Long gone are the times where governments and companies we worked for will look after us when we retire. Companies are going bankrupt, governments extending the retirement age and paying close to nothing for your hard years of labour. You must save for your retirement. For example, the UK’s full basic State Pension is only £137.60 per week. The rest, if you are lucky, will come from your workplace pension or personal pension, if you even have either of these.
The new normal is to save yourself.
By the age of 50 you should already have at least 500,000 EUR/USD/GBP saved and well placed. In your retirement, you will need at least 1m. A more realistic sum is between 2m and 3m. Here is an example:
If you earn 10,000 per month. As a rule of thumb, you need at least 8,000 (80% of your monthly income) or 96,000 a year.
Statistically, your life expectancy is 92 years. If you retire at 65, you have 27 years ahead of you in retirement. This adds up to a total of 2.5m over 27 years.
Most people place their money in investments such as stocks, bonds or real estate. When you are in retirement, you need to mobilise your investments to be able to earn a good regular income. Not all stocks pay dividends and if they do they are usually small, which will force you to sell and spend the capital + gains. Bonds, unlike decades ago, earn little if anything in interest and real estate in retirement can be burdensome and a hard to sell asset. Not to mention if you have tenants who refuse to pay, which happens often.
Having multiple sources of income is always safer than one, but especially when the main source is in stock portfolios.
Vanguard (https://retirementplans.vanguard.com/web/enc/pdfs/RILongBroc.pdf) suggests that once you retire you shouldn’t withdraw more than 4% of your retirement savings in the first year. If you have 1m saved, that represents only 40k a year. With that in mind, keeping your savings diversified is crucial. In times of sharp stock market swings, you need something stable that will provide a regular income.
Regular fixed income
Fixed Income products are a perfect solution if you are retired or looking to place your savings. For those who are retired they give a regular fixed income on a quarterly basis and for those who are saving for retirement or large lump-sum purchases such as a house, it’s a way of increasing or diversifying your savings. One such product is the 12-month fixed income plan, which for over 10 years has been providing between 10% and 12% interest per year. This is one of the most short-term solutions, allowing you to stay in control and know your savings situation at all times. This plan also has no administration or management fees. Click here to request more information.
Another option is the S&P 500 Index recommended by Warren Buffet as a perfect low-cost savings investment. The regular contribution plan guarantees your capital and a minimum 4% growth per year. Click here to request more information.
Crewinvest are introducing brokers who recommend selected investments, savings and retirement products. We have no access to your funds and do not charge any management fees. All contracts and funds are directly signed and sent to the providing companies.
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