So you've decided to start saving for retirement, but after using our calculators, you realise you can’t afford the recommended monthly contribution. What now?
Don't give up on the idea entirely – having a source of income when you stop working is very important, and the only way to ensure that is to you want to supplement your retirement savings. Luckily, there are a number of ways to solve the problem of affordability. Here are some ideas:
1. Speak to a financial adviser
It can be overwhelming trying to figure out your retirement strategy. If helps to get in touch with an accredited financial adviser, who will be able to outline various options and solutions.
2. Work a bit longer
The world has changed and as you near the age of 65, there's a chance you either won't want to stop working, or you won't be able to. Working a bit longer, past your planned retirement age, is one way you can get the most out of the money you're investing. Just a few more years of saving can make a huge difference to how much you end up with. And, it's been said that working helps keeps your brain active and can slow the ageing process. Staying on at your job isn't the only option to do this: maybe you find a way to make money out of your own business working part-time, doing something you've always wanted to do?
3. Assess your current lifestyle
To be able to afford to retire, you may need to make some changes to the lifestyle you're enjoying right now, in order to save more. Look at where you can cut back, for example on travel expenses and meals out, or by moving to a smaller home or driving a more affordable car. You should also get rid of any debt you have, such as paying off personal loans, store cards and credit cards. You then able to put away more into your retirement savings each month.
4. Check your portfolio
Meet with your financial adviser and review your investment portfolio. If you have a long enough investment time line you can opt for more risk. Even though how much money your investment makes may fluctuate in the short term. As this is a retirement plan, long-term returns are what you want, as they generally offer a higher return over a longer period of time.
5. Look at your finances holistically
Realise that you have large monthly expenses that disappear once you retire. These could include transport costs to and from work, or paying off your home loan that may be paid up, or your children may not be dependent on you anymore. Because some of your expenses may come down, you can live comfortably off a smaller income than you had when you were working.
For assistance on saving for your retirement please chat to a friendly financial adviser closest to you.