Retirement is an extremely important time financially for anyone. From then on, it will be based only on a fixed income – the pension. Its value is not the equivalent of the salary received during the active period of life.
In such a situation, where the income (pension) is limited to a fixed amount, how can a person maintain the lifestyle with which he has become accustomed? The answer is simple: with the help of lifelong savings. But is it so easy to save and secure your savings?
Saving a lifetime – a mission impossible for many people!
36% of Romanians indicate that their source of income barely gives them the opportunity to cover their daily needs. Experts recommend that a person’s income be divided into the following percentage: 50% for current expenses, 30% to ensure the need for relaxation and 20% to be directed to an account or savings deposit. If income allows them to cover only their daily needs, there is no way to save for these people.
Life insurance is an option for those who will benefit from an extra security measure. However, in Romania, only 10% of the population turned to this option. And in terms of savings, only 14% of Romanians can say that they are trying to insure themselves for old age. If Romanians have a problem in terms of the level of saving, here that, at the international level, there are also states where people manage to make important monthly savings:
- Luxembourg – 18.09% of monthly earnings;
- Switzerland – 17, 47% of income received each month;
- Sweden – 17, 04% of family earnings per month;
- Germany – 10, 47% of money entering the household monthly;
- The Netherlands – 9, 86% of what is earned month by month.
At the level of the European Union states, in the third quarter of 2019, there was a decrease in savings. Thus, it decreased from 16, 7%, as it was in the previous quarter, to 10, 46%. Compared to the difficult period of 2020, when the global health crisis will be followed by a financial and a food one, can savings still be made?
Strategies to follow to save in the long run
When you are an active person in the field of work, the chances of saving are higher. The first thing you have to do is be aware of the need to save . This way you will take all the necessary steps to raise money from your monthly income. Of course, you will be able to adjust your lifestyle to narrow your spending level. Another option you have at hand (precisely because it is physically possible) is to increase your income during the active period.*PUBLICITATE
The next step is to protect yourself from unforeseen situations that may arise in your life. This means saving even more, given that you will need an emergency fund. You also have the option of online emergency loans, but these are solutions of maximum damage and you do not have to use them every time you need money.
It is essential to start saving from the first moment of achieving a stable income. The concept of “state pension” must be forgotten until retirement. You have to save because only in this way you will have the necessary money in old age. Establish a plan for 3, 5 or 10 years and see how things evolve. It is difficult to make long-term plans in a world where volatility is very high.
Opt for banks that enjoy strong capital, both financial and image. Securing savings does not mean high interest rates, but stability and security for your money. Small banking institutions offer high long-term interest rates (on deposits with a maturity of 12 months) of up to 4, 6%. But are they so safe in the long run?
The state provides people’s money up to 100,000 euros per person. But in an unfavorable economic situation, nothing is so sure. So, you are the person who can secure his money in the most efficient way. You can even opt to invest part of your savings in yourself. This way you will be able to identify better paid jobs.
Which means, of course, a higher income, but also the possibility to make higher savings. Don’t forget the optional private pensions, which are a form of investment in your savings. You need to multiply your ways of saving, so that they, together, work for you in the long run.
Save in a planned way!
He sees saving as a form of investment. An investment in your personal future, but also that of your family. Because, when you reach old age, you don’t have to become a financial burden for your loved ones. As long as you have a source of income and you can multiply your earnings, you have to save!
The money saved can be distributed among various banks. Opt for 12-month deposits, which give you the maximum interest. The distribution of savings can be done in another form: deposits in Lei and in foreign currency. The only amendment to foreign currency deposits is related to currency fluctuations. Another way to secure savings is to invest money. In general, government securities and financial instruments with a high level of stability can be purchased.
Buying real estate is an option, but it is not the most efficient. Such an operation involves additional investments, the costs of which cannot be recovered. The money obtained from the rent involves the payment of an income tax and related taxes (CAS and CASS). Your savings need to generate more money, so you can make short-term investments using secure financial instruments.
The retirement period should not worry you if you have taken the necessary measures in time. By saving you will be able to manage this period in the most advantageous way for you. In addition, you will cover all the expenses necessary to maintain good health. And the money saved will allow you to make other plans, especially since you will now have a lot of free time. Because, in the end, the money saved means financial freedom and unlimited possibilities for relaxation!