Retirement can feel like a long way off. If you’re in your thirties, forties, even your fifties, it seems like a future so distant it’s hard to picture. But for many of us (the lucky ones at least) retirement will roll around one day, and the way we spend the winter of our life is heavily influenced by our actions in the present. Our planning and preparation now impacts the kind of lifestyle and financial freedom we’ll have later on when we’re no longer able to work. Here are some of the things you can put in place now which will benefit you later down the line.
Start a business
Starting a business from scratch is hard work. It takes time and dedication, it can take years to build up. But if you’re successful, you can eventually end up with a company that runs without you. Hire the right people (and hire someone to do your job) and you can cash in on the profits each month with no work needing to be done by you. Once you retire, you can continue cashing in on this and reaping the reward of regular profit. Or you could sell up, and use the cash as a lump sum for whatever you need. If you’re currently working a job you hate and have aspirations of setting up your own company, put in the background work first. Go back to school and get yourself a business qualification of some kind. You could go to university full time and get a degree, or study online in your free time. You can get diplomas in leadership, management, marketing and lots of other related subjects which are bound to help you when you set up yourself. Save up as much money as you can to get started, so that you’re not beginning your business in too much debt. And do your market research, a successful business needs to find a gap in the market and offer customers something they can’t find elsewhere. Make sure your product or service is good, and remain flexible and adaptable so you can continue over the years, giving customers what they want even when demand changes. If you want a business that eventually runs itself, it’s all about hiring the right people. Your employees should be hard working and motivated and want success for the business as much as you do. They should be experienced (otherwise, have them trained up) so they’re excellent at their job. Look after them well by providing good employee benefits, a pleasant working environment and fair wages. This will prevent staff turnover rate, and senior staff members can train up junior members so there’s always someone to fill each role as the years go on.
Make investments
Investments are a great way to put your money to work. Instead of letting it sit in the bank and earning a little interest, investing it can earn you huge sums back. It can be a risky game, when it comes to investing there’s a chance you can lose it all so you need to be smart. Unless you know exactly what you’re doing then it can be best to hire a financial advisor and let them deal with everything. You can invest in everything from commodities such as oil, precious metals and even weapons. You can invest in the stock market, business or peer to peer lending. These all have varying levels of risk, so know what you’re getting yourself in for. Investments can build you money over time, and again it’s passive income if you’ve hired a financial advisor so you get to cash in on the profit without an extra work or hassle. Perfect for when you retire, as you can take out all the cash that you’ve generated and use it to live the way that you’d like.
Buy property
The first step would be to buy your own property. That way, once you stop working in older age, you don’t have any rent or a mortgage to pay. This can free up a large part of your budget. If you’re able to, purchase some properties to rent out too. You don’t need all that much money up front, once you cover the deposit your tenant’s rent will cover the mortgage. If you do this now, by the time you retire you could have a number of properties that have all been paid off. Keep renting them out to get a monthly income, or sell them and enjoy the lump sum. Either way, it’s something you can do now that will massively benefit you later down the line. If you use an estate agent to run things for you, you won’t even need to deal with tenants directly and the hassle to you will be minimal. They will deal with advertising, referencing, chasing up late payments, making sure the property has been cleared by the tenant once they leave, sorting out their bond deposit and much more. It’s not just residential agents to consider, how about commercial premises too? If you use buyers agents for commercial buildings, again they will take care of everything for you.
Add to your pension pot
Your pension is ultimately your most important investment. If you work for an employer, in most cases they will be contributing to a pension pot for you. However, if you work for yourself then this is something you’ll need to set up, contribute as much to this as you can. Even if you already have an employer paying in for you, you can top it up as well so you’re putting away as much as possible ready for retirement. It can be hard, many of us live from paycheck to paycheck, and it can be difficult thinking about what will happen in twenty, thirty or fourty years down the line. But put away what you can afford, it will add up over the years and give you a much more comfortable retirement. All pensions will give you a choice of investment funds. So where to you start? Choosing your pension funds is just like choosing any other investment, in so far as you need to consider your attitude to risk and your investment time frame. As younger investors have a longer time until retirement age, and so a longer investment horizon, they can take on more risk with their pension investment in the hope of generating better returns. It all depends on your age, budget and how much risk you’re prepared to accept. Do your research and make a careful decision. Be aware that there are many scams surrounding pensions so don’t just take up an offer from a cold caller that sounds good. Look into the company, speak with family and friends and get financial advice on the matter if needed.
Be sure to make a will
If you’ve managed to acquire a fair amount of riches through your life then it’s even more important to write a will. That way, your money and estate will be divided up exacltly how you want it. No one likes to think about their passing, but from a financial point of view it’s essential and once it’s done you can forget about it. It’s something that can bring you peace of mind throughout your retirement. Funeral plans are another, that way everything will be done for your family and they won’t be left with lots of costs to cover.
The winter of your life should be a time to relax and enjoy yourself. Spend time with family, pursue hobbies and generally have a good time after being in the working system for so many years. Having money isnt the be all and end all, but it can certainly make things a lot easier and allow you to live the way that you want.
How will you be organising your finances to prepare for retirement later in life?
