Retirement blues already

Donna Willan Money cents

Am I doing enough to ensure that when I retire I will be able to live comfortably? How much is enough? And can I do it? Oh this is a scary topic!

I began by asking, ‘What is enough?’. First I re-watched the Just One Lap 100 second video on this topic (video is at the end of this post), and the message is clear: “Don’t put your retirement dream at risk – invest 20% of your income every month”. WOW! That is a big ask! I then spent some more time on the Internet, seeing what others say about retirement. According to Forbes website, “The only way to keep up is to have something well above 10% of salary pouring into your retirement account. You just have to do it if you don’t want to be eating cat food at age 75 .” Forbes suggests that at the age of 45 I should have three times my annual salary saved in my ‘thrift plan’.

Am I on track? Am I saving between 10-20% of my income? Some readers may remember that I reflected on this in February, when my plan was to ensure my house is paid off by the time I am in my mid 50s by paying an extra 10% of the bond every month. I am doing that. In fact, I am paying 20% most months, which is 5% of my income. So the house will be nicely paid off by my early 50s. Well done me! I continue to pay my Retirement Annuity (although I’ve been told that this will not amount to much, despite starting it when I was 26!)

BUT, it’s not all good. In February, I said I would start taking out a regular Satrix investment. I haven’t begun that yet. Oh dear! In total I am saving just over 10% of my income, but as I pay off my bond I will be able to increase what I invest elsewhere. But in order to follow the 20% rule, I really need to invest additional money monthly. Where will that money come from?

So I’m feeling a bit discouraged that I still cannot do the 20% savings per month, but I do hope that investing in paying off my house is a wise retirement choice. Surely, having the house paid off and being completely debt free with a big asset at retirement is significant. I think this is also about being very disciplined, to ensure that as I see a decline in the bond repayments I immediately invest the extra money. I still wonder if investing in paying off my house versus investing in the stock market is the right way to go? I need to think about this more for sure.

In my next column I will reflect on the money habits I learnt from my mother and whether I am following her advice, and avoiding her mistakes.


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