Planning for retirement is just one area in which, with the benefit of hindsight, many people wish they’d taken action earlier. Wealth management company St. James’s Place explains why it’s so important to make a start on saving.
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How often in life do we look back and wish we had done things differently? According to a recent study, two in five retirees regret retirement-planning mistakes that have left them struggling financially. Nearly one in five say that they didn’t save enough for retirement, and 15 percent regret not starting to save earlier in their working lives. Understandably, many of us still have misgivings about locking our money away for decades – especially if we have more immediate calls on our income.
Nevertheless, if we’re serious about planning for the future, we need to put away surplus income today, since doing so funds our lifestyles tomorrow. With that in mind, how should we go about saving for life after work? The sooner you start, the more choices you have later. The power of compound returns (gains on gains) means that 10 or 20 years can make a big difference. For example, if a level gross investment of US$10,000 per annum to an investment product commenced at age 30, a projected fund of $460,000 would be available at age 60. T he following table shows what could happen if the start of the regular annual contribution was delayed by 5, 10 or 15 years.
This example is just a guide and makes a number of assumptions, however, it’s a good illustration of the benefits of planning ahead when it comes to investing for retirement. Most of us have a choice of what we can do in retirement and when our retirement can start. The key decision is when we start to make worthwhile investments.
You should never think that it’s too late to start saving, or that you can’t catch up. There are significant opportunities to make up lost ground if you have the available means. However, the fact remains that the best way to secure a comfortable retirement is to save as much as possible as early as possible in your working life, and take financial advice. The longer you delay saving, the harder it will be to build the kind of fund that will see you through retirement. To receive a complimentary guide covering wealth management, retirement planning or Inheritance Tax planning, get in touch with a St. James’s Place adviser.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested. The levels and bases of taxation, and reliefs from taxation, can change at any time and are dependent on individual circumstances.
This article first appeared in the Oct/Nov edition of Expat Living magazine. Subscribe now so you never miss an issue.