Retirement planning should be one of the most important aspects an individual considers when they start their financial journey.
However, all too often common excuses stop people from putting money in the retirement pot – everything from believing they don’t earn enough money to save, that even if they did save it wouldn’t add up to much, or simply that they don’t know how to save.
A new report has highlighted the extent of this problem, with most savers set to miss their retirement goals by at least 50 per cent.
Standard Chartered, in its inaugural “Wealth Expectancy Report 2019,” found that a whopping 56 per cent of people in 10 of the world’s fastest-growing economies have retirement goals around twice the size of their likely pension pots at age 60.
The “wealth expectancy gap” was found to be pervasive across the 10 fast-growing economies such as China, Hong Kong, India, Kenya, Malaysia, Pakistan, Singapore, South Korea, Taiwan and the UAE.
In UAE, the report highlighted the tendency among respondents to focus on near-term financial goals. Although people in the Emirates regard financial security as critical to quality of life and happiness, they tend to focus on living in the here and now. Individuals in the affluent group, in particular, prefer to live in the moment (51 per cent) rather than worry about their financial future.
But it doesn’t have to be this way. Here are eight game-changing habits experts recommend for getting your retirement savings in place.
There’s no time like the present to begin with a plan, say money professionals. “Key to anyone’s retirement planning is to start early and define your standard of living,” says Dilip Manjunath, senior wealth architect at Elixir Wealth Solutions.
“The earlier you start saving, the better it is for any individual to accumulate a bigger corpus amount, which at the time of retirement can yield enough income to take care of all expenses.”
Have a budget
“Creating a simple spreadsheet with all your income, expenditure, assets and liabilities will help you to understand where you are right now,” says Gemma Frankland, Director of Client Services at financial advisors, Globaleye.
“Think of this as a map; you can’t work out where you are going until your work out where you are right now. Your fixed costs – rent, utility bills, travel expenses – are a need. Making a list of your monthly needs and wants will help you to gain perspective.”
If you’re serious about financial stability long-term you need to prioritise saving. “The majority of the individuals focus more on their short-term goals such as a dream vacation, buying an expensive car, or jewellery,” says Manjunath. “There’s nothing wrong with that, but people need to focus foremost on pay themselves first by putting savings as it will guarantee them financial security and independence.”
Set up automatic transfers
The beauty of automatic transfers each month is that you don’t have to give it another thought, say experts. This can be helpful if you tend to back track on your saving decisions, such as whether you really need to save 10 per cent of your income this month. Automating the process lets your savings grow unattended, and if you schedule the transfer around the time that your earnings arrive, the money for savings never really mixes with your spending funds.
Keep track of the little things
The devil can be in the detail when it comes to a saving plan going wrong. “As with any habit, it’s important to be mindful about what triggers the unnecessary spending,” explains Frankland. “If you’re addicted to online shopping, for example, then restrict your screen time and consider what triggers that behaviour. Imagine being on a diet – you restrict the items available to you and focus on the end goal to remain on track.”
Have an emergency fund
When it comes to emergency savings, more is always better. Life often doesn’t go as planned: you could lose your job, have a medical emergency, or need to deal with your car breaking down. That’s why money experts generally advise people to set aside three to six months’ worth of living expenses in an emergency fund.
Celebrate the small savings
Experts say it’s crucial for success to acknowledge how far you’ve come each step of the way and break down major goals into chunks. Smaller milestones that can be reached relatively quickly will give a psychological boost and help you stay motivated, says Manjunath.
Choose the right savings vehicle
According to the Wealth Expectancy Report 2019, 59 per cent of people rely primarily on savings accounts to achieve their financial goals – so finding an account that will give you a head start and better returns is crucial.
The Standard Chartered Shariah-compliant Saadiq XtraSaver Account is currently offering a great deal where all new deposits get 2.5 per cent per annum profit rate for the first two months and 2 per cent per annum for the remaining months. This is a limited offer available until end of April 2020.
“Getting to grips with retirement savings and investments isn’t rocket science, but it is worth reading up on the basics and getting professional advice,” added Frankland.
From 1 February to 30 April 2020, get better returns with the Saadiq XtraSaver Account. Apply now