Here are a few questions that you need to answer honestly. Until what age do you wish to work? Do you already have a retirement plan? Have you started building your retirement fund?
I don’t know about you but I want to retire as early as possible. If you already have a retirement plan, you’re heading the right direction because a bad plan is better than no plan at all. I’m not saying that your plan is bad but it would help if you could compare it to three of the most common retirement plans.
First up is receiving pension from social security. It is probably a program with good intentions but it just isn’t enough. What you get out of this is barely enough to sustain an acceptable lifestyle. In your old age, you should also be prepared to see some expenses you didn’t have when you were younger. Some of the expenses may include hospital bills, medication and gifts to spoil your grandchildren. While this may help, it is not really a viable option for a good retirement.
Children as Retirement Plan
For a single guy in my 20’s, I do not have this option. There are, however, people who really do consider this as an option, most of them are those who do not really plan ahead. It has been a tradition for children to take care of their parents in their old age. It’s quite a good tradition but it should not be mandatory nor should it be something that parents should rely on. Here are a few reasons why relying on children in retirement years is a bad idea. 1) Your children may not be financially capable of supporting you. 2) Your children might just turn out to be selfish. 3) Your children might die before you do. I know these aren’t pleasant things to talk about but it’s just the reality of life. Each of these scenarios have the possibility to come true, so we need a better alternative.
The best alternative we can give you is building a retirement fund. The retirement fund is a combination of the savings, investments and insurance that you have accumulated over the years you’ve been working. This way, you won’t have to rely on social security benefits or on your children. You can still keep a healthy relationship with them and by that time your grandchildren too. If your children eventually become wealthy and give you, then be grateful. If they try to give you when they still are not financially stable, you can decline so that they can build the financial stability for their family.
- Have savings enough to sustain you for years. (You have a long time to prepare for retirement. A constant deposit into your savings will surely make it amass a substantial amount.)
- Invest in assets. (These assets should earn you enough passive income; so that you won’t need to make withdrawals from your savings.)
- Make sure you have enough insurance coverage. (You may have some insurance policies but our needs grow as we age. It is important to review the coverage through financial needs analysis.)
MysterE is the stage name of Earl Wong, a magician, educator and entrepreneur. He has dedicated his time and effort to creating educational materials with a sprinkle of magic. He is also a financial advisor affiliated with Sun Life Financial which allows him to personally spread financial literacy.