The time you do this, the method of appreciation and regularity are also important for financial preparation for retirement.
The title and perex of this post can be a little confusing for someone, but it doesn’t really matter how much you set aside for responsible financial preparation for retirement. The important criteria are the time, the type of investment and the amount. We will discuss them gradually.
You can start at any age, but…
You can start financially preparing for retirement at any age. Remember that the later you start, the more you will have to set aside as if you started at a younger age.
For example, if you are 30 years old, all you have to do is set aside ten percent of your monthly income each month. In 35 years of your life, it can be a nice sum of money. If we only take into account the current average monthly salary, which is $ 2,000, the monthly deposit will be $ 200. You save $ 2,400 a year. At age 65, you will save $ 84,000. Of course, it is necessary to take into account inflation, which we did not expect for simplification.
It also depends on how much you need to save. If you know that those 84 thousand crowns will be enough for you, all you have to do is set aside two thousand crowns a month from the average Czech net salary. That is, provided you are thirty and have 35 years to retire. If you need 50 years and receive an average salary of $ 4,000, you will need to defer a higher monthly deposit. It will no longer be $ 200 a month, but maybe $ 400 or $ 500.
Beware of inflation
If you regularly postpone a specific part of your monthly income, increase this amount by inflation. The same applies even if you deposit money, for example, into a savings account. if inflation is higher than the after-tax income in a given year, adjust this difference with a one-off deposit. This will ensure that your old-age financial reserve retains its fair value.
How to make higher returns
High returns are every investor’s dream. That is, even those who save their money at home under a mattress or on a personal account. Paradise music for every ear is low risk and the highest possible yield. Unfortunately, the reality is different in the vast number of cases.
To achieve higher returns, you need to invest money in riskier investments. These include, for example, shares or equity mutual funds. However, in order not to lose your money unnecessarily, you must let the investment work for a while. At least five years is recommended for equity funds, and at least ten years for equities. You won’t spoil anything by directing your investments for two or more decades.
It does not have to be difficult to prepare responsibly for retirement. All you have to do is postpone the pre-determined amount on a regular basis and monitor inflation and investment. All this once a year.