What is Retirement Planning?
Retirement planning is a process by which individuals / couples create (and follow) a system of savings and investing in order to have enough money to sustain a desired standard of living when they decide to retire. What is involved with retirement planning? When you decide to start retirement planning, you need to decide when you would like to retire and what standard of living you would like to adhere to when you reach your desired retirement age. When retirement planning you also need to take into account how much income you are earning now, and the likelihood of your income increasing until you reach your desired retirement age. When retirement planning, the exact balance of 1) retirement age 2) desired standard of living and 3) your income earning potential during your working years, will vary based on what you want to accomplish for your retirement. For example, if someone in their 50s is just starting their retirement planning and wants to retire with a high standard of living i
Retirement planning is the important task of deciding how you will live once you retire. Retirement planning involves the consideration of a number of factors, including at what age you hope to retire, how much money you will need to cover living expenses coupled with the things you plan to do once you’ve retired, and where your money will come from. Generally speaking, retirement planning is planning your finances for the period of life after you stop working. Each person’s situation is unique, and therefore, retirement planning isn’t one standard plan for every person. Saving money for retirement through one or all of the available retirement planning options is the first place to start. Many employers have retirement planning options available to their employees. Some companies have pension plans, others have 401(k) plans, and some have a combination of both. There are different types of pension and 401(k) plans, and you should check with your company’s human resource department for
This type of planning is an amalgam of social, psychological and financial preparations for the period when you will no longer be in full-time employment. These days, the definition of “retirement” is getting rather broad because many retirees continue to work. That fact doesn’t change the concept of retirement planning as planning for your golden years. It doesn’t alter the inherent uncertainty of the future either. Retirement planning is multi-dimensional, although primarily financial. It can be perceived as a subset of financial planning that seeks to attain some degree of financial independence at retirement. Why is there so much fuss about it? The risk of outliving your life savings (longevity risk) is grave. Also, purchasing power risk and inflation risk make it harder to maintain your pre-retirement standard of living throughout retirement. Greater health risk is experienced, since average life expectancies are on the rise. Retirement planning is vital, because it is designed to
There is, unfortunately, no perfect retirement plan that will work for every single one of us. We have to make the effort to find options that work for us — often going far beyond allowing our path to be guided just by eliminating options. Instead, we must set goals, decide our preferred methods for earning additional income and invest time, effort and even money to ensure that, in the long run, we wind up with more money. We have to do the research ourselves, instead of relying on what seems like a great deal. After all, if a retirement plan seems to be too good to be true, it probably is.
