ByThere are two key elements that will determine whether you have cash or run out of money in retirement. These two elements are the keys to lasting financial success. The first element is income and the second element is savings. Income is the element that brings money into your life and savings is the element that keeps money in your life. Yet millions of people every year give savings the least attention during their active career years. It is as though they forget that their saving is what they will depend on in retirement. These people spend their lives working hard for other people and do little on their savings. If you want to experience a restful retirement, you must keep big portions of your income as savings for yourself. It is important to do so early enough so you can gain financial freedom and help other people.
So, how many people do it this way? Only a few. The majority of people prepare for retirement in the exact opposite way. They focus on other people and work on projects that last as long as their active career years only to run out of time and money when they are ready to focus on themselves. It is the abandonment of savings until later that makes retirement a dreadful experience for many people
It depends on where you are right now, how hungry you are for success, and whether you are ready to take immediate action. Regardless of where you are or what you choose to do today, know that millions of people have gone ahead of you, and at least 95 per cent of them have lost their high-quality life in retirement.
They have descended from a prestigious life to a life of financial pain. If you do not want to end up this way, you must brace up for success and create the kind of life you desire in retirement. Almost all success stories that I know started when someone reached that point of enough is enough. This maybe your enough is enough moment. Let me show you how you can take the steps forward.
There are three things you can do to never worry about money in retirement again.
The first thing is to replace your retirement income. While your job can retire, your income must never retire. The second thing is to focus on the 20 per cent action that will make the difference in your retirement life and the third is to find the money that will fund your dream retirement life. Below, I explain each of these points in details.
First, you must replace your retiring income with a non-retiring income. There are two kinds of income that do not retire. The first is investment income and the second is business income. Replacing your retiring income with an investment or business income is important because the major difference between you today and you in retirement is the absence of a high-active income. If you replace your income with a non-retiring income, you will have a smooth transition into retirement but if you depend on pension, you will struggle in retirement and here is why.
Pension is less than 20 per cent of your current salary and depending on pension means crashing the quality of your living standard to fit into a small budget. Pension as of today does not last for a lifetime and you are likely to run out of money if you live longer than the money in your account. If you are lucky to have a few other investments aside from pension, you must make sure these investments mimic some of the characteristics of your current active income. They must be stable, consistent, regular, and difficult to lose. The key to success in retirement is to find ways to replace your retiring income and to do it in such a way that gives you peace of mind.
The second thing you must do is focus on the 20 per cent action that will give you the greatest peace of mind in retirement. There are three areas to focus on if you want to experience a blissful retirement. The first area is income. You need both short-term income security and lifetime income security to thrive.
The second area is a residential home of your own or some sort of rental provision that does not stress you in retirement. One of the biggest capital expenses that frustrate people the most is rent. The sooner you take care of rent, the more stable and stress-free your retirement will be. The third area is health. Health crises can destroy any amount of wealth and it is in fact the biggest destroyer of wealth. Knowing what to do to heal your body, stay healthy, fit, and productive is critical for success in retirement.
And finally, the third thing you must do is find the money to fund your retirement life. It is rare that you find a person who already has all they need for retirement. Often, four things are in short supply for most people. First is time. Most people are already out of time and must find ways to achieve their retirement goals within the limited time that they have.