Retirement Planning is very much like the martial arts scene.
There are forums where people extensively discuss how to fight.
Many know how to throw a punch and a kick, but have never been in an actual fight.
Last but not least, there are plenty of martial arts schools teaching their own style of martial arts. They claim to sell the best martial arts manuals.
But jokes aside, I have been seeing more and more people start their FIRE (Financial Independence Retire Early) journey.
For that, we have created a Retirement Progress Checker for you to use, read on to find out how you can download this.
And today, we’ll start with why you need to start your retirement planning at 40 and how it will change the way you execute your retirement planning.
As a disclaimer, this article is to explore another approach to retirement planning. Do not spend every single cent of money just because you think you can start at 40. Save up as a habit whenever you can.
Why Start Retirement Planning at 40?
First and foremost, let’s establish what constitutes as serious retirement planning.
Retirement planning needs cashflows aside for a LONG PERIOD OF TIME and the main purpose is for your OWN USE AT RETIREMENT AGE.
Almost everyone preaches the benefits of planning early without factoring the commitment needed to a long term plan.
In addition, there’s just too much changes from ages 25-40!
Some are trying to upgrade and figure out life’s interest. Some are trying to settle down and start families.
There are things to spend on before the age 40!
Saving 50% of income for the long term is good but saving hard now and forsaking a better/different future is being near sighted!
That is not to say we support spending every single cent before 40 years old. Saving money is still a habit which needs to be cultivated.
2) Money to spend on starting a family
Many couples postpone starting a family because of financial reasons.
It is undoubtedly costly to raise a child. Some estimates are at $670,000!
Your savings would be prioritised for your children. You have to provide for their childcare, enrichment classes and much more.
Child raising is at its costliest in a children’s first 6 years (age 0 to 6) of life especially with childcare costs and medical expense. I know this because I am undergoing this right now!
As a result, saving 50% of income might not be viable for most circumstances.
If you are expecting a kid now this post might interest you:
What is F.I.R.E. and why some families can’t get there!
F.I.R.E. stands for Financial Independence, Retire Early.
The FIRE movement is also the central theme in a lot of personal finance bloggers, forums, and social media platforms. It is extremely popular among millennials and their hashtags.
The emphasis and key attraction is Retiring Early, preferable before the age 40.
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