 1 million dollars is not that much if you calculate carefully. Just do a rough calculation the amount of money that you spend a month right now and check how long can you survive with a million dollars. This will give you a rough idea if a million dollar is enough for you or not. Plus, a million dollar now might not worth the same a million dollar after 10 years.
Any how the so call magic numbers mention above is just a reference. If you really look into those numbers and compare it to your financial statement and income, it can help understand your current standing and situation. That way you can plan your retirement accordingly. I suppose no plan is a perfect plan, especially after the economic downturn. Most people who actually thought they are financially stable to retired were hit by the unexpected lost. Plan is plan and it only works under circumstances without any surprise issue. Guess we just have to keep on adjusting our plan according to the situation.
P/S: One of the reasons this blog of money making opportunities is created is related to my retirement. I can continue to blog on without retired and continue to make money online as long as I like. If this is my retirement plan, then this is something that I want to retired to.