Build wealth not commodities
It is not uncommon for doctors and dentists to drive top of the range cars, take their family on luxury holidays and enjoy splashing most of their surplus income. What if you were to cut back on your spending by just £200 per month and channel that into building wealth for your retirement?
This does not constitute advice and advice should be sought in all instances before acting on it.
Build £100k+ in 25 years
When it comes to retirement planning, facts and figures don’t lie and it is entirely possible to predict, with some degree of accuracy, what your financial position will be if you follow a certain path of saving and investing.
For example, if you were to cut your spending by just £200 per month, and instead invest it somewhere with a 5 percent return, you could essentially clock-up an extra £100k+ of wealth over 25 years.
This would mean you could either retire earlier or just enjoy more wealth to support your retirement plans.
Also typically, it doesn’t mean cutting back on your day-to-day expenditure. It is quite possible for £200 to be saved from cutting commodities; the extras, the luxury items.
The “wealthy” build wealth rather than commodities
Those that retire with a satisfying bank balance and finance-free assets are generally those people that focus on building wealth throughout their life, rather than spending their income or profits on commodities, such as fancy cars and holidays.
Choices that you make throughout your life have a financial impact for the long-term.
It may not be as enjoyable right now to downgrade your car from the top model, or only go to Europe for a holiday instead of the Seychelles
However, if you are able to visualise the future and delay gratification, it is one sure way to an earlier and (financially) happier retirement.
How much income do you need in retirement?
A recent survey of 100 dentists (*) showed that three quarters didn’t know how much they needed to save each month for retirement. Interestingly also, the amount of annual income people expected they would need in retirement fell by £10k, on average, compared to a similar study two years ago.
Working out how much income you need in retirement is unique to your own bespoke situation and aspirations.
It depends on the assets you will still need to support, the size of your family, if your children will be in education and your personal goals for how you want to spend your time once you no longer have to work.
Working with a professional financial adviser can help lay the right plans to ensure you meet your personal financial goals for retirement.
Making small changes to the way you spend your money can make a significant impact on your future financial position.