retirement advice

Retirement moves which you should start taking during your 20s and 30s

Retirement moves

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Though you might be decades away from quitting your job forever, planning your retirement is everything about taking the proper start. During each stage of your journey towards retirement, you will require knowing about the most vital money moves that you should make, the target for savings that you should set an aim for and the ideal way in which you can mix and create the best investment portfolio.

These change when you reach your peak years of earning and when you reach the pre-retirement red zone. If you’re someone who is all set to take the best money moves while you’re in your 20s and 30s, we will offer you some of the best techniques that you should follow in order to stay debt free post retirement. Check them out.

#1: Collect the entire company match for you 401(k)

In case you’re beginning to save money at the age of 35, you will require putting aside 17% of the income for 30 years so that you can retire properly at the age of 65, as per researches done by the American College. You start at the age of 30 and then your target will decrease by 12%. If you begin at 25, the target will drop to 8.8% in a year till you reach the age of 65. Usually, you should save 6% to earn the entire amount. If you think that’s too much, you can start with 3%.

#2: Demand $5000 more in your salary

The amount that you earn during the initial 10 years of your job will always have a long-lasting impact on the wealth that you accumulate. As per studies done by the Federal Reserve Bank of New York, the typical wage of the worker grows between the age of 25 and 35. So, if you can get a boost in your pay of $5000 when you are of the age of 25, this can sum up to $635,000 more in the earnings that you make over the lifetime. You should negotiate irrespective of whether you’re grabbing a job offer or you’re looking for a raise. It is sad enough to note that just 35% of the millennials have ever asked for a raise.

#3: Be smart about paying low investment costs

It is always a smart and a wise decision to keep investing costs down. When you’re still young, you should lock in on the low-fund expenses and this is also a rewarding experience. In case you invest $1000 in a month in a retirement fund for long 30 years, you will end up having $762,000 keeping in mind the average annual returns and mutual fund fees.

#4: Try to know yourself in the future

You should picture yourself in the future and this will give you a clear idea of your savings mindset. There are several kiosks which allow workers to get an idea of how you can look when you’re 65, the number of people who enrolled in a retirement plan rose to 65% as compared to the previous year.

Therefore, whenever you’re worried about the ways in which you can systematically save for your retirement, you can take into account the above mentioned strategies and techniques.

The Halfway Point: Saving For Retirement In Middle Age


A midlife crisis is worsened when the notion of money comes into play. The worry about a lack of finances or nothing in terms of pensions once you have passed the age of 45 can make you anxious, and if you haven’t thought about where to begin at this stage in the game, now is the time to start. You may have led a life of self-employment, or you have not been able to put money aside for your future due to your children, and in the modern financial climate it is much harder to save, but it is achievable. Let’s look at your options.

The ideal amount to save is roughly 2/3 of your final salary, which sounds a lot, but here we are going on the assumption that you are 45 to 50. The standard retirement age is around 65, but this is the first option, if you defer your retirement by 5 years it can give you the springboard that you need to earn the funds you need. On a salary of $10,000 a year, that means you would need to save approximately $6,666! Breaking that down into a weekly salary will make it more manageable. The other thing to point out at this stage is that you need to think about your retirement plans, if you plan on downscaling your property to a home without a second floor, your outgoings will be a lot less. Post-work, depending on your overall needs, they may be a lot less than what you need now. You need to take into account things like your health and so forth and factor into this whether you need additional care. So you may need to invest in a fund towards spending your remaining years in a retirement village. This is becoming a more viable option for people as they get older, but it is something you need to start thinking about now depending on your needs.

Other methods to save would be to start an independent savings account (known as an ISA in some countries) where you are unable to access the money unless you pay a fee. It is a simple way to prevent you from dipping into your finances when you need a little extra money. There are high-interest ISAs available, so it’s worth shopping around for the best value ones. Don’t forget the tax relief you are entitled to. Depending on where you live and how much you are starting to contribute towards your pension, it means that you can be entitled to a higher rate of relief which can be very attractive.

The other option to think about is if you are in a marriage or a partnership, saving money independently instead of as a couple means that you are able to get more money tax-free. And while it can prove difficult, the goal of saving 2/3 of your salary can be easier in this respect. It isn’t easy to do to at such a late stage in the game, but if you are prepared to make sacrifices, it will mean a much more comfortable future.

Are millennials more serious about their retirement today?

Millennial money has always been under the scanner – irrespective of whether it has been about concerns regarding their saving habits or retirement planning. However, it seems that 2017 is going to spell a fresh start for them. Let us explore why it is so.

The Natixis 2016 Retirement Plan Participant Study

As per the Natixis 2016 Retirement Plan Participant Study the average millennial, who has a defined contribution plan had actually starting saving from the age of 23. Needless to say, the defined contribution plan that we’re talking about here commonly refers to 401(k). The number (the age mentioned here) is equivalent to 31 years for Baby Boomers and 27 years for Generation X. Now, who actually can deny the benefits of these extra years’ savings? Going by the expected market returns, a person’s average salary (hikes included) and his deferral, it might as well be said the Millennial stands to retire with around $600,000 dollars.

Why they should save more

However, it has been opined that though millennials are saving early, they aren’t saving enough. While it has been found out that around 66% of them give around 1 to 5%of their salaries to the retirement plan of their company, the figure needs to be somewhere around 10%.

Millennials surveyed by Natixis think that they would need least something around $869,662 when they retire. The numbers should ideally increase given the chances of inflation in the next 40 years, illnesses or other inabilities to work or a major market correction.

If there is marked inflation in the next 40 years then let us tell you that $869,662 will not really be enough of purchasing power.

Don’t rule out chances of a possible market correction just before you’re about to return as well. With around ten to fifteen per cent decline in your portfolio you wouldn’t really be happy even if your portfolio is worth a million dollars!
Then there are these chances of developing diseases like diabetes or any other chronic illness. What happens when you’re battling with these health irregularities? Your healthcare cost increases!

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5 Disadvantages Of Early Retirement

retirement lifeThe only thing better than retirement for some people is early retirement — when you are able to line up your ducks in a row and bow out of the workforce before the standard retirement age. Yet there can be significant disadvantages to retiring early — making it that much more critical that you project your future income and expenses as accurately as possible. Before you hang up your hat for good, make sure you address the following five concerns:

  1. Inflation. A common misconception about retirement is that you will be spending less than you currently do. The truth is, you likely will be spending more because you will have the free time to enjoy leisure activities, hobbies and interests you could not freely pursue as a full-time employee. Add to this challenge the inflation factor, and you could be looking at a 170 percent increase in living expenses by the time you reach age 80 if you retire at age 55. If you neglect to account for inflation in your retirement planning, you could be in for an unwelcome surprise later, so do your due diligence to ensure you account for both rising inflation and rising expenses.
  2. Change in lifestyle. The general rule of thumb is that during their retirement years, most retirees should plan on spending 75 to 80 percent of the amount they currently spend. As noted above, this amount could be much higher, not only due to lifestyle changes, but also possibly due to medical expenses. If you are unable to increase your income for your retirement, then you might have to adjust your lifestyle and forgo some of the plans you had for enjoying your leisure time.
  3. Health insurance costs. High health insurance premiums go hand in hand with individually purchased policies. You could be forced to spend large amounts of your retirement savings on health insurance until you become eligible for Medicare at age 65. If you wind up spending all your money on health care, then your early retirement won’t make much sense.
  4. Too much time, not enough money. Many retirees, finding that they have time on their hands and have too little retirement savings, turn to part-time employment to supplement their income. However, you cannot count on this option, as good part-time jobs can be even more difficult to find than good full-time ones. (Think about it: How excited would you really be to flip burgers in a burger joint as a retiree?) Additionally, you will need to account for the additional costs that part-time employment may incur, such as higher income taxes and reduced Social Security.
  5. Reduced Social Security. If you collect Social Security before age 65, your benefits will be reduced, and the benefits for early retirees will lag behind inflation. Check your calculations carefully: If they show you will have to begin drawing Social Security benefits at age 62 to help meet living expenses, then you likely cannot afford an early retirement.

On the bright side, it is possible to retire early if you can ensure your long-term financial security. Say, for example, you have accumulated sufficient personal resources to allow for an early retirement, or your company offers early-retirement incentive programs — aka window incentives, now a popular method companies use to reduce the size of their workforce.
In any case, the key is to be realistic as you make your projections, and know exactly where your money will be coming from and how much you can expect to bring in during retirement. Sit down with a financial adviser to go over the details and build a plan for early retirement that won’t leave you struggling to make ends meet, but rather enjoying your newfound freedom.

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An expert on financial and retirement planning, Felicia Gopaul offers timely tips, advice and guidance at Her articles help readers to manage their finances, plan for college and retirement, and save and spend wisely. When she’s not writing on money matters, Felicia also enjoys travel and travel writing, as well as reading, hiking and yoga.retirement life

The Freelancer Guide to Pensions

Pension PlanWith the recent government reforms on pensions it’s never been more relevant to think about funding for later life. The introduction of a new flat-rate pension worth an estimated£144 per week in today’s money,will provide the UK’s elderly with “the minimum” they will need and no more.

New laws are being passed in favour of UK workers, to ensure that they’re being offered adequate support from their employers in the form of compulsory workplace pensions.

But what can the humble freelancer do to ensure they have sufficient provisions for retirement?

Keep Tabs

You’re self-employed now, but the likelihood is that you’ll have accumulated pension plan(s) over the years from previous companies (as well as maybe from doing your own thing).

The best thing to do with these before you decide how to proceed is to take stock of what you have. It’s probably been some time since you looked at how your funders are performing and how these will to help towards your retirement fund.

Set Up a Personal Pension Plan

When you invest funds into a pension (which you can do tax free), your provider will spread this money across different stocks and shares (investment portfolio). There are two main routes that you can go down to determine what happens with your money next:

Stakeholder Pensions: an investment portfolio where the decision about which stocks and shares are selected is made by the pension provider, with little or no input from you.

The obvious benefit to taking this route is that the provider will have a vast amount of expertise to be able to make the most astute choices for your age and circumstance.However, there will be a charge for this service.  Usually, the provider will chargea percentage of the value of your investment annually.

Self-Invested (SIPP):this is a private pension plan where you maintain control over which investments the fund makes on your behalf, and you have control over the investment portfolio from the first investment being made to the point of retirement. It is possible to make significant savings this way, but you must be confident in your ability to make astute decisions, as there will be no recovery if your investments don’t perform as expected. If you do decide to go down this route, always seek the advice of a financial professional to ensure that you’re aware of the risks involved from the outset.

Don’t Stay Stagnant

Just because you don’t have an annual pension review with work doesn’t mean you can let your payments stagnate and continue to pay the same in year on year.

Make sure you increase your investments in accordance with your salary by contributing a percentage of your earnings, rather than a set amount. As a general rule of thumb, this should be a percentage that is equal to half your age when you set up the fund. So, if you were to start saving at 24, this would be 12%.

You may also decide to review your input and gradually increase the percentage invested as you get older. As circumstances change, i.e. you might manage to pay off your student loan, credit card debt, or even better – your mortgage, a good idea is to start contributing at least some of the equivalent into your pension instead. You’re not used to the money, so you won’t miss it, and you may be thankful for that little bit extra when you’re no longer working.

Remember, it’s never too late to start saving. Whether you already have some funds tucked away, or you’re just about to start, it’s a great idea to consolidate your cash and take time to make sure you’re getting the most out of your money to prepare you for later life.

This article was contributed by Laura Moulden on behalf of Nixon Williams, a firm of contractor accountants offering comprehensive accountancy services to businesses throughout the UK

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It Really Can Be Simple To Buy A Property In Your Pension: Our A – Z Guide

Buy A PropertyOne of the main reasons people use a Self-Invested Personal Pension, or SIPP for short, is to buy a commercial property, either for their own business to use or to be let out to a third party.

It sounds complicated, but it doesn’t need to be, so we thought we’d take you through the basic A to Z of buying a commercial property in your SIPP.

1. Decide on your strategy. Are you buying a property which your business will occupy, in which case you will still have to pay rent but to your own pension, or will you  let it to a third party? Of course your business could occupy part of the property and sub-/let part, the choice is yours

2. Find a suitable property. This is the fun part! Viewing property and imaging the possibilities can be very exciting, but don’t get carried away, remember your strategy and budget. You should also remember that a SIPP cannot buy residential property or a holiday home; it’s a big ‘no no’ and can’t be done, despite what some people will try and tell you

3. Organise your borrowing. SIPPs can borrow money to help fund the purchase of the property, but there are rules. A SIPP can only borrow up to 50% of its assets, for example if your SIPP is valued at £100,000 it can borrow up to £50,000, giving a total budget of £150,000 to fund the purchase and cover any fees such as legal costs, stamp duty, surveys, and other professional fees

4. Find a suitable SIPP. Some SIPPs will not allow you to buy a property, whilst other SIPP providers are very experienced in such arrangements. If your existing SIPP provider will not allow properties to be bought then you will need to consider a transfer to an alternative provider. Even if your existing SIPP provider will allow property purchase you should compare the costs of alternatives

5. Make an offer. So you’ve found a property and chosen your SIPP provider, it’s now time to make an offer. This works in the normal way, there’s nothing really different just because you are buying the property in your SIPP

6. Find a solicitor. You will need a solicitor to carry out the legal work associated with the purchase. Some SIPP providers will work from a panel of lawyers and insist you choose from this list, others will allow you to use any solicitor of your choosing; just make sure the one you chose has experience of dealing with buying a property in a SIPP

7. Organise a survey. You’ll want to make sure that the property you are buying isn’t falling down or about to cost you and arm and a leg in repair bills

8. Sit back and let the professionals get on with it. Once you’ve followed the first seven steps you can probably breathe a sigh of relief, settle back and let the professionals get on with completing the purchase

9. Find a tenant, move in, and arrange a lease. If your business is renting the property then you will need to draw up a lease and start paying rent, if you intend to find a third party then you’ll need to market the property, either through a professional agent or yourself

Our quick A to Z guide will help you buy a property in your SIPP, and whilst it might look easy there will always be complications along with way which is where your IFA and other professional advisers will really earn their fees.

Phillip Bray writes for Investment Sense and looks at the SIPP rules when it comes to buying a commercial property in your pension.

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