Many people start working with the goal of retiring as soon as possible. Apart from emergency funding, savings are also designated to help reach an early retirement.
However, there are those who did not start working with this end goal in mind, whether by choice or caused by external circumstances. Although most millennials are aware of their lack of financial security, those in previous generations have been looked over.
Do you think you’re late to the game and need to get on track with saving for retirement? Are you planning to retire abroad in a different country? Read on to get started.
1. You Are Not Alone
The first thing that you should know is that you are not alone.
According to a survey by GOBankingRates, 42% of millennials, 52% of Gen Xers, and 28% of those over 55 have nothing saved for retirement.
Furthermore, a survey by HSBC found that 36% of those living outside their native countries have not started saving for retirement, with 41% stating that they also have no emergency savings.
Surprisingly, even those who have saved do not think it’s enough.
According to the Insured Retirement Institute, 76% of Baby Boomers felt that they had not saved enough for retirement, with 68% reporting that they wish they saved more, and 67% reporting that they should have started saving earlier.
While you may not find yourself in a position where you can retire whenever and wherever you want, do understand that you are not the only one with your predicament. The key here is accepting the fact that saving up is vital to reach your goals. Only then will you be able to take the necessary steps to retire comfortably.
2. Analyze Your Financial Situation
So you’ve read the facts and realized how important it is to save up for your retirement. Though you have some catching up to do, starting late is better than not starting at all.
The first thing you need to do is analyze your current financial situation. One straightforward way to go about this would be to list down all your assets versus your debts, and then compare how much money you’re making versus how much money you are spending.
When you list down your debts and your expenses, you’ll have an idea where your money is going.
This goes hand in hand with evaluating your lifestyle and the cost of living where you want to go. How much are amenities in the country that’s caught your eye? Is a chunk of your paycheck going to debts that you can pay off sooner?
Analyze how you are spending and how you are saving (if you are saving!), and identify where you can improve.
3. Determine How Much you NEED to Retire Comfortably
After analyzing your financial situation, you’ll know where you stand financially and where you’re starting.
The next step is to do some honest and realistic goal setting: what exactly do you want out of your retirement? Would you like to be able to retire in a lush beach house in a different country with a lot of activities nearby?
Whatever your goals may be, you’ll have to calculate how much you need to save in the number of years you have left before your retirement.
Remember, having higher goals means more aggressive saving. Other things to consider in determining how much you need to save are your family and how often you’d like to visit them, your medical needs (and potential medical needs), and the lifestyle you want to have.
4. Take Advantage of State-Sponsored/International Private Retirement Plans
For expats, these plans vary from country to country. In general, however, these are plans that provide tax breaks—or rather, tax deferrals—in return for saving up for retirement.
For example, if you’re working in a country such as Spain, you can avail of a Third Pillar Scheme to save more money for retirement. The catch is that the income from your pension pot will be taxed when you access it.
Despite the drawbacks, these plans are useful for it you want to be able to save more money (by paying less tax) over a shorter period of time—an essential element for anyone who feels they are starting their retirement savings late.
5. Get Lean and Mean
Although it’s best to start late than never to start at all, the truth is, you’re going to have a harder time than those who have been saving years before.
Aside from following good savings habits—such as making savings a priority or meticulously tracking your expenses—you also need to consider taking bigger and sometimes more painful steps. This may include buying a secondhand car rather than a brand new one, or moving to a smaller house to save on expenses.
Always remember that these sacrifices today are so you won’t fall short financially in the future.
6. GET STARTED and Keep Going!
Whether you find it easy or difficult to get started, the key to success is to be consistent with your saving.
Much like a diet, you won’t see results right away, even if you’ll feel the sacrifices. It’s important to remember that the sacrifices you make now are so that you can reap the rewards of financial security later.
Better Late Than Never
Saving up for retirement can be difficult, especially if you feel that you’re starting late. However, starting now means you’ll have more time to catch up. Follow this brief guide to jumpstart your savings, and begin your journey to a financially secure retirement.
Want more information about planning for an overseas retirement? Contact us below: