You thought you would have some millions invested to fund your retirement, but now when you are toying with the idea of retiring, you are nowhere near that figure! Well, this is the story of many. You may be making a lot of money but with both low investment returns and the progressive tax system you will never be able to reach your target. Everywhere, interest rates on CDs, bonds, treasury bills, money markets, etc. are today approaching zero and returns for riskier investments, such as stocks, remain volatile and uncertain. And to top this is the progressive tax. The more money you make, the more you pay in taxes. As such you will never be able to retire.
Back to the question: ‘Can you afford to Retire today?’ First of all, forget the target you have in your head. Trust me, you have very slim chances of making it if you approach things that way. So to know whether it’s time right for you to call it a day, here are a couple of questions you need to ask.
Typically, you need 60-70 percent of what you are earning now to keep up with your post-retirement expenses and maintain the same lifestyle. But then a big pile of money doesn’t do you much good unless you know how to turn that into income. So do your investments ensure that you will have a monthly income, say about 60 percent of what you are earning today?
Are you ready to open yourself up to the possibilities? There are actually many ways to retire today with whatever funds you have and still have a post-retirement life which is still the same as yours today.
Are you ready to move overseas to move to a warm, hospitable climate with good medical services? You may not realise that relocating to an overseas location offering high standard of living at low costs means your money can go a lot further.
THE WAY FORWARD:
Many factors, including advancements in health care and longer life expectancies, have turned retirement into an active lifestyle. Retirement today is less about slowing down and more about changing course. So I strongly believe that instead of saying that you need a specific sum to retire, ask yourself how you could retire right now with the money you already have. Whatever you have for retirement could be enough if you are ready to change your lifestyle. You can retire on what you have got stashed away right now if you intend to. All you need to do is remove yourself from a high-cost, high-tax lifestyle to a cheaper community offering the same level of comfort or even more.
For starters, you could retire overseas. By choosing the right overseas location, it can be enough to fund a comfortable, appealing, rich, and rewarding retirement.