Retirement Planning
In Europe, we live in a very social system. Retirement fees are deducted from the salary immediately and paid out to those who need it right now. Records about a person’s monthly salary are being maintained, so that this person can have the same benefits when he or she retires. Frankly, with a growing elderly population, I am not sure for how long our governments can maintain this system. Therefore, retirement planning takes an important place in my financial planning strategy.
Firstly, I build up a retirement through my employer. A small amount is deducted from my gross salary, which is tax exempt, and paid into a fund. My employer pays the same amount. Even if I change employers, I can take the fund with me, it is tied to me as a person, not to my employer.
Secondly, I am paying a small amount of my net salary into an investment fund. As my salary grow, so do my monthly payments.
All in all, I am currently using 3 main pillars when building my retirement. It gives a good and secure feeling, knowing that I am building wealth over time, even with small amounts, and that I will probably not have the risk of having to lead a poor life when I retire. Perhaps I can even retire early, who knows.
I would encourage everyone to at least put a few percent of his or her salary aside for retirement purposes. You could invest that money into an investment fund, or buy individual stocks, depending on how well you are familiar with investments. Even putting small amounts aside will pay out, due to yearly dividend payouts. If these dividends are re-invested, you’ll then be paid dividends on dividends, and your wealth will keep growing. Due to the effect of exponential growth, it is important to start investing for retirement as soon as possible.
