Money Management Principle: How Many Paydays Do You Have Until You Retire?

Many cannot wait until they can retire. 

Do you dream of one day being financially free and enjoying life without the need to work? 

Imagine your retirement if you have built up enough money to enjoy your golden years…

• No financial stress and a regular income to cover your living expenses without having to work.
• Not having to get up early, sit in rush-hour traffic, and work hard to meet deadlines.

But the sad reality is that many people are not able to retire financially secure. Most do not start saving early enough.

What are Your Retirement Goals and Dreams?

Do you have a dream for your golden years? 

Do you plan to build up enough wealth so that you do not need to work?

Are you saving for retirement? 

Will you be able to retire at retirement?

I need to encourage you to plan well. 

“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.” (Proverbs 21:5)

The secret to retiring financially free is to save a part of each salary you earn over your working career. Do not draw from it; keep building it up for retirement.

Start planning early. Stick to your plan. Over time, you can build towards financial freedom.

Do You Know How Many Paydays You Have Until You Retire?

• If you start working at age 25 and plan to retire at age 65, you have 40 years, or 480 paydays, until you retire. 
• If you only start savings towards retirement at age 35 and plan to retire at age 65, you will only have 30 years, or 360 pay days, until you retire.
• If you delay your savings and only start saving towards retirement at age 45 and plan to retire at age 65, you will only have 20 years, or 240 pay days, until you retire.
• If you delay your savings and only start saving towards retirement at age 55 and plan to retire at age 65, you will only have 10 years, or 120 pay days, until you retire.

Average Life Expectancy…

The average life expectancy for a person retiring at age 65 is around 16 years for men and 18 years for women. However, let us say that God blesses you with 20 years, and you live to 85. 

That means you need to build up 20 years’ worth of income (linked to inflation) to cover your retirement years.

Let us put this into perspective…

• At age 25, you have 40 years (or 480 paydays) to build up enough income for 20 years in retirement.
• At age 35, you have 30 years (or 360 paydays) to build up enough income for 20 years in retirement.
• At age 45, you have 20 years (or 240 paydays) to build up enough income for 20 years in retirement.
• At age 55, you have 10 years (or 120 paydays) to build up enough income for 20 years (or 240 paydays) in retirement.

The impact of delay…

So, let me show you the impact of not saving a portion of your monthly salary regularly from a young age.

• If you only start saving for retirement at age 35, you would have had 30 years or 360 pay-days to build up your retirement savings.
• If you started saving at age 25, you would have had 40 years or 480 pay days to build up your retirement savings.

If you had started saving R500 p.m. at age 35 and continued to invest until age 65, you would have built up around R1,100,000, enabling you to secure an income of around R5,000 p.m. over 20 years.

However, if you had started saving R500 p.m. at age 25 (10 years earlier) and continued to invest until age 65, you would have built up around R3,200,000, enabling you to secure an income of around R15,000 p.m. over 20 years.

Your R500 p.m. investment over 40 years will give you three times more income at retirement than if you started saving ten years later. 

Put another way, if you wanted to retire at 65 but started saving ten years later (at age 35 instead of 25), you would need to save R1,400 p.m. (that is an extra R900 p.m., nearly three times more over 30 years) to make up for your missed savings.

Don’t Take Your Paydays for Granted

“The wise man saves for the future, but the foolish man spends whatever he gets.” (Proverbs 21:20)

Start saving a portion of each salary you receive each month. Be wise. Don’t be foolish. Save it before you spend it!

How many paydays do you have until retirement? 

Each month, you lose another pay-day, so start investing as soon as they start earning an income.”

Start Small

It is better to start small and begin saving than delay your savings until you can “afford” to save more. Don’t put off saving. Instead, start small and build up wealth over time.

With the power of compound interest, even small amounts invested over the longer term could become a substantial sum.

“Whoever gathers money little by little makes it grow.” (Proverbs 13:11)

Start saving a portion of each salary you receive each month. 

Make it non-negotiable. And don’t draw it. Let it grow until retirement.

You can thank me later…