How to plan a successful retirement

How to plan your retirement so you don’t have to depend on anyone else when you are out of work.

Some companies, especially governmental or public companies, provide formal retirement pension to workers who completed a certain number of years with them. Other companies give workers an end of service compensation based on some preset formula. In some countries, the government takes care of minimal elderly care. While in others, each individual is on their own.

As an employee, you need to think about your retirement and fund your retirement regularly from an early age. The reason is that, humans behave as if they will forever be young and able to work and earn.

But this is not the case.

Most human beings are unable to hold onto full time working hours from around 65 onward.

Even if they want to, physically the elderly are weaker and slower and such work could become a burden on them.

In addition, from mid 40s, energy levels fall.

You might get tired more quickly and be unable to work the same level of work as before.

In many places retirement begins around age 65 when people stop working altogether or reduce their workload / working hours.

For these reasons, you need a retirement plan so you have the funds to maintain your living standard once you are no longer able to work.

Planning a successful retirement has two components:

1. Setting a fixed amount to put into your retirement fund or pension. You can take advantage of private pension investment plans and government funded and / or employer funded pension plans. Pension investment plans are plans that allow your funds to grow through investment. Various investment and wealth management companies provide such services where they invest the funds for you. And because they are expert in investing, they may be able to grow your wealth through profitable investment decisions.

In government and employer funded investment plans, either of these two add to the employee’s pension fund, dollar for dollar.

Either of these types of pension funds offer guidance on the amount to invest monthly in order to receive a certain payout amount in the future.

2. Considering and planning for the half-life scenario.

The half-life scenario considers the possibility that at some point in your midlife you may need to change jobs or start over. Such a situation is highly likely to occur as workforce is replaced and skills become obsolete causing older workers to be replaced by younger ones.

To ensure you are prepared for such a situation, you need to plan your retirement so that by midlife (from around age 40 to 50), you will have the funds needed to sustain you for at least 2 years in case you lose your job, need a career change, or need to take time off from work to refresh your skills.

Since many people go through a midlife career crisis where they need to refresh their careers, it makes sense to plan and be prepared for such a situation.

By planning and carefully funding your retirement pension as well as possible breaks in your career, you can ensure that you will have the funds needed to maintain your lifestyle once you are out of work without depending on anyone else.

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