Retirement planning: it’s a marathon, not a sprint

by Infinity

Retirement planning is a marathon, not a sprint. Building sufficient wealth to ensure a comfortable retirement requires meticulous preparation, thoughtful decision-making, and a long-term perspective. Here’s how expats in Asia can harness the marathon mindset to execute a comprehensive retirement plan.

The importance of retirement planning

The best time to start your retirement planning was yesterday, the next best time is now.

With life expectancy increasing and state pensions dwindling, the quality of your retirement is likely to depend on you and how much you manage to save during your working life.

However old or young you are, you should be investing to guarantee your future financial security, because no one else will do it for you.

Start as early in your career as you can. The longer you have to save, the easier it will be to accumulate enough to live off after you retire. Compound interest will be a key factor that boosts your savings and the longer it has to work its magic, the better.

How compound interest boosts retirement savings

You may be surprised at just how much compound interest could enhance your savings. Here’s a very simple example to demonstrate its phenomenal power.

The figures in the table below show how an initial investment of just $10,000 transforms into over $70,000 over a 40-year period through the power of compound interest alone.

The figures assume an annual return of 5%. That’s not a pie-in-the-sky rate – it should be achievable over 40 years with a diversified portfolio. The 40 years is important – remember, this is a marathon, not a sprint.

The first column in the table shows the annual interest earned. This is reinvested each year although nothing else is added to the initial investment.

At first, the accumulated value grows slowly but over time it increases exponentially until, in year 40, the interest on the investment alone is $3,352.

Not to mention a more than sevenfold increase in the initial investment from $10,000 to over $70,000.

The figures assume an annual return of 5%. That’s not a pie-in-the-sky rate – it should be achievable over 40 years with a diversified portfolio. The 40 years is important – remember, this is a marathon, not a sprint.

The first column in the table shows the annual interest earned. This is reinvested each year although nothing else is added to the initial investment.

At first, the accumulated value grows slowly but over time it increases exponentially until in year 40, the interest on the investment alone is $3,352.

Not to mention a more than sevenfold increase in the initial investment from $10,000 to over $70,000.

The key ingredient to financial success in this scenario is time – and that’s where the marathon mindset comes in.

The marathon mindset and retirement planning

As any sporting professional will testify, you don’t become a champion overnight. Achieving sporting greatness is a marathon, not a sprint. It takes the three P’s: planning, patience and perseverance.

A marathon mindset is also required for retirement planning. A pension pot cannot be accumulated overnight. Planning, patience and perseverance are required to build wealth over a significant period of time. Just as top athletes start young and train for many years, you should start saving for retirement as soon as you can. If you haven’t already started, start now!

In a world where speed is everything, it can be difficult to maintain a long-term perspective. We all want results fast and it can be difficult to stick at things when there are no quick wins.

That’s why having a financial planner as your coach can add significant value.

Retirement planning: how a coach can help

Top athletes don’t achieve sporting greatness alone. Behind every Lionel Messi or Usain Bolt is a highly qualified and experienced coach who works out a strategy, provides motivation, and reviews performance to ensure that the athlete is on track to reach their goals.

When it comes to the marathon of saving for retirement, your financial planner takes on the role of coach. They are there to define your savings and investment strategy, motivate you to stay focussed on your long-term goals, help you select investment products aligned to your objectives and regularly review your investments to ensure that you are building wealth according to your personalised retirement plan.

Whether you are just embarking on your marathon journey towards retirement, or you have an established career, you will benefit from working with a professional financial adviser who can offer independent advice and support you in devising and executing a realistic and achievable retirement plan.

If you’re looking for a financial coach to run the retirement planning marathon with you, Drop Alex a line today.

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Evelyn Partners is an award-winning financial planning and investment company that builds on a heritage of more than 186 years. They have won numerous awards and their clients include private individuals, families, charities and professionals.

They presently look after more than GBP50 billion and 172,000+ clients.

At Evelyn, your personal wealth is their personal responsibility.

Evelyn's award-winning services are now available in Asia exclusively through Infinity, and can be applied to new and (probably) existing investments.

To learn more, drop Alex a line, today.

Get in touch with Alex here or at alex.dewit.linkedin@gmail.com