Why retiring early means NOT booking that holiday
Why retiring early means NOT booking that holiday… unless you’re already saving for retirement as well!
Saving money is not easy for many people. The thought of retirement, one of the most important components of life to save for, seems so distant. Putting money aside for it is hard to do when you want to make purchases or go on a holiday. There are many reasons men and women are reaching retirement age only to find out they do not have enough money tucked away to pay for their expenses, nevermind retiring early. When considering this, it can be hard to imagine why people are more willing to go on a holiday rather than put that money into a retirement account.
Retiring early is affected by need for instant gratification
Some experts state that many individuals do not save for long-term needs like retirement because they want, and feel they need, to have something now. That is, instead of putting money into a retirement account now, these individuals spend it on holiday trips, lavish accommodations and other short-term desires. While everyone needs a getaway every now and then, sometimes the need for immediate gratification needs to be curbed to ensure long-term goals can be met.
Why do people want to spend money on an annual holiday rather than pay for the option of retiring early? For many men and women, the lure of going on a trip today is much better than having to wait.
- Many men and women work very hard and feel they need a break.
- Some people feel that trips are important for their social life.
- Some people go on holiday because everyone else is doing it and they feel they cannot possibly be left out.
There are many other reasons why an individual may make the decision to do this. But what is the solution? Should you never travel?
The need for increased retirement savings continues to climb
Many people are working more years. Some are forced to do so just to meet their monthly expenses. Others are working harder and longer to put more money into retirement so they have the option of retiring in the first place. Yet, many of these people did not have to work so hard and so long. Retiring early is no longer the option of the privileged few. It can be done by anyone who is sensible enough to start saving at the right time in their life. Even on a moderate income, putting away a small amount of money on a regular basis can help individuals to save for retirement. Of course, to do this, the individual has to invest long term, meaning from a younger age. He or she also needs to invest consistently, every month for example. This is one of the main reasons that people cannot retire sooner or have to work during retirement. They simply did not put money into their accounts until it was too late.
Finding a balance for retiring early
I firmly believe that one of the key components to being able to retiring early is to put money into your retirement pot as early as possible. The sooner you begin to plan for retirement and put those funds into your retirement account, the less actual funds you’ll need to put in yourself. Compound interest will help to make up the difference. For this reason, individuals need to find the balance they need between travelling expenses and retirement savings.
Going on holiday could be ideal, if the individual is still saving for retirement. It is best for individuals to work closely with advisers who can provide customised retirement savings plans to meet the needs of the individual. This will change from time to time, but once a plan is in place, saving for a holiday remains an option. You can have peace of mind enjoying your trip knowing your retirement is paid for as well.
About Mike Coady
Mike Coady is an expat expert based in Dubai and is on hand to help with all of the above and more.
Mike is an award-winning money coach and industry leader in the financial sector.
Qualified to UK Financial Conduct Authority (FCA) standards, a member of the Chartered Insurance Institute, a Fellow of the Institute of Sales Management (FISM), a Fellow of the Institute of Directors (FIoD) and featured as a highly qualified Financial Adviser in Which Financial Adviser.
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Blog published by Mike Coady.