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When should I start saving for my retirement?
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Ideally, you should start as soon as possible. That's because money you put away at an earlier age can benefit from compounding and grow into a larger sum when you're ready to retire. Unfortunately, life expenses often get in the way of retirement planning: kids need more fun have to be replaced, and other unexpected expenses pop up. So many people might not be able to get a start until later in life. If you fall into that "late start" group, remember that you'll have to try to save a lot more in those later years, and probably have to invest more aggressively to make up for lost time.
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I am 23 years old, I want to plan for the future by saving $100 per month. Any Suggestions? |
Congratulations. You have made a very important decision for yourself. At your age, you can multiply your retirement savings if you start that early. Review our Libertas plan. It's perfect for you.
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How much money should one put away for his retirement savings?
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There's no single percentage that will work for everyone. The percentage will vary depending on your age, how much you've got saved, etc. But for someone in his 30's or early 40's saving 10% of his income is certainly a starting point. You'll have to do a lot more than that, however, if you're into your 40s and you haven't saved anything yet.
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Why is planning your retirement important?
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It's important because once you get to a certain age, you have fewer years to accumulate more money. So if the money you've put away over your working life plus Social Security isn't enough to keep you in the lifestyle you'd like to maintain, you may not have a lot of options for improving your situation... Review our retirement planning section for more details.
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In the retirement planning section you are considering that 60 to 70% of our pre-retirement income is sufficient to maintain our lifestyle. How had you come up with that number?
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Well, that's a pretty questionable assumption. It really depends on how much money you make and spend. If you make a lot of money, you may not need as high a percent. But if you are in the middle class, 70% might be a reasonable amount. The "experts" are assuming you will pay off your mortgage before you retire. That's a starting point. Then they assume you have work-related expenses, clothing… that no longer exist and that all your children expenses have stopped. But most people want to do some travelling when they retire. And if one of your hobbies is shopping, you'll have more time to do that when you retire. So it really depends on you personal circumstances and lifestyle.
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What do you think about Social Security Systems, aren't they enough to secure our retirement…? |
The majority of our systems were built around the 60s. Life expectancy was 65, the population was young and no major economic crisis. Now, European social security systems are reducing their benefits or extending the age at which retirement benefits are paid. If you are young you should consider that your social security benefit could be 70 to 80% of what it is now.
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