We are all so busy that it can be easy to lose track of our retirement plans. We asked our team members about their plans, and they had some great suggestions.
Photo credit: cottonbron
Do you know how much you will need to save to retire? Retirement is a long process that starts with planning and making the right decisions. We asked 4 people at our company about their retirement plans. Here is what we found.
"I plan to save enough money so that when I retire at the age of 60, I can say goodbye to the workforce! To do this, I need to save approximately Ksh 30 million, which will require a total of Ksh 2.65 million of annual income. To meet these goals, I plan to set aside fixed monthly savings from my salary as well as half any other earnings or profits that I receive," said Lilian, a talent sourcing expert.
"One day, I will retire early, be wealthy, and live the good life. To reach my goal, I'll need to have several hundred million dollars in assets and investments, plus a hefty annual income between 50,000 to 100,000 USD. In order to accumulate my fortune, I will invest in ventures outside my regular job, taking advantage of the diversity that will come from working for myself. The savings habits that I employ include having a separate bank account for my savings and investments. And by networking with other like-minded people who are interested in starting their own businesses," said James, a Senior Talent Specialist.
"My ultimate retirement plan is to retire at the age of 60. I have calculated that I need approximately 122,000 USD in savings in order to achieve this goal. My projected annual income to meet this goal is 16,500 USD. To achieve all this, I have adopted certain saving and spending practices, including having a savings account with my bank and focusing on buying assets that earn interest. I've put far more thought into what purchases I'll make each day: should it be a luxury evening out or a bar of chocolate? If it's a luxury night out, it's less likely to happen," said Judith, our Uganda-based Customer Experience Associate.
"To reach my goal of retiring at age 45, I will need to have $1 million in the bank by then. Fortunately, a $6,000 annual income will cover this. I'll do it by setting up some fixed deposits, engaging in some forex trading, and investing in gold. Other than that, I'll just have to practice self-denial," said Oluwayemisi Akinlotu, a Senior Account Excellence Specialist.
Additionally, here are 3 key points on how to save for retirement
1. Set up your retirement savings goal
Your savings goal depends on a number of factors, including the living expenses you'll have in retirement, your expected retirement age and life expectancy, and your expected rate of return on your investment. One of the most popular benchmarks is what's called the 25x Rule. It suggests multiplying your annual expenses by 25 to calculate how much you'll need to save by retirement.
In addition, start saving through a workplace retirement plan, if available. One of the best ways to save for retirement is through an employer-sponsored program.
2. Set up automatic recurring deposits
The reason why recurring deposits are good for retirement savings is because of their flexibility. You can set up a recurring deposit for any amount of money that you wish to invest, and also choose how often you would like to make the deposit — either every month or every quarter or even every year.
3. Regularly increase your retirement savings rate
It’s also a good idea to regularly increase your retirement savings rate as your income increases. A good rule of thumb is to save at least 10 percent of what you earn each year and increase that percentage by 1 percent every year until you hit 20 percent. If saving 20 percent of your earnings seems like too much, try saving 15 percent and then increasing that amount by 1 percent a year until you hit 20 percent.
Conclusion
As with any type of retirement planning, saving money early is better than saving later. So if you are already saving for retirement make sure to increase your savings rate (percentage of income) each year, or every other year. The earlier you start the more time your retirement accounts have to grow.
