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Retirement is not a once-off plan. It is a multifaceted plan that evolves over time. Retirement needs at twenty differ greatly from those at forty or even fifty. Professionals’ circumstances change throughout life, and so should their retirement plans.  

Why do your retirement needs change?  

Life happens, and priorities change.  

At twenty, you don’t really have an idea of what your retirement will look like; you only have a vague picture in your head. As you reach your forties and fifties, you know the kind of lifestyle you want to lead in retirement. Events in life, like marriage, divorce, illness, etc., affect retirement. Your priorities also change throughout life. 

At what age should you retire? 

Deciding at what age to retire is a personal decision. Many professionals’ ideal situation would be to retire early and enjoy life while they are still younger and have their health. For others, it would mean working part-time during retirement.  

Of course, realistically, this depends on a person’s financial situation. Retiring early means saving a more considerable amount of money to provide for a longer retirement.  

Also, the age at which you start saving makes a difference. Saving in your twenties gives you around forty years to accumulate wealth and let compound interest do its magic while starting in your thirties or forties means saving much more and earning less compound interest. 

Don’t forget that people are also living longer, and you need more money to fund the extended retirement period. 

Some unforeseen factors, like health problems or an illness, could force you to retire early.  

Your financial advisor will create a retirement savings plan according to your financial needs and requirements for your retirement lifestyle.  

How will your retirement savings be affected? 

There are several factors that could influence your retirement savings. Some can be planned for, but others are unforeseen. Factors include: 

• The country you will retire in. The cost of living will determine your retirement needs.  
• Family has a significant effect on your retirement savings. Children’s expenses, like schooling and extracurricular activities, will drain your disposable income and leave less for retirement savings. Even taking care of adult children or parents will put a strain on finances. 
• Life events like marriage, divorce, having children, or falling ill will affect financial requirements and commitments.  
• Wealth changes. You might inherit money, which could have a significant impact on your retirement savings. 

Moving abroad will affect your retirement savings. 

Moving to another country could seriously affect your retirement savings as the country in which you saved for retirement might have a lower or higher cost of living than the country you now live in or retire in.  

This means you might not have enough saved for retirement in your new country, e.g., professionals moving from a weaker economy to one with a major currency, like moving from India to Europe. The Indian Rupee is worth much less than the euro. 

Why should you review your retirement plan? 

Life happens, and a retirement portfolio needs to be rebalanced and reviewed regularly to ensure it is on track according to retirement goals and risk profile. Retirement goals will change throughout a working life, and this is the cause for adjusting retirement savings contributions accordingly.  

Also, the cost of living and inflation are always on the rise and often unpredictable. This means continually adjusting your retirement portfolio to ensure you have enough to live off at retirement.  

The Save-by-age retirement plan 

Understanding your retirement timeline and taking the necessary action along the way is essential. You can’t have a solid plan in your twenties and keep it that way. Your retirement plan evolves and needs to be reviewed regularly. One way is to divide it into 10-year stretches. 

In your twenties, take advantage of compound interest to build your retirement portfolio. You have the gift of time on your hands. Starting to save for retirement in your twenties will always trump starting with larger savings in your forties.  

As you get older and more aware of what you want from your retirement, you can adjust your retirement savings plan accordingly. It is vital to reassess goals and needs for retirement every few years, like a major car service to overhaul the brakes, while annual reviews are to rebalance portfolios and make any minor changes like a regular minor service. 

Don’t forget the need for a good tax-efficient portfolio and structure. Your financial advisor is essential in protecting and keeping your money working for you. This means adapting to the changing financial markets and letting your retirement plan evolve. 

Please note, the above is for educational purposes only and does not constitute advice. You should always contact your advisor for a personal consultation. 

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.