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10 Ways to Financially Prepare for Retirement

10 Ways to Financially Prepare for Retirement

While a number of developed economies throughout the world continue to showcase overt signs of growth, it appears as though everyday citizens are yet to feel the true benefit of this. This is especially true for those approaching retirement age, who, according to a 2013 HSBC report, are facing the prospect of exhausting all state and private pension funds within a relatively short period of time.

The survey, which canvassed the opinion of more than 15,000 respondents across a total of 15 global markets, suggested that the average citizen will have spent his state and occupational pension capital just 14 years into retirement. With the average international retirement length now 18 years, the failure to save can have significant implications for an entire generation of citizens.

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Practical Ways to Avoid Running Out Of Money in Retirement

    This problem can be overcome, although it requires individuals to adopt a proactive approach and consider alternative methods of generating and saving income. By thinking broadly and outside basic pension plans and savings accounts, it is possible to prepare for a bright and financially sound future beyond retirement.

    1. Live a frugal and enjoyable lifestyle

    For anyone who contributes to an occupational pension and is expecting to supplement this income with state funds beyond their retirement, there is a tendency to take a more relaxed approach towards making additional savings. This represents flawed thinking, however, as your ability to live a frugal and financially prudent lifestyle can boost your pension income and correct any potential shortfalls. Although this should not impact negatively on your enjoyment of life, it is important to cut costs where possible and maximise savings, discounts and promotional offers.

    2. Recognise yourself as a viable financial asset

    Beyond savings accounts, pension funds and fixed-rate bonds, you should also consider yourself as a viable financial asset. Equipped with knowledge, experience and a carefully honed skill-set, you have an innate capacity to earn that is likely to be the single most influential factor on the quality of your life beyond retirement. By recognising this quickly and maximising your earnings through activities such as freelancing and consultancy, you can lay the foundations for a financially prosperous retirement.

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    3. Learn to plan rather than save

    Goal setting is key to challenging established thinking patterns and cultivating more positive behaviour, especially when it comes to building and retaining wealth. It is important to set the right goals, however, as saving money is only possible if you can minimise spending, optimise your earning potential, and remain free from debt. This requires considerable forward planning, which enables you to consider your long term financial goals and minimise any risks that may prevent you from achieving them.

    4. Consider the dual benefits of healthy living

    We live in an age of information, where citizens have never been more knowledgeable about health issues and the impact of a poor dietary regime. Cultivating a healthier lifestyle not only enables you to improve physical fitness and live longer, but also provides you with an opportunity to save money by eliminating costly practices such as smoking, drinking alcohol and consuming fast food. Over time, these savings can quickly accumulate and boost your personal wealth considerably.

    5. Take advantage of financial freebies and tax breaks

    Taxation is not only a controversial issue in developed economies throughout the world, but also has a huge impact on your earning potential and capacity for long-term savings. As a financially astute individual, it is important to understand pension plans and tax laws, and use them to your advantage. In terms of private occupational pensions, for example, it is important to ensure that you match the contribution of your employers and access the free capital that is offered. Certain savings and retirement accounts also offer considerable tax breaks, alongside additional investment options that are free from capital gains scrutiny.

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    6. Develop financial literacy as a core skill

    This brings us to the need for financial literacy, which is now being considered as a core feature of the educational curriculum for students throughout developed economies. Without being financially literate, it is impossible to understand staple economic factors such as interest rates and their impact on investment income and earnings. More specifically, it is important to understand how fluctuating interest rates impact alternative investment options, so you can calculate which offer the best financial return at any given time.

    7. Follow economic trends and the course of inflation

    On a similar note, inflation and the cost of living are key economic factors that also impact disposable income levels. Not only is it important to understand these concepts, but there is also a need to follow the real-time economic trends that surround them. For example, it was recently announced that disposable income levels in the UK would not rise until at least 2015. This means that financially-aware consumers can look to regulate their spending and avoid heavy borrowing as inflation continues to rise disproportionately.

    8. Think like an entrepreneur and take calculated risks

    The nature of the global economy has changed considerably since the Great Recession, not least in terms of labour market evolution and the prevailing method of working in developed nations. As a result, we are now in the age of the ‘accidental entrepreneur’, who can be characterised as having a marketable skill and an appetite for taking calculated risks. This kind of mind-set is key when it comes to investing your hard-earned money, as you cannot hope to generate sizeable returns without placing your capital on the line in the first place. In the quest to supplement your retirement income, a slightly risk-averse approach can often deliver the best possible results.

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    9. Never borrow money to fund your lifestyle

    Economic recovery is often driven by consumer borrowing, especially in the modern age where there are a host of new and innovative short-term lending options available. While there is nothing necessarily wrong with this, it can become an issue when you borrow money as a way of bridging a short-term shortfall in income or sustaining an existing lifestyle. This leads to the cultivation of cyclical and long-term debt, which can slowly eradicate your savings over time. With this in mind, you should only ever borrow money with a clear goal in mind (such as an investment) and if you have calculated the potential risks and returns.

    10. Be proactive and continually look for new opportunities to save

    Above all else, your capacity to save money and boost your private pension income relies heavily on your outlook and financial philosophy. Even if you are in full-time employment and saving a considerable amount of money each month, it is crucial that you continually look for new opportunities and vehicles through which you can maximise your income. This type of proactive approach will reap significant rewards over time, especially for younger citizens who are still developing their career path.

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    Published on July 4, 2018

    Top 10 Recommendations on Money Management Apps

    Top 10 Recommendations on Money Management Apps

    Don’t want to overspend your budget, swipe your credit card too many times, and feel like a financial mess? Instead of beating yourself up for the bad financial decisions you’ve ever made, create a new plan!

    The solution is simple, save more and spend less. But, we all know it’s easier said than done.

    One problem is finding quality apps that save you time and money, and aren’t just hype.

    Luckily, there’re many great money management apps available at your fingertips. Here are 10 reliable money management apps that can help you save money, and crush debt.

    1. Personal Capital

      When was the last time you’ve tracked your net worth? Probably months ago or maybe never. Personal Capital allows you to easily track your net worth and plan for retirement.

      Here are some of its main features:

      • Sync many investment accounts, and expenses (mortgage, credit cards, etc.) in one place
      • Discover hidden fees and how much they’re affecting your retirement plan
      • Wealth management for investors requiring a long-term strategy

      With Personal you’re free to track your expenses and net worth.

      Available for: iOS and Android

      2. Mint

        If your smartphone could only install a few apps, Mint would be one of them. Why? Because Mint tracks all your balances and bills in one place.

        Here are some of its main features:

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        • Effortlessly track all your bills and balances in one dashboard
        • Categorized expenses to understand where you spend your money
        • Uncover hidden fees, and determine your investment style with sophisticated retirement tools.

        Feel at ease with managing your money by a reputable company that isn’t going anywhere.

        Available for: iOS and Android

        3. YNAB

          Everyone needs a budget, there’s no way around it. YNAB (You Need A Budget) is an easy to use app that will change the way you think about money. Their motto is to “give every dollar a job”, and you’ll quickly discover why.

          Here are some of its main features:

          • Easily sync all bank accounts in one place
          • Visually see your debt paying progress with eye-catching charts and notifications
          • Customized categories setting saving goals

          The best part about YNAB is the community that comes along with it. You can hop on the YNAB forum to receive support, listen to the YNAB Podcast or stay tuned for their weekly videos.

          Available for: iOS and Android

          4. Wealthfront

            Albert Einstein once said “compound interest is the eight wonder in the world”, and for a very good reason. The problem is, most people are scared or unwilling to learn the basics of investing. This is why Wealthfront is the perfect solution for the hands-off investors.

            Here are some of its main features:

            • Variety of investment account options including IRA, Roth IRA, and more
            • Your portfolio composed of 7 different asset classes
            • Automatically rebalanced portfolio
            • Daily tax loss harvesting

            Wealthfront is perfect for people requiring investment guidance, or prefer a hands-off solution.

            Available for: iOS and Android

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            5. Clarity Money

              If you’re staying on top of your budget but want to take your finances to the next level, Clarity Money can help you. Clarity Money helps you stay under budget and build a personalized savings plan.

              Here are some of its main features:

              • Easily cancel subscriptions with one click
              • Synchronize bank accounts fast
              • Transfer money effortlessly between different accounts

              Clarity Money isn’t an app that does it all. But, it does make transferring money and canceling subscriptions fast and efficient.

              Available for: iOS and Android

              6. Acorns

                What if there was a way to quickly gain confidence in investing your money, without too much risk? There is, and Acorns is your solution. With Acorns’s technology, you’re able to make investments as small as $5.

                Here are some of its main features:

                • Automatic contribution option
                • Customized portfolio tailored to your needs
                • Low management fees ranging from $1-$2 per month

                Stop wasting dollars on expensive coffee. Instead, invest them towards a brighter financial future.

                Available for: iOS and Android

                7. Albert

                  Do you budget by only subtracting your expenses from your income? If so, how would you discover any overpayments or extra money you could save? This is where Albert shines, and it does it all free.

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                  Here are some of its main features:

                  • Receive notifications for overpayments, hidden fees, and low balances
                  • An Automatic budget that’s built around your spending and income
                  • Easily track debt and set new financial goals

                  While Albert does offer a paid option, most of its core features are FREE. So, what better option to save?

                  Available for: iOS

                  8. Prism

                    Have you recently forgot to pay a bill because life got in the way? Prism automatically tracks your bills and syncs your bank accounts in one place.

                    Here are some of its main features:

                    • View all your account balances in one glance
                    • Bill due dates are automatically pulled and tracked
                    • Receive early reminders for upcoming bills

                    If your budget is on “fleek” but can’t seem to stay on top of your bills, Prism is your go-to app.

                    Available for: iOS, Android, Windows, Amazon

                    9. Mvelopes

                      Remember hearing about people using envelopes to budget their money? Well, Mvelopes is the new envelope system for this generation. Easily create monthly budgets and track your saving goals.

                      Here are some of its main features:

                      • Connect unlimited bank accounts
                      • Real-time budgeting with auto transaction syncing
                      • Low monthly $4 fee or $40 annual

                      Mvelopes can help you crush debt, save more, and help you stop overspending. With its low monthly fee, it’s worth a try.

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                      Available for: iOS and Android

                      10. Wallaby

                        Most people don’t have time to track their credit card’s changing rewards and interest rates. Because of this, you need help reaping the most of your credit card’s rewards. Wallaby is the app that will help you do just that.

                        Here are some of its main features:

                        • Automatic recommendations for the best credit card to use for each transaction
                        • A friendly user interface, displaying credit cards with their corresponding images
                        • Free to use

                        If you’re using the same credit card to make your purchases, you may be leaving money on the table. Give Wallaby a try if you’re ready to maximize your credit card’s rewards.

                        Available for: iOS and Android

                        Take control of your finances and experience financial freedom

                        Picture yourself staying on budget and saving more money than you’d ever imagined.

                        It took hard work and dedication but you’d finally learned how to manage your money. You have to start taking control of your spending and saving habits.

                        You now have a list of reliable apps that can help you build better money habits, what are you waiting for?

                        Featured photo credit: Pexels via pexels.com

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