The ultimate human race
The ability to retire financially independent can be 'a challenging race'. Interestingly, a marathon runner's training programme can teach us valuable retirement-saving principles.
Here are five top tips that can help you retire financially independent.
Marathon training tip #1: Get a training programme
Runners use training programmes that guide the amount of training needed for them to reach their goals. When saving for retirement, creating – and sticking to – a realistic budget is the beginning of your 'race'.
Document your total expenditure in a given month – keep track of every item you purchase. You may find that you are spending money on things that you want, but don't need. Take a look and see what you can cut out. It's best to draw up a budget.
A budget will help you determine how much of your money is needed to cover expenses and how much can be used as disposable income. Now, place contribution to retirement savings at the top of your spending priority list.
Many runners enlist the services of an experienced coach/mentor to help them leverage their strengths and eliminate weaknesses.
As an employer, you can mentor your staff and help strengthen their financial wellbeing at retirement age by considering choosing an umbrella fund investment which offers cost-effective benefits.
Marathon training tip #2: Stick to a healthy diet
Runners need a diet filled with the appropriate amount of nutrients to ensure their body functions at its optimal level; saving for retirement should follow the same principle – follow a financial diet.
Bad financial debt such as credit card repayments and purchasing items that lose value quickly can be seen as eating unhealthy food, causing you to gain weight even though this isn't your intention.
However, there is also good debt that can help you generate income in the long term, such as a bond for a house.
It's essential to have a good understanding between needs and wants – if you don’t need it, don’t buy it.
Marathon training tip #3: Pace yourself for the race
Running at a consistent pace that is tailored for you, is what will help you achieve the goal. However, this doesn't necessarily mean that issues may not occur, and adjustments may have to be made along the way to the finish line. Saving can be seen in the same way. Your starting point and the amount you're able to contribute can set the pace to achieve your financial goal.
It’s said that a retirement income equivalent to 75% of your final salary should allow you to have the same standard of living once you retire.
Marathon training tip # 4: Cross training
By strengthening your non-running muscles and giving your running muscles a break, you can become a stronger runner. Similarly, different finance products have specific benefits that can help you maximise the strength of your retirement savings plan.
The reliance on a pension or provident fund may not be enough to achieve your goals. It’s worthwhile considering adding a retirement annuity or tax-free investment to supplement your primary retirement fund.
Marathon training tip # 5: Don’t procrastinate
Many people find the task of starting the ‘race’ daunting and take a while before they benefit from the routine preparation. Similarly, the sooner you start a routine of saving, the more time you have to reap the full rewards of compound interest.