ADULT workers and self-employed individuals usually desire to live comfortably in retirement. Yet, many are worried about the journey to retirement because they have not been intentional about their goals.

If you desire to retire wealthy, or live a life of ease and comfort, then the road to that destination requires saving and investing regularly, month after month, year after year, in the right systems that will grow your money exponentially.

What are the systems? Be a contributor to a workplace pension such as a superannuation fund or approved retirement or pension plan. In addition, invest in stocks, bonds, and mutual or pooled funds. The journey to retirement is a marathon and not a sprint. Waiting too late to put a plan in place can be detrimental.

In a recent discussion with a pre-retiree who was planning to retire in a few months, she was unsure of how much pension she would get upon retirement. Her concern was how she would cope in retirement if her pension proved inadequate. She is now retired but her worse fear has been realised. There is no monthly pension. A lumpsum payout was made to her, which amounted to a year’s salary. How will she cope in retirement (which may be upwards of 20 years) with only one year’s salary? The problem is compounded as there are debts still outstanding. The solution? She plans to return to the workforce. It won’t be easy, but now she is putting a plan in place with contingencies. This scenario underscores the importance of knowing where you are on your retirement journey during the normal working years. Keep track of contributions and review pension statements. Individuals who retire wealthy or comfortably don’t get there by default but by design — it’s years of putting their money to work.

Partner plan

I had an interesting conversation with a male pre-retiree recently. He is nearly 10 years from retirement and for most of his working life he engaged in saving in what is commonly known as “the pardner plan”. He has now come to the conclusion that this type of plan is not a long-term investment but is ideal for short-term goals. As retirement draws nearer and with little long-term investment, he recognised that a partner plan will not make him wealthy nor provide the income he needs in retirement. He is running out of time.

The habit of saving makes it easier for him to put those savings in a diversified investment portfolio of stocks and bonds. His emergency fund is already in place from savings from the partner plan, which is indeed a savings plan. He regrets that his long-term investment is only just beginning.

Growing your money for retirement requires investing in long-term investment instruments that will increase in value over time, as well as contributing or participating in a workplace pension plan.

Goal-setting

As we begin a new year be intentional about your goals. Write them down but be reminded that goals are not new year resolutions — they are specific plans that should be measurable, time-bound, and realistic or relevant. Always remember: If you miss a deadline, do not change the goal. Instead, change the deadline.

Categorise goals into short, medium, and long term. Short term refers to goals of up to three years. Medium-term goals are between three and five years, and long-term goals are above five years.

Goal-setting requires discipline. Always define your goals. Are you investing for your children’s education, buying a home, a car, or retirement? All these goals have different timelines for achievement. Once your goals are defined, then the investment vehicle to get you to your financial destination can be decided. Determine how much you need to save to achieve each goal and measure your success along the way.

Ensure your hard-working dollars are in the right system to deliver the results you desire. It was motivational speaker Les Brown who said: “There is no secret to success. There is a system to success.” Your goals can’t be achieved without taking action. Persistence is key.

Grace G McLean is financial advisor at BPM Financial Limited. Contact her at: gmclean@bpmfinancial or visit website: www.bpmfinancial.com. She is also a podcaster for Living Above Self. E-mail her at livingaboveself@gmail.com