Retirement is the period in which the worker ceases
to be active and begins to enjoy a paid retirement without carrying out any
work activity. Since World War II, many countries have developed a welfare
state in which their citizens enjoy a retirement backed by public pensions.
Currently, the demographic and economic crises are changing the retirement
model as we know it. Therefore, it is important for workers to bear in mind
that their public pension will not be guaranteed in the future, so they will
have to save and invest if they want to maintain their standard of living once
they retire.
The main
tips that can help you plan for retirement are the following:
1. Prepare for the future. The first step is to
become aware that public systems cannot guarantee the standard of living of
retirees in the near future. To this we must add that life expectancy has grown
in recent decades and the retirement period is becoming the longest stage of a
person's life.
2. Calculate how much money is needed in
retirement. Knowing how much we need to maintain our standard of living in
retirement is essential to be able to plan it. Making an estimate of the
economic needs and the unforeseen events that may arise during retirement will
help us to have a good plan that guarantees us a certain standard of living.
3. Calculate how much money we could get with the
public pension. The first exercise on the source of income for retirement is to
estimate how much the public pension could bring us. As an initial reference,
we can consider how much we would receive as a pension if, hypothetically, we
retired today, and met the requirements. Thus, in principle, we would know how
much we would charge if the current situation were maintained. Then, we would
have to estimate a negative scenario where hypothetically we would not receive
at least 50% of the pension that we have estimated. In this way we will know
what amount of pension we could receive in the future in an adverse scenario.
4. Look for alternatives to the public pension. The
evolution of the public pension system does not guarantee that future workers
will have a good standard of living in the future, when they retire. For this
reason, within retirement planning it is necessary to look for income
alternatives to the public pension. The first step is to identify what could be
the sources of income in the retirement period apart from the public pension.
5. Know the different alternatives and calculate
how much income they can contribute. Investing in real estate to obtain rental income
is an option with a view to enjoying different sources of income in retirement.
The rental of homes, parking spaces, offices and commercial premises can
generate higher returns than what savings deposits in banks currently provide.
Other ways to save are pension plans. These are a widely used savings and
planning vehicle for two reasons: first, because they help you save for
retirement on a regular basis; second, because they present fiscal advantages
by deferring the payment of taxes. Some large companies offer collective
private pension systems; this represents an important supplementary income
source. Investing in mutual funds, in the stock market,
6. Don't forget insurance. Insurance is one of the
fastest growing retirement savings tools. Its security, profitability and
flexibility are attracting future retirees. In insurance we can find different
types, such as insured pension plans, individual systematic savings plans or
savings and income insurance.
Posted: John
Labunski
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