Retirement Planning – Overview
Financial planning for retirement is a process that needs to be conducted meticulously, just as one would plan for college or a career.
But while plans for higher education or future jobs afford you the luxury of time, financial retirement planning is something that one should think about at the earliest – perhaps even as early as in your early/mid-twenties to thirties.
If you delay financial planning for retirement until (say) you are in your late 40’s or early 50’s – as many individuals tend to do – you may not have sufficient time to accumulate the wealth you need for a comfortable retirement.
Image Source: BigStock
See Also: At What Age Can You Retire? Here Is an Overview of How Soon You Can Retire
Here are 7 ways to make sure your financial retirement planning process is on track to ensure you retire when you want and how you want:
1. Start investing early
The earlier you start thinking about financial planning for retirement, the more likely it is that your plan will meet success.
Plans that are in the works for 30 to 40 years will take advantage of more beneficial market cycles than those that are able to work for you for a shorter period.
Critics may say that long-term financial plans are also exposed to more down-drafts than shorter ones. True. But a 40-year financial planning process for retirement will also offer you more years to recover from a down-draft – more so than a 5-year plan!
2. Learn the basics
Financial planning for retirement is akin to building a house.
You don’t have to go out and build the house yourself, but knowing what’s involved in the building process will give you a much better appreciation of what’s needed for a plan.
So learn all you can about financial retirement planning before you start putting a plan together.
3. Know what you need
The key to successful financial planning for retirement is not how much you can save for retirement, but how much you actually need to retire comfortably.
Saving from a very tender age may still not get you where you want to be (financially) by the time you retire if you have extremely lofty goals.
Figure out what your retirement lifestyle will be, and map it to financial goals using any one of a number of retirement planning toolkits and calculators available online.
Read More: Ways You Can Retire Early (Detailed Early Retirement Planning Guide)
4. Saying goodbye to debt
Going into retirement with huge amounts of debt is never a smart strategy. So while you are still working – and saving! – think of ways to retire or reduce your debt as much as possible.
Image Source: BigStock
The lower your debt burden is, the easier you’ll find financial planning for retirement will get. A good retirement plan focuses on providing you (and your family/spouse/partner) income to live during retirement, and not to pay interest on debts or debt retirement.
Popular Article: Retirement Calculator Tool | Retirement Income Calculator
5. Get the government to pitch in
If you are amongst the fortunate few, your financial planning for retirement will depend entirely upon your own resources.
But many of us are not as fortunate – and we need help.
Explore various retirement benefits available to you, including Social Security benefits, Employee Retirement Income Security Act (ERISA) benefits, and other government supplemental income vehicles.
The key to comfortable financial retirement planning is to make use of all available tools that can help you meet your retirement financial goals.
6. Checking up periodically
Check up on your plan periodically, especially when you are already in retirement.
Sometimes unforeseen situations (lower interest rates, poor investment performance, higher than expected inflation) can silently play havoc with your financial retirement planning.
7. Get professional help
Not everyone understands what planning for retirement entails, especially if you are starting our early in life.
That’s why it pays to consult with a financial retirement planning professional.
It is here that your learning of the process will pay off, because you’ll now know exactly what kinds of products and services you need, and you’ll know where to look for experts that can help you with them.
Following these simple yet common-sense steps can make financial planning for retirement not only fun but also effective.
But above all, they put flexibility in the plan and ground it in reality. If you give thought to these 7 steps when conducting your retirement planning exercise, you’ll be in a much better position to respond to the unforeseen conditions that are bound to come your way over the long haul.
AdvisoryHQ (AHQ) Disclaimer:
Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.
Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.