What should you know?
Failure to effectively manage your finances during your working years can leave you short in later life. We call this the ‘Retirement Lifestyle Cliff’, where inadequate savings lead to your lifestyle drastically reducing the moment you stop working.
Why should you care?
If you spend beyond your means during your working life, the chances are you will arrive at retirement with insufficient resources to maintain the lifestyle you have become accustomed to. This can be a rude awakening, at a time when your options to improve the situation are limited.
Some key considerations:
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- State-provided pensions: These are generally designed to cover only the basic necessities, so are unlikely to be sufficient to sustain your desired lifestyle.
- Continuing to work: This is easy to say but not always easy to do. As you get older, the opportunities for high-earning employment diminish significantly. You may be able to work, but likely at a reduced level of income.
- Health: If your health deteriorates, it may affect your capacity to continue to work. Care and treatment costs may also consume a large part of your already limited resources.
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The message is simple, it is down to YOU to build the wealth you need, to afford the retirement you desire, and a mindful attitude to spending is one of the essential components you need to master.
