Marius Du Toit, Managing Director – Efficient Benefit Consulting
As a general rule of thumb, starting on your retirement budget as young as possible is always the best option to maximise your retirement benefits. The sooner you start, the longer you can save and invest for your retirement period, and the more you might enjoy your golden years. Individuals who have not prepared at all may be hesitant, even afraid, to think about the importance of pursuing this vital financial milestone. Perhaps you are wondering: “How do I plan for a retirement budget?”
We have created a basic guide, taking into consideration your income versus your expenses and how you might live until the inevitable happens.
8 Questions to Ask Yourself Before Creating a Retirement Budget:
Before you create your retirement budget, ask yourself:
- How active am I now, and what do I want to do after retirement?
- Do I need to consider foreign currency exchanges if I have travel ambitions?
- What parts of my current lifestyle am I not willing to change at all?
- What parts of my current lifestyle am I willing to change or give up?
- What portion of my income needs to be devoted to health issues and medical expenses?
- Will I have to assist my children financially through these years?
- What kind of inheritance would I want to leave my children and grandchildren?
- Do I want to remain in the family home or am I prepared to downscale?
Once you have answered these questions, you can estimate what your expenses might be and how much money you will need each month. Now, you can start investigating how to earn this amount once you retire.
Creating a Retirement Budget: Income Strategies
Complete an honest critical analysis of potential income revenue streams that might pay out monthly, quarterly, or annually by reviewing your current portfolio.
- Do you have passive revenue streams like a family-run business or rental properties that might provide a monthly income?
- Are you saving cash and is it offering you the best interest rates?
- Have you invested in unit trusts, retirement annuities, or safe stocks and bonds that might pay out dividends?
Depending on your age and risk analysis, you might also still be able to take a few risks on the stock exchange.
Importance of Debt Management
Managing your debt through this phase of your life is critical. Protect yourself against debt by considering short-term insurance, strong medical funding and critical disease policies. Prepare against tax and inflation, and try to keep your debt to an absolute minimum by including housing, healthcare, food, and transportation first. The rest can be saved for through expendable income after these necessities have been seen to.
ENDS
