Finances often only worsen a midlife crisis. The worry about a lack of finances or 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 be self-employed or maybe you haven’t been able to put money aside for retirement because you’ve had to pay for your children. The modern financial climate may make it 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 salary, which sounds like a lot, but here we are going to assume 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 $6,700! Breaking that down into a weekly amount 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, maybe a lot less than what you need now. You need to take into account things like your health and factor into this whether you will 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 can 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 at such a late stage in the game, but if you are prepared to make sacrifices, it will mean a much more comfortable future.
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