Preparing For Retirement: Should You Spend Less Or Earn More?

American Advisor Group

In order to make your dream of retiring early a reality, you generally have two options: to spend less or to earn more. If you are an avid reader of personal articles, it is no surprise that spending less is included in “Ways To Save For Retirement”. But, when you want to focus on maximizing your earning potential then, you will have to do several measures to earn more.

SPENDING LESS

Pros:

Spending less gives an a more instantaneous result compared to earning more due to its direct nature. It is easier to accomplish because of money management and budgeting techniques.

Cons:

There is a limit to when you can spend less before you hit a boiling point. For instance, some people restrict their way of life to the point that it is extremely uncomfortable and unsatisfactory.

Tips:

  • Lower your utility bills by unplugging cables, turning off the lights, and minimizing the air conditioner temperature.
  • Cancel your hand phone plans and switch to prepaid in order to regulate your telecom bills.
  • It is important to track where your money is going through the last month’s bank statements and receipts. Notice what you have spending too much on and reduce it.
  • Cut down your T.V. bill by canceling your cable subscription and opting for watching at Toggle.sg. Toggle.sg lets you watch episodes of your favorite shows at Channel 5, Channel 8, Channel U, Okto, Suria, and Vasantham – for free! But, viewing of premium content is on a subscription basis.
  • Lastly, if you are buying a new appliance, make sure that it is an energy efficient model. Smaller appliances not only help you save more on space but on bills also.

EARNING MORE

Pros:

The ways you can earn are endless. Ultimately, it is based on your good financial choices, a ton of effort, and a sprinkle of luck. Additionally, here is no limitation in the amount you can possibly earn.

Cons:

Making more money takes time and effort. You will need to find a better job or to work more hours in order get a start-up capital for your small business. The flow of profit after the initial business launch takes time too.

Tips:

  • Increase your earnings by upgrading your skills. To upgrade your skills, you can enroll to workshops or courses. Consider going down to your community centre (CC) and find out the affordable courses they offer. Transform the awesome skills you learned into viable freelance businesses or part-time occupations.

Related Article: 4 Community Centres’ Workshops That Can Really Make You Money

  • Start your own small business such as an online clothing shop. Online business allows you to sell your product or service at the convenience of your own home and your own time.

Related Article: How And Why You Should Start An Online Business Now

  • Lastly, contemplate on proposing a salary increase or a leaving the company for a better company.

WHICH ONE WEIGHS MORE?

On your way to save for your retirement fund, frugality or spending less is the first step. Once you are financially stable, it makes more sense to seek for higher income.
You can earn millions of dollars but if you are spending irrationally, you can get into financial problems. And, even if you are cutting down your spending, you may not reach your goal if you do not earn a decent amount of money. So, the best way to reach your retirement goal is to have a combination of both options.

Retirement

(Image Credits: 401(K) 2012 via Flickr)

Source: 1

Read More...

Retire In The World’s Cheapest And Most Beautiful Countries

In 2013, Live and Invest Overseas and International Living examined the best countries worldwide where you can retire for S$1,760/month or less.

Live and Invest Overseas is a trusted online publication dedicated to giving information on retiring, living, and investing overseas. With a similar goal, International Living, established in 1979, had surveyed experts and contributors to get the cost of living information of countries around the world. These are the latest large-scale data available to date:

1. NICARAGUA, CENTRAL AMERICA

Nicaragua, a multiethnic country of approximately 6 million people, is one of the most beautiful countries in America as it boasts its Pacific coastline, Caribbean beaches, and freshwater lakes. You can live for about S$1,350 a month inclusive of utility bills (no air-conditioning), groceries, entertainment, rent, maid (3 times a week), and health insurance. Not a bad way to retire!

2. PHILIPPINES, ASIA

Philippines, a picturesque country consisting of 7,107 islands, ensures that you can enjoy a low-cost island life once you retire. For about S$1,410 a month, you can avail services such as electricity, water, gas, cable TV, Internet, grocery shopping, rent, and entertainment costs. Relax in the beach and reminisce the old times while sipping a fresh coconut juice that will cost you lest than a dollar!

Image Credits: Brian Evans via Flickr

Image Credits: Brian Evans via Flickr

3. MALAYSIA, ASIA

How about retiring close to home? In Malaysia, you can retire for a cost of approximately S$1,450 a month. This is inclusive of utility bills, handphone bills, Internet services, maid (4 hours/week), transportation, health insurance, and entertainment. Keep your healthy physique by buying a bagful of fruits that will cost you only S$5.

Image Credits: Tatiana Vdb via Flickr

Image Credits: Tatiana Vdb via Flickr

4. ECUADOR, SOUTH AMERICA

Aside from English, if you are fluent in Spanish then, you may consider living in Ecuador. With mostly Spanish-speaking citizens, Ecuador known for its rich ecosystem that hosts many species of plants and animals. For approximately S$1,760 a month, you can indulge on utilities, grocery shopping, health insurance, maid (2 times a week), Internet services, cable TV, handphone services, entertainment, and transportation. The top choice of most American retirees is the wonderful city of  Cuenca due to its glorious weather and affordable real estate.

Image Credits: andresmbernal via Flickr

Image Credits: andresmbernal via Flickr

Age gracefully by retiring in a comfortable place where you are at peace with your finances! The world is your oyster. 🙂

Sources: 1 , 2, and 3

Read More...

5 Financial Steps You Must Take After Getting Your First Job

So you got your first full-time job after graduating…what happens next? You may be lost and unfamiliar with the new responsibilities ahead. So, it is best to keep your finances in check. These steps will help:

1. ALLOCATE YOUR FINANCES BY BUDGETING

List down your expenses (i.e., fixed and variable), your income, and debts. Be aware of your cash flow for at least 2 weeks to help you set up a budget. Do not panic if you still have to pay your student loan because a budget will help you plan your income allocation.

2. REDUCE YOUR STUDENT LOAN

Do not wait until the lender notices you have graduated, start now. The earlier you start making payments, the more you will save. Furthermore, if you have a private loan that you took out when your credit score was lower, there is a potential to borrow again at lower rate.

3. THINK ABOUT YOUR FINANCIAL GOALS

You may be living from paycheck to paycheck at the first few months but how about 4 years from now? Think about your long-term financial goals and start planning your budget accordingly. You may consider buying a house, traveling, or having kids, so start setting aside some money every month towards your goals. This will lessen the load and the stress.

4. CONSIDER BUYING THE INSURANCE YOU NEED

Insurance maybe in the back of your mind because you are young, healthy, and you got your life ahead of you. But, it will be the best thing you have ever invested on once accidents and unforeseen things happen. It is cheaper to buy insurance now while you are young because the risks are low. Many employers offer group life and group disability insurance, so it is more affordable and cheap enough to consider.

5. OPEN YOUR RETIREMENT ACCOUNT

I stressed this issue so much before and I will say it again. The best time to start your retirement savings is before you hit 35 years old. Wouldn’t you want to have a relaxing life with no financial worries once you retire?

Image Credits: 401(K) 2012 via Flickr

Image Credits: 401(K) 2012 via Flickr

Then, set aside at least 5-10% of your income per month for retirement fund. Also, avoid debt as much as possible and get educated about your finances. Know how and why you should save for retirement before your mid-30s here.

Read More...

Smart Investment And Retirement Strategies From 20s And Beyond

IN YOUR 20s

1. EDUCATE YOURSELF.

Read and understand materials about self-empowerment, investment, and money management. Here are four books to get you started with:

“The War of Art” by Steven Pressfield
“Why Stocks Go Up and Down” by William Pike
“The Intelligent Investor” by Benjamin Graham
“Turning Pro” by Steven Pressfield

2. CONNECT AND DISCONNECT MORE.

Networking is very important especially if you will be dabbling in the field of business. Meeting people with shared interests will not only bring a life of fun but also a life of opportunities. Your network may refer you to your first job or even challenge you to be a business partner. On the other hand, you must disconnect with the distractions such as excessive amounts of alcohol or other vices that are harmful to your body.

IN YOUR 30s

3. BEGIN NOW.

The sooner you start, the more money you part with. In order to retire on 80% of an income, a 30-year-old must save 10% of his or her salary.

4. INVEST IN STOCKS.

Even if the economy suffers badly, your account will have time to recover. For instance, The Fidelity Select Software and Computer fund has yielded more than 11% a year since 1996. Keep it basic with a low-cost index fund.

IN YOUR 40s

5. PUT VALUE TO YOURSELF.

You may want to put your retirement savings into hold because of your child’s college fund. But, keep in mind that you cannot load for retirement yet you can loan for college fees or even get a scholarship.

6. SEEK THE EXPERT’S ADVICE.

To reach the maximum level of your retirement savings, sit down with a financial planner. Create a financial goal together and learn how to save more, spend wisely, and invest to reach it.

IN YOUR 50s

7. STAY WITH STOCKS.

You may increase your percentage of savings by investing in bonds but do not totally quit on stocks. To battle inflation, you must lean on the stocks’ higher growth potential.

Image Credits: American Advisors Group via Flickr

Image Credits: American Advisors Group via Flickr

Read More...

How And Why You Should Save For Retirement Before Your Mid-30s

When you are young, in your 20s or 30s, retirement feels like a looooong way ahead.

Typically in your 20s, the only person you have to spend for is yourself. In your 30s, you will have new financial priorities such as the wedding, child’s schooling, house loans, etc.

If you consider all the aspects of your finances and fast-paced life today however, you will realize that it is the best time to start saving for retirement before you hit 35. Even the strategies to save for retirement are in-lined with the ideal to start saving while you are young.

Here are the 4 strategies to save for your retirement before your mid-30s…

1. PAY OFF YOUR DEBTS

It makes sense to pay off your debts or at least your high-interest debts before you save for your retirement. Since not all debts are equal, pay off your high-interest debts first followed by the lower ones.

2. SET UP A BUDGET

Systematically allocate your income onto different categories and stick to that budget. Do not spend beyond what your budget is for that month. This allows you to save regularly rather than arbitrarily.

3. SEEK FOR AN EMPLOYER THAT SUPPORTS YOUR GOALS

Image Credits: American Advisors Group via Flickr

Image Credits: American Advisors Group via Flickr

As much as possible, look for an employer that supports your long-term goals. If your employer offers Retirement or Pension Plan then embrace this company benefit.

4. TRACK YOUR RETIREMENT SAVINGS

During your…

a. 20s

It is best to start saving at least 5% of your income or sign up for your employer’s Retirement Plan. Avoid debt as much as possible and get educated about your finances.

b. 30s

Invest your money and check whether it is in lined with your goals. Increase your contribution to your Retirement Savings while preparing for your child’s school fees.

c. 40s

Make thought-through decisions about your expenses and cut down the unnecessary. This is when you hit your savings to the maximum. By this time you should have at least S$80, 000 to your Retirement Savings.

d. 50s

During your 50s, you must prepare for the unexpected. Seek the financial experts’ help if you must. Then, plan your exit with glee because you are well prepared for it.

Note: This is just an ideal time frame for your Retirement Savings. Contemplate and reconsider the realistic measures that are suited for you.

Read More...