Retirement is the inevitable phase of every individual’s life. All of us will have to enter into that stage sooner or later, voluntarily or compulsorily. Retirement is that juncture in life when we stop working completely, and become totally dependent on our savings for all our basic needs.
Why do you need to plan your retirement?
There are many reasons for us to plan our retirements. However, the most important reason is to secure at least a minimum income during our old age, so that we do not become dependent on family members for our basic needs.
Expenses are going up day by day, and therefore we will need to plan our retirement in such a way that we are able to meet those rising expenses. It is said that you will need 70-80% of your present income to meet with the expenses during your retirement. As old age grows on us, medication is one more big expense for which all of us need to think. We will have to bear those costs in one way or the other. Proper retirement planning will help us cope up with the medical expenses.
There are many other family responsibilities, from which we cannot relieve ourselves like children education, taking care of our spouse, etc. All this can be sorted out and worked out with a proper planning.
Benefit of Retirement Plans
All of us wish to enjoy our retirement life, and do the things that we never had time for. There are many positive things we could do in our old age, like spending more time with our loved ones, traveling the world, giving time to our hobbies, etc. All of these will require two things, a healthy mind and body, and of course money. Saving money on retirement plans in our 30s is the best thing we can do from our incomes.
Lifespan in today’s world is increasing, but the general retirement age of 62-65 is still the same. That means your earning period is same but retirement life is getting longer. Retirement plans will help you to live your life your way and with dignity.
Points to keep in mind while planning retirement:
If you have not started saving do it right away: Once you enter the retirement phase, the money you saved is all what you have. It is your only income left out of which you have to bear your expenses.
Evaluate your social security: Social security is never enough to provide an income for your whole retirement, but somehow it can give a consistent income once you stop working.
Estimate what will be your retirement period expenses and incomes: Total up all your guaranteed investments like social security, pensions, fixed deposits etc. Even add up your non-insured incomes like 401 (k)’s, taxable accounts, etc. Plan it such a way that all your routine expenditures are covered by your guaranteed incomes and other spending are covered under non-guaranteed income.
Try to predict your standard of living at that time: Retirement means no work, which means ample of time on hand. This leads to exploring outside food, more travelling etc. All this increases your expenses.
Clear off all your debts: It is very vital for you to clear all your debts during your working age. When you have a flow of income you will be in a better position to pay off your loans, credit cards, mortgages etc. Once the income stops, paying all this becomes really difficult.
Keep all your legal documents up to date: With the changing times, it is very important to keep certain important legal documents like power of attorney, will, etc, updated.
Meet a financial planner: Decisions concerning retirement planning are very important, and hence it is important for you to take professional advice.
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