Have you ever stopped to wonder why 60 is considered retirement age? Some public services - like the police force in certain countries - require you to stop working at 60. For most, retirement age, which traditionally varies from 60 - 65 simply refers to when you’re entitled to receiving your pension plan, whatever that may be.1 Thousands of man-hours go into determining when the appropriate age is to allow for citizens to get support from the government. Although it may seem like an arbitrary age, retirement age is a highly debated topic and can be the tipping point for financial crisis - i.e. Greece, pre financial crisis had an extremely generous retirement policy with a whopping 17.5% of total GDP being paid to retirees in pension funds.2 And as I’m sure most of you have connected, the retirement issue has been touted as a prominent reason for the financial difficulties faced by Greece and it’s citizens.
But remember back before the turn of the millennium when ‘freedom 55’ became a turn of phrase used by banks and financial advisors alike to talk about taking control of your own financial freedom and retiring early? Is freedom 55 a possibility for the average person? With the likelihood that pensions will increasingly be available at a later age, as life-expectancy increasingly grows, and the cost-of-living is getting more expensive than ever, it seems like the dream of early retirement might be a thing of the not-so-distant past. As long as freedom 55 is seen as the exception, not the norm, the principle behind the idea should be celebrated to help plan and save for early retirement. Like many goals, sometimes with time they have to be adjusted to your socio-economic position. Below are a list of financial tips which are key to meeting your retirement goals:
1. Live below your means - sounds simple right? But by not trying to, ‘keep up with the Joneses’ and living contently can save you big money in the long term.
2. Start early and be realistic about your current financial situation - track every penny spent to accurately set retirement goals, and benchmarks needed throughout the process.
3. Focus on debt well before you stop working - riding mortgages and debt is often touted as a way to free up financial chains.
4. Finally focus on the other side of retirement, hobbies! It may seem like a dream to no longer have the pressure of a career looming over your head, but many find purpose in jobs, and find the transition stressful, detrimental to their mental and physical health.