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The generation that is currently
employed, is going to live a retirement completely
different from the kind of retirement earlier generations
faced.
For one, expenses are going to be much
higher as traveling and pursuit of hobbies in retirement
become possible and attractive. Secondly, life spans are
increasing, leading to longer in-retirement life.
Thirdly, medical expenses are rising dramatically
leading to higher potential outflows. And finally, the
family structure is changing to one where the elderly
would like to be financially independent in their golden
years.
Most people like to start creating
their retirement fund in their early fifties. But those
who start even ten years earlier,
increase their wealth
creation potential exponentially. The early birds create their
retirement nest with much less effort. This is not
just because they
have more years to
save but also because they can access investments with
higher potential
return due to their
longer time horizon.
An important financial advice in investment management
is to increase time horizon if you wish to
reduce risk.
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