Here is the first of many future guest posters from the eToro P.I. Program, if you would like to contribute to any future posts please email me any articles, differing points of view are very welcome on here.
Can you afford to retire?
An important question..
Maybe you don’t want to retire or even plan to, perhaps you will remain a boundless dynamo of energy well into your twilight years and never get sick or suffer life changing injury.
Perhaps you just want to keep rockin forever!
Or maybe, just maybe you're going to wake up one day, Old, tired, in debt and still at work.
There is a simple horrible fact to face and that is the pension plans of the western world have failed. There are millions of Baby boomers and Gen x'ers that simply cannot retire as they have not prepared and saved responsibly or efficiently.
The Millennial Generation's consideration of their long term future is even worse in fact it's lamentable.
There are articles all over the internet about Saving and retirement, but how many of us take this subject as seriously as we should.
Some basic saving guidelines I've come across are:
save 25% of your annual income in your 20's
By 30 have 1 year's salary saved.
increase this multiple every 5 years.
By 35 have 2 years annual salary saved.
By 40 have 4 years annual salary saved.
so on and so forth.
So we can see the later you leave it the more you are going to have to play catch up.
Retiring early is possible but it is unlikely that investments alone will be enough to pay for it.
A total lifestyle adaptation may be required.
So let's look at some ground rules we can all exercise to make early retirement or even just retirement a possibility.
1. Save in an organised, deliberate and systematic fashion as we discussed above.
2. Aim to live Debt free. No credit cards, no loans, perhaps even no mortgage (well not an expensive one)
It is far better to have people owe you money than to owe others.
3. Live within your means. (infact live well within your means)
This essentially means cutting costs, and aggressively limiting expenditure.
Do you really NEED new shoes?, do you really NEED a holiday? Do you really NEED a new care etc etc.
4. Get rid of the hangers on. People who only take from you have to go!
Ask yourself honestly which relationships add value to your life and cut the one's that don't.
5. Go through life on a constant mission to acquire Assets.
The possibilities here are endless, Property, collectables, antiques, Investments, Debtors (people who owe you money) and the list goes on.
6. From an international statistics point of view, Don't smoke, drink, gamble, get divorced or suffer any other legal expenditure. All are bank account killers.
Now I know what some of you are going to say, “But Tom life is for living”. “God that sounds boring”. “live in the now dude!”
But what I am advocating for is not a life of misery and hardship but quite the contrary.
If you are fortunate enough to live 8 decades on this planet then 25% of that time (2 decades)
Perhaps even just 12.5% of your life (1 decade) with the right investments and enough sacrifice could be all it takes to end up living financially worry free and secure in the knowledge that you have provided for your children's future (if you have any) and can retire when the time comes.
Of Course we should live for today “carpe diem” and all that.
But let’s at least plan and prepare for tomorrow
By Tom Barson