Retirement planning is one of the most important part of any personal financial plan and it helps you make sure that you have enough money to retire comfortably.
One of the biggest enemies of financial security is debt and everyone should endeavour to be debt free, especially before retiring.
In this article, we share tips on how to be debt free before retirement, so you can spend your savings on living a happy, comfortable life rather than on clearing your name.
In an ideal world, your debt should be cleared by the age of 45 so that you can spend the remainder of your career saving as much as possible for your retirement.
Short-term debt is a silent killer. It steals away from your ability to save for a stable financial future. Things like clothing accounts and credit cards can cripple you financially. Therefore, it’s of critical importance to clear bad debt as soon as you can. You may benefit from drawing up a plan, aligned with a budget which will help you pay off your short-term debt sooner rather than later. Once all your bad debt has been paid off, resist the urge to start any new, unnecessary debt so that you can focus on boosting your retirement savings instead.
When taking out a home loan to buy a home, consider how long you have to pay off the loan as well as what the interest will be and if you will be able to pay it off before retirement. If not, you may want to consider a more affordable home or, if possible, reduce the loan repayment period. Those who have an existing bond should also avoid drawing from an access bond unnecessarily as this will increase the loan repayment term as well as the interest rate.
Big homes cost a lot. Not only are your bond repayments through the roof, general maintenance and upkeep of a large home can seriously break the bank. Whether you have paid off your property or not, downsizing can bring more money into your life which you can either invest or put into your retirement annuity. In addition, you will be spending less time (and money) on keeping your home running and more time enjoying your life and reaching for your dreams.
It’s not always an easy thing to do but rethinking your lifestyle can be hugely beneficial when it comes to saving money. The best way to do this is to have a budget and to take a disciplined approach to keeping track of your expenditure. Without a budget in place, it’s impossible to know where and how you are spending your money. Once you take a closer look at this, you will likely find that you are spending far too much on entertainment or shopping sprees. By cutting back on these expenses, you can save more every month and get closer to living your best retired life.
We know that the idea of retiring can be both scary. However, when you have plan adequately and save as much as you possibly can, retiring can be something to look forward to.
Let our financial advisors in Johannesburg set you up to live the retired life you have always dreamed of.
Contact us for more information.
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