PART ONE – Ways in which we retire… know your end destination!
The retirement landscape has changed drastically since the early Roman Empire times… which some of the services providers haven’t reflected in their fees… sssshhhh
It means that every person has a different idea of how they want to get to retirement. The graph below gives you an understanding of the different ways you can go into retirement.
Traditional retirement
Traditional retirement is broken into 2 parts – being the normal retire at age 65 model, or the early retirement model. Both are very 1995.
Semi-retirement
Semi-retirement is becoming the norm. And this is due to a few reasons highlighted below:
- Most people don’t save enough,
- Most people don’t start saving early enough,
- Fees ate up performance,
- Invested in portfolios not suited for retirement purposes.
The semi-retirement model delays your retirement, but you continue working (contract, part-time or full-time if possible) while you continue growing your retirement.
Temporary retirement/sabbaticals
Here you decide to work for shorter periods, then take an extended break. They either stick to the same industry, and come back and work after their break, or change careers and work many different careers over their lifetime.
It doesn’t matter which retirement model you consider, or choose, at some time in the future, far far away, or so you think, you will need money to sustain your living standards, and you won’t be able to generate income from your work and skills – your body and mind won’t allow it.
Your retirement journey is about accumulating assets over a long-term period (30+ years) to ensure that when you decide to retire, you have enough assets to pay yourself at retirement, while maintaining your living standards. You don’t want to be in a position where you use to earn R30 000 per month, and after retiring (because you didn’t prepare) you now receive only R3000 per month.
The best way to start this process is with investing from a very young age over your working career and preserving any monies when changing jobs.
Starting your retirement journey starts with understanding how you want to spend your time at retirement. Once you know that – you can start putting an investment strategy together, which will help you get to your end destination.
Always remember, plans can change, therefore make sure you have flexibility built into your retirement and investment strategy.