Why retirement savings must be treated as a marathon and not a sprint?

Date : 30/10/2020
Read: 5 mins

Here are six reasons why saving for retirement should be like preparing for a marathon.

Why retirement savings must be treated as a marathon and not a sprint

Retirement planning is a journey that you undertake for many years in order to reach your desired goal. Most people start preparing for it from a young age and continue up until they retire. This is why some experts have compared it to a marathon. Just as in a long race, you are required to prepare well in advance, plan your approach, keep a steady pace, and run systematically towards the winning goal.

A marathon requires time and strategic methods. Similarly, retirement planning also demands a long and careful look at your wants, needs, aspirations, and resources at hand. There is a reason why a marathon brilliantly compares to saving up for retirement. Read on to find out how.

1. The focus is on the end goal

Whether in a marathon or in retirement planning, knowing and paying attention to the end goal is crucial. Having a goal in mind allows you to set up a suitable strategy. If you are running a marathon, you will need to start slow and then pick up speed during the middle and end parts of your run. This will enable you to keep your energy intact and not tire out early on. Retirement savings are similar. When you have an end goal, you can plan how you want to save for it. You can start small as you would not be earning a lot in the early years of your career. However, as you become eligible for promotions and raises, your savings portion can also increase, ultimately accommodating the final target.

2. The timeline is important

Every runner fixes a time for themselves to complete a said distance. Whether it is two hours for running 21 km or 4.5 hours for running 42 km, time is of extreme relevance in a marathon. It’s the same with retirement savings. Having a timeline in mind lets you break down your savings strategy into components. If you have 25 years left to retire, you can take more risk and venture into volatile investments. Even if you suffer losses, you will have a considerable amount of time to make up for it. However, if you have only 5 years left to retire, it may be very risky to take chances at this stage. It is essential to set a realistic timeline in running a marathon as well as saving. Setting unachievable targets can only result in disappointment.

3. It is necessary to plan for the worst

Most runners practice in adverse conditions and terrain to prepare themselves for the harshest of situations. Marathon runners also practice in the rain, scorching heat, and cold, so they are able to give their best on the big day. Just like a marathon, retirement savings also require prudence and careful planning. Every contingency such as an investment loss, unemployment, inflation, etc. should be kept in mind while planning. It is good to be prepared for the worst. This can be done with an emergency fund.

4. Maintaining a steady pace is important

Running a marathon is a long activity, which is why the pace matters a lot. If you run fast in the beginning, you will burn out later. If you are too slow when you start, you will find it hard to catch up. Always remember that unlike in a race, what matters in a marathon is to finish it and not to necessarily win it. The same is true for retirement. When saving for retirement, you should focus on keeping a steady pace. Having a systematic savings plan will ensure that you never falter. This will also not put a burden on you in unprecedented times.

5. One must choose the right equipment

Marathon runners pay extra attention to their diet, clothes, and shoes. Apart from staying well-hydrated, they also eat fresh, keep a high intake of carbohydrates for energy, and stay clear of rich food that can cause lethargy. Their clothes and shoes are of the best quality to avoid any kind of discomfort during the run. Retirement planning also requires the best of savings and investment products. Keeping your risk appetite in mind, you should pick instruments that can deliver returns that you aspire to earn. Mutual funds, pension plans, fixed deposits, etc. are some commonly used retirement accounts.

6. The time after requires planning too

When you finish a long marathon, you will likely be dehydrated. Your legs would hurt, and you may have pulled a muscle while running. Depending on the weather, you may suffer from a heat stroke or chilblains. All of these things will require immediate medical attention. Your journey towards retirement also does not end when you retire. You must have a plan for the next chapter too. When you retire, you may need a large pool of funds at once to purchase a home or buy a new car. In other circumstances, you may not need lump sum funds but rather a periodic flow of income. Regardless of your needs, you have to cautiously prepare for post-retirement in a way that ensures you don’t run out of money in your golden years.

Last words

Retirement planning is not as difficult as it seems. However, you need to have a sound approach in order to have a financially secure and stable retirement life. While everyone’s plans and strategies can differ, the important thing is to follow the basic principles of saving and investment. Staying focused and not diverting from your path will ensure that you have a comfortable life in your sunset years after you retire.

In addition to the above tips, it also helps to know these 5 must-have investment instruments for retirement planning.