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How to Save For My Retirement – Easy to Understand

Some of us are aware of how much money we need to save for retirement and when they are planning to retire. Now How to Save for My Retirement - Easy to Understandputting money away in any investment vehicle can be risky. The question you need to ask yourself now is “how to save for my retirement”.

You should always try to save more as and when you can. I will explain to you the different ways of investing your savings towards retirement. I will briefly explain what the top retirement savings vehicles are.

TOP Retirement Savings VEHICLES

There are many ways to save for your retirement. You can invest your money yourself, you could belong to your employer’s provident or pension fund, preserve your money when you leave your employer’s retirement funds, etc.

Here is a list of the best savings vehicles for your retirement savings:

 

  • Pension Fund:

Offered by employers to their employees who become members of the fund

Members can only leave the fund when they retire, leave the employer, death or if the fund is liquidated

At retirement members can take up to a maximum of one-third of the money, the balance is transferred to an annuity (pension – gives you a monthly income)

 

  • Provident Fund:

Offered by employers to their employees who become members of the fund

Members can only leave the fund when they retire, leave the employer, death or if the fund is liquidated

At retirement members can take the full amount of his savings, members are not forced to buy annuities

 

  • Retirement Annuity Fund:

This vehicle is for individuals who want to save and invest towards their retirement

Ideal for members of an employer pension/provident fund who want to add to their existing retirement savings – always try to save more

Members can only leave the fund when they retire or death

At retirement members can take up to a maximum of one-third of the money, the balance is transferred to an annuity (pension – gives you a monthly income)

 

  • Preservation Fund:

This vehicle is for individuals who want to reinvest their withdrawal benefits from a pension or provident fund

This vehicle is ideal for individuals who leave their employer’s pension/provident fund before their retirement age

No further contributions are allowed into this fund once funds are transferred from a pension/provident fund – no further contributions allowed

Members can only join this fund on withdrawal from or liquidation of their pension/provident fund

Individuals are allowed one emergency withdrawal from the fund before they reach retirement age

With a preservation provident fund – on retirement, individuals can take the entire lump sum or use a portion of it to buy an annuity to give them an income

With a preservation pension fund – on retirement individuals can take up to a maximum of one-third of the money, the balance is transferred to an annuity (pension – gives you a monthly income)

 

What is the Best Way to Save For Retirement

The answer to this depends on how old you are.

The best way to save for retirement in your 30s, 40s and 50s:

What is the best way to save for retirement in your 30s

 

What is the best way to save for retirement in your 40s

 

What is the best way to save for retirement in your 50s

 

It All Depends on YOU

For Living a good life, money is an essential asset to have and is most probably the most important. But the importance of money increases more after you have reached your inevitable retirement.

Because, after when you retire, the means of earning an income are reduced and your health and strength will not be the same as when you are young, a good retirement plan is essential if you want to maintain a happy and comfortable standard of living even after retirement.

Do you think that you are prepared for retirement? How old are you now? Valid questions, especially the closer retirement age starts creeping up on you. Let me know – leave a comment

 

 

 

Luis

16 Comments

  1. What a coincidence! My wife and I were just talking about saving for retirement a couple of days ago. This a very interesting and educational article as I don’t know much about saving for retirement.
    I personally would prefer the funds with pensions like the Pension Fund or the Retirement Annuity Fund. Just so I can create a budget for what I have coming in every month.
    My wife and I are both in our thirty’s so the chart for investing while in your thirty’s is perfect for us. As a matter of fact, we were just looking into compound interest. This just confirms that we are on the right track. Thank you so much for this article.

    • Hello. Thanks for the response and glad this post was able to help you out. Pension funds and retirement annuities have tax benefits as well as committing retirees to purchase an annuity in order to earn an income at retirement instead of receiving a full lump sum in cash and risk spending he lump sum and therefore the funds not lasting. So good choice.
      I’m busy at the moment creating a post on compound interest so check back later on the website. It’s fantastic – Einstein called it the eight wonder of the world. The longer yiubinvest for the greater it’s impact on your investment growth.
      Thanks again and let me know if you need any assistance in your retirement planning.

  2. Great article! Very informative, yet easy to understand.
    Thank you for sharing! It is most important to have a retirement plan.

    • Hello.
      Thank you for your feedback. Glad you enjoyed the read and understand the importance of a retirement plan.

  3. I’m totally unprepared. got lots of work to do now thanks! that table at the bottom was a bit of a swift kick in the bottom

    • Hello.
      Glad I was able to help you out in a small way.
      Keep coming back as there will be more new content that will assist you further.
      Regards, Luis

  4. Oh, man… I had no idea there were so many options, Luis!
    Is there like a Retirement Saving Vehicle that you would consider the best deal (if that make any sense)? One that would be definitely worth looking more in to?

    Best Regards!
    Matiss

    • Hello.
      Thanks for taking your time to read my post.
      There’s no perfect retirement savings vehicle as it all depends on an individual’s preference and choice. For example a vehicle that only allows you to withdraw your funds at retirement (retirement annuity or pension fund) is good for individuals that need to be disciplined and spend money easily, in that they can’t spend their funds before retirement. Retirement annuities also have more tax advantages.
      Let me know if you need any more advice on this subject.
      Regards.

  5. Great post Luis. I’m in my early 30’s and unfortunately not close to start a saving for retirement! My main issue is not having a stable and good income. It is difficult to think about retirement when you have chosen to be an independent worker but as soon as that stable income I will have a look at your table again! 🙂 Hope I’m still in the 30’s!

    • Hello.
      Thank you for reading my post.
      The best thing to do is to stay focused and true to a set plan going forward no matter what.
      Please do check back as I will be adding on more informative posts to help you.
      Regards

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